Economies to Scale and the Importance of Human Capital in the Moulds Industry in Portugal: A Micro Panel Data Approach

Fátima Diniz and Elias Soukiazis ()
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Fátima Diniz: Faculty of Economics, University of Coimbra, Portugal
Elias Soukiazis: Faculty of Economics, University of Coimbra and GEMF, Portugal

No 2015-11, GEMF Working Papers from GEMF, Faculty of Economics, University of Coimbra

Abstract: The mould for plastics industry in Portugal is highly technological, innovative and modern, with a clear focus on exports. It is one of the most successful sectors in this country with high reputation in the world markets. The main aim of this study is to explain this success by detecting the main factors which determine the dynamic production structure of this industry and its transformation over time. Focus is given on the multiple aspects of human capital, such as work experience, learning by doing tendencies, innovation, dissemination of knowledge and business cooperation between companies that generate positive externalities in the production process. All these factors contribute significantly to explain the success this industry has achieved over the recent decades. A production function framework is employed in line with the neoclassical approach where human capital is the engine of growth as has been postulated by the endogenous growth theory. The production function is estimated by using unbalanced panel data and applied to a sample of firms operating in this industry, over the period 1987-2012. Our empirical evidence suggests that factors such as physical capital(cutting edge technology, including specific software) and quantitative as well as qualitative factors associated with human capital are the key factors explaining the production dynamics of the moulds industry in Portugal. Increasing returns to scale and human capital externalities are also identified as special characteristics in this sector.

Keywords: Production function; economies to scale; human capital externalities; panel data; moulds industry. (search for similar items in EconPapers)
JEL-codes: D24 D62 F43 I25 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2015-05
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Persistent link: https://EconPapers.repec.org/RePEc:gmf:wpaper:2015-11

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