Spatial Variation in Manufacturing Technology and Cost Efficiency: Georgia, 1987

This paper estimates aggregate manufacturing production functions for three kinds of counties in Georgia: metropolitan counties, counties adjacent to metropolitan areas, and counties not adjacent to metropolitan areas. The purposes are to assess locational efficiency within the manufacturing sector for different kinds of places and to examine the capital intensities determined by comparative advantages in these places. The latter is a notion put forth in the Scott-Norcliffe hypothesis which has suffered from lack of rigorous testing. The research confirms that metropolitan areas are no longer the most efficient locations for the manufacturing sector. The most efficient locations for manufacturing have moved to adjacent areas. It is confirmed that there is a trade-off between capital and labor, with capital intensities reaching their highest level in metropolitan areas, given the fact that wage levels in metropolitan areas are highest. This spatial analysis shows that the production function approach is valid in a rigorous test of the Scott-Norcliffe hypothesis in Georgia.