Any one organization or agency, whether for-profit or non-profit organizations that are seeking to enhance their efficiency, improve production technology, thereby achieving the goal of improving productivity, with a view to the current competitive environment. Efficiency measurement is very important, it can help decision makers understand whether the organization achieve technology progress and innovation objectives. In recent years, the government and civil organizations devote themselves to measure the change of organizational efficiency and productivity. Academia constantly research and develop various models of efficiency and productivity analysis, and application to actual cases analysis. Efficiency and productivity analysis has leapt to the mainstream of production economic studies. This empirical study adopts the census data of the classification of the Chamber of Commerce and industry of manufacturing in Taiwan, using two-stage approach to explore dynamic agglomeration externalities of 2-digit manufacturing. In the first stage, we apply dynamic network data envelopment analysis and Malmquist productivity index to calculate static efficiency and dynamic efficiency of 2-digit manufacturing. In the second stage, we apply Tobit regression analysis to verify a manufacturing geographical concentration effects on productive efficiency. We also adopt two-stage least squares methods (2SLS) to validate dynamic agglomeration externalities effects of manufacturing. Based on the results of this empical study, we propose some specific practical policy alternatives and management strategies. In the last 20 years, the strctures of Taiwan manufacturing industries have significant changes, the livelihood industry and of the sharp decline in industry, the chemical industry, electronics industry, metal machinery industry is growing fast. There is an obvous agglomeration tendency toward northern Taiwan region. In static efficiency, labour-intensive manufacturing industries tend to be diminishing return to scale rendering, while knowledge-intensive industries are rendering the increasing trend. The scale efficiency of eastern region manufacturing is very low, resulting in their productive efficiency significantly lower than the northern, central, southern regional manufacturing. In dynamic efficiency, the total factor productivity (TFP) of Taiwan manufacturing industries are rendering the growth trend, achieving the goal of innovation effect. However, the technical efficiency of manufacturing are rendering decline trend. This study found that the most important impact factor on production efficiency is the internal economies of scale. Localization economies, urbanization economies, and other static agglomeration economies external effect gradually reduce. Moreover, this study also found that Taiwan manufacturing industries have notable MAR professional dynamic external economics and notable Porter regional competitive dynamic external economic effect. Besides, Taiwan manufacturing industries has noticeable human resource dynamic external economics, but we also found low wages is beneficial to regional economic growth. We should not expand to explain Taiwan manufacturing-sweatshops. This phenomenon may be caused by high salaries, high rents, high land costs and high labor costs, these factors offset the interest of agglomeration economies. Finally, Taiwan and mainland China signed a cross-strait economic cooperation framework agreement (ECFA) in Chongqing on 29 June 2010. Taiwan manufacturing inevitably be impacted and influenced by ECFA. This is an important topic worthy of further study and discussion in the future.