Modeling Regional Productive Performance Using a Spatial Stochastic Frontier Approach: New Evidence for Europe (1995-2007)

Regional Studies, Volume 52, 2018 - Issue 10. doi: 10.1080/00343404.2017.1390219

31 Pages Posted: 3 Mar 2016 Last revised: 19 Nov 2018

See all articles by Julian Ramajo

Julian Ramajo

UNIVERSITY OF EXTREMADURA

Geoffrey J.D. Hewings

University of Illinois at Urbana-Champaign

Date Written: February 29, 2016

Abstract

The literature on the measurement of regional convergence at different spatial scales and over different time periods is extensive. This study explores the potential role of variations in European regional technical efficiency as a contributing factor in providing explanation for convergence or divergence. To control for spatial dependence among regions, the paper uses a spatial stochastic frontier approach that integrates spatial econometric techniques with stochastic frontier models, also allowing for non-linear technical progress jointly with time and cross-sectional varying technical efficiency. From the estimated production function, we obtain estimates of the technical efficiency of the investigated 120 NUTS-2 regions of the European Union over the period 1995-2007. Our findings show that geographical externalities affect the EU frontier level, and that European regions have been converging to the frontier at a rate of about 0.8% per year. However, the analyses of the efficiency scores reveal that there is a strong geographic pattern of regional efficiency while the degree of average regional efficiency has increased steadily year by year. Overall, it appears that European regions have converged during the 1995-2007 period in terms of their ability to utilize physical capital and labor to maximize output.

Keywords: Technical efficiency, spillover effects, frontier analysis, stochastic production function, spatial panel model, European regions

JEL Classification: C23, D24, R11

Suggested Citation

Ramajo, Julian and Hewings, Geoffrey J.D., Modeling Regional Productive Performance Using a Spatial Stochastic Frontier Approach: New Evidence for Europe (1995-2007) (February 29, 2016). Regional Studies, Volume 52, 2018 - Issue 10. doi: 10.1080/00343404.2017.1390219. Available at SSRN: https://ssrn.com/abstract=2739612 or http://dx.doi.org/10.2139/ssrn.2739612

Julian Ramajo (Contact Author)

UNIVERSITY OF EXTREMADURA ( email )

AVENIDA DE ELVAS S/N
FACULTAD DE CC. ECONÓMICAS Y EMPRESARIALES
BADAJOZ, Extremadura E-06010
Spain
+34-924289547 (Phone)
+34-924272509 (Fax)

HOME PAGE: http://https://sites.google.com/view/julianramajo-eng/

Geoffrey J.D. Hewings

University of Illinois at Urbana-Champaign ( email )

318 Davenport Hall
607 S. Mathews
Urbana, IL 61801-3671
United States
217-333-4740 (Phone)

HOME PAGE: http://real.illinois.edu

Register to save articles to
your library

Register

Paper statistics

Downloads
82
rank
293,967
Abstract Views
291
PlumX Metrics