Productive Efficiency and Territorial Externalities in Small and Medium‐Sized Industrial Firms: A Dynamic Analysis of the District Effect

A series of works have analysed differential behaviour in terms of productive efficiency between companies inside a hypothetical industrial district and those outside the district. This objective has been addressed using measures of technical efficiency. The results obtained provide valuable information for quantifying the district effect at a given moment in time. However, constant changes in the market and business behaviour mean that it is worthwhile studying the business district effect from a dynamic point of view. In this study, we provide this new vision through the use of Malmquist productivity indices. This methodology enables us to analyse possible differential evolutions by comparing the productive efficiency of companies inside and outside a district over a period of time. An empirical application has been made on a set of small and medium‐sized Spanish ceramic producers during the period of economic expansion between 1996 and 2007.