The Performance of Manufacturing in the European Union in the Context of Agricultural Economics - The Agricultural Economics of the 21st Century - page 42

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Fig. 4.2 Productivity of labor (Production value/number of persons employed) growth rate (%) in
averages (over the period 1996-2008 and over the differing current countries of the European
Union) for the several forms of the manufacturing sector considered
significance. Relative to the other variables, only the coefficient associated with the
share of R&D employment in the number of people presents a positive statistic
significance, although residual (0.018). For the entire manufacturing sector, con-
sidering what was mentioned before and the R 2 value, it would seem that the
original Verdoorn relationship is the more robust.
The manufacture of food products, beverages, and tobacco is not affected by
fixed or random effects (the ordinary least square is the more adjusted method),
considering the F tests for these effects. The Verdoorn coefficient is relatively
lower (0.896) than that of the whole manufacturing sector and the constant coeffi-
cient has statistical significance, but presents a residual value (0.052). In this sector
the new variables, number of people employed per enterprise, share of employment
in manufacturing total, investment per person employed, all show statistical signif-
icance, but the coefficients are close to zero. The first new variable presents a
positive effect and the last two, negative effects. This means that the share of
employment in the manufacturing total and the investment per person employed did
not have, in the period considered, for the current 27 countries of the European
Union, an endogenous positive effect upon the labor productivity growth rate and
consequently did not help in the improvement of the increasing returns to scale in
this sector.
The manufacture of food products and beverages shows a Verdoorn coefficient
which is excessively high, because it is close to 1, but higher than 1, because values
lower than 1 are expected. This happens in some cases and is explained as a sign of
strong increasing returns to scale.