Agglomeration Economies, Regional Growth, and the Aggregate Production Function: A Caveat Emptor for Regional Scientists
2012; Routledge; Volume: 7; Issue: 4 Linguagem: Inglês
10.1080/17421772.2012.722668
ISSN1742-1780
Autores Tópico(s)Fiscal Policy and Economic Growth
ResumoAbstract Over the last 20 years or so, mainstream economists have become more interested in spatial economics and have introduced largely neoclassical economic concepts and tools to explain phenomena that were previously the preserve of economic geographers. One of these concepts is the aggregate production function, which is also central to much of regional growth theory. However, the estimates obtained cannot be regarded as providing evidence of the underlying technological structure of the spatial economy, including the aggregate elasticity of substitution, the degree of returns to scale, or the rate of technical progress. RÉSUMÉ Depuis une vingtaine d'années, les économistes traditionnels font preuve d'un intérêt supérieur pour l'économie spatiale, et ont introduit des concepts et des outils en grande partie néoclassiques pour expliquer des phénomènes qui étaient, jusqu'alors, réservés aux spécialistes de l'économie géographique. Un de ces concepts est la fonction de production globale, qui est également au cæur même d'une grande partie de la théorie de croissance régionale. Toutefois, on ne peut considérer que les évaluations obtenues démontrent la structure technologique sous-jacente de l'économie spatiale, y compris l'élasticité globale de la substitution, le degré de rendement à l'échelle, ou le taux de progrès technique. EXTRACTO Durante los últimos veinte años, los economistas establecidos han desarrollado mayor interés en la economía espacial y han introducido conceptos y herramientas económicos mayormente neoclásicos para explicar fenómenos que anteriormente pertenecían al campo de los geógrafos económicos. Uno de estos conceptos es la función de producción agregada, que también es una parte central de mucha de la teoría del crecimiento regional. No obstante, no se puede considerar que las estimaciones obtenidas proporcionen evidencia de la estructura tecnológica subyacente de la economía espacial, incluyendo la elasticidad agregada de sustitución, el grado de retornos a escala, o el índice de progreso técnico. 聚集经济、区域经济增长和总量生产函数 摘要: 近二十年来 , 主流经济学家对空间经济学日渐热衷,引入了大量新古典主义的经 济学概念和工具来解释以前经济地理学家束手无策的现象。这些概念之一就是总量生产函数,它对大部分区域经济增长理论也很重要。但是,得到的估计量并不能作为空间经济学内部技术结构的证据,包括替代的总估算、规模报酬比例或者技术进度速率。 Keywords: Accounting identityagglomeration economiesregional aggregate production functionsJEL CLASSIFICATION: B50O4R11 Notes 1. See Felipe & McCombie (Citation2005a, Citation2012a). Simon & Levy (Citation1963) first applied the critique to cross-sectional data. Shaikh (Citation1974, Citation1980) generalized the criticism to time-series estimations of supposed production functions and Simon (Citation1979a) thought the problem so important he mentioned it in his Nobel prize speech (see also Simon, Citation1979b). However, the problems have generally been ignored by economists who use the production function, with the exception of Temple who misunderstands the issues (see Felipe & McCombie (Citation2012b) and the references cited therein). 2. 'Finding Waldo' is a children's game where the character Waldo has to be found where he is hidden in a coloured picture with many other individuals. Solow (Citation2000) uses this as an analogy for the ad hoc linear restriction necessary in many endogenous growth models to ensure a steady-state solution, but which is often merely implicit rather than explicitly stated. 3. Ideally, the production function should include land as a factor production. However, this is often excluded because of data availability and we shall abstract from this factor of production here. 4. It is sometimes argued that the critique does not hold because neoclassical production theory assumes perfect competition (i.e. there are no economic rents). This is erroneous for the reasons set out in Felipe & McCombie (Citation2007) and, for reasons of space, will not be discussed here. 5. Times-series estimation of production functions sometimes give a poor fit to the data with the estimates of the output elasticities taking often implausible values. This is because proxying the weighted logarithm of the wage rate and the profit rate by a linear time trend (or their weighted growth rate by a constant) is misspecified as the wage rate and, especially, the rate of profit has a pronounced cyclical fluctuation. It is always possible to find a more flexible proxy that makes the estimating equation equivalent to the accounting identity. 6. Although, as O'Donnell & Swales (Citation1979) and Armstrong & Taylor (Citation2000) point out, other factors such as the supply elasticities of capital and labour are also important. 7. Note that, as we have seen above, the accounting identity critique does not depend upon these stylized facts. If they do not hold, then we know immediately from the accounting identity that MRW's specification will give a poor statistical fit. 8. These are OECD, East Asia, South Asia, Sub-Saharan Africa, Western Hemisphere, Middle East and North Africa, and Europe. 9. The growth of total factor productivity was adjusted for the rate of change in human capital. Generally, this does not make a great deal of difference as the latter is proxied by a function of the growth of the change in ratio of the wage rates of the skilled and unskilled workers, which is generally relatively small, and could even be negative (Solow, Citation1988, p. 313). 10. Estimating Equation (Equation31) directly generally finds the implicit estimate of ψ not significantly different from zero, while estimating Equation (Equation29) gives v approximately equal to one half. This is due to econometric reasons and will not be discussed here. Suffice it to say, Equation (Equation29) is generally seen as the preferred specification. It should be noted that the use of the factor shares as weights is, in the light of the accounting critique, somewhat of an ad hoc assumption. The neoclassical interpretation of them as reflecting output elasticities is invalid. 11. See Hausmann et al. (Citation2007) for a theoretical and empirical analysis of the importance of exports in determining national growth rates and Leichenko (Citation2000) and Minondo (Citation2010) for regional examples. Additional informationNotes on contributorsJesus Felipe The views in this paper represent solely those of the authors, and not those of the Asian Development Bank, its member countries, or those of its Executive Directors
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