The Performance of Manufacturing in the European Union in the Context of Agricultural Economics - The Agricultural Economics of the 21st Century - page 46

The decreasing order of increasing returns to scale, considering the Verdoorn
coefficient, for the several forms of manufacturing, within the manufacture of food
products, is the following: Production, processing, preserving of meat and meat
products (0.959), manufacture of dairy products (0.833), manufacture of prepared
animal feeds (0.771), manufacture of vegetable and animal oils and fats (0.711),
manufacture of grain mill products, starches, and starch products (0.685),
processing and preserving of fruit and vegetables (0.618), manufacture of other
food products (0.660), and processing and preserving of fish and fish products
(0.499). In these industries many times the fixed and random effects are rejected
and when they are not rejected the fixed effects are more acceptable. The new
variables either do not have statistical significance or do have, but the coefficient
values are close to zero or many times negative.
The manufacture of tobacco products has the lower Verdoorn coefficient, but in
the data analysis presented the greatest average in labor productivity growth rate.
This signifies that the growth rate of this variable is not picked by the Verdoorn law
and does not come from increasing returns to scale, but instead comes from other
variables not considered in the study, as can be confirmed by the value of the
constant coefficient and by the R 2 values being around 0.451.
In general, relative to the new variables, the variable wages and salaries do not
show any case for statistic significance. The variables, number of people employed
per enterprise, investment per person employed, and the share of R&D employment
in the number of people, present values or insignificant statistics, or close to zero, or
in some cases negatives. The total share of employment in manufacturing reflects
strong negative effects upon the processing and preserving of fruit and vegetable
sectors ( 0.421), in the manufacture of grain mill products, starches, and starch

products ( 0.749). This

signifies that in these sectors the total share of employment in manufacturing is not
a consequence of the enterprise number or dimension, but rather a consequence of
the dependency of the labor resources, with lower increasing returns.

0.285), and in the manufacture of prepared animal feeds (

Conclusions
The Verdoorn relationship has been studied by many authors for different
periods of time, for several countries and regions, and for different sectors.
Sometimes with the original relationship and at other times with extensions
considering the Keynesian theories or other theories, as for example, the New
Economic Geography (this theory along with the Keynesian theory defends
the existence of increasing returns to scale as the base of circular and
cumulative processes).
In this study, from the data analysis and from the results obtained with the
several methods of econometric estimations, it was possible to conclude that
in reality, in the differing countries that actually are members of the European
Union, the economy is strongly diverse. The differences in the labor

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