New Economics Papers
on Efficiency and Productivity
Issue of 2005‒08‒13
thirteen papers chosen by

  1. Trade Liberalization, Intermediate Inputs and Productivity: Evidence from Indonesia By Amiti, Mary; Konings, Jozef
  2. Farm Productivity and Market Structure. Evidence From Cotton Reforms in Zambia By Irene Brambilla; Guido G. Porto
  4. Imports and Productivity By Halpern, László; Koren, Miklós; Szeidl, Adam
  5. Overcoming Barriers to Competitiveness By Orsetta Causa; Daniel Cohen
  6. Russian Industrial Restructuring: Trends in Productivity, Competitiveness and Comparative Advantage By Rudiger Ahrend
  7. Product Market Competition and Economic Performance in Finland By Jens Høj; Michael Wise
  8. Do Social Preferences Increase Productivity? Field Experimental Evidence from Fishermen in Toyama Bay By Jeffrey Carpenter; Erika Seki
  9. Product Market Competition and Economic Performance in Sweden By Lennart Goranson; Martin Jørgensen; Deborah Roseveare
  10. The Impact of R&D on the Singapore Economy:An Empirical Evaluation By Yuen Ping Ho; Poh Kam Wong; Mun Heng Toh
  11. Product Market Competition and Economic Performance in Hungary By Carl Gjersem; Philip Hemmings; Andreas Reindl
  12. The Service Economy in OECD Countries: OECD/Centre d’études prospectives et d’informations internationales (CEPII) By Anita Wölfl
  13. Wage structure and firm productivity in Belgium By Thierry Lallemand; Robert Plasman; François Rycx

  1. By: Amiti, Mary; Konings, Jozef
    Abstract: This paper estimates the effects of trade liberalization on plant productivity. In contrast to previous studies, we distinguish between productivity gains arising from lower tariffs on final goods relative to those on intermediate inputs. Lower output tariffs can produce productivity gains by inducing tougher import competition whereas cheaper imported inputs can raise productivity via learning, variety or quality effects. We use Indonesian manufacturing census data from 1991 to 2001, which includes plant level information on imported inputs. The results show that the largest gains arise from reducing input tariffs. A 10 percentage point fall in output tariffs increases productivity by about 1%, whereas an equivalent fall in input tariffs leads to a 3% productivity gain for all firms and an 11% productivity gain for importing firms.
    Keywords: inputs; productivity; tariffs
    JEL: F10 F12 F13 F14
    Date: 2005–06
  2. By: Irene Brambilla (Economic Growth Center, Yale University); Guido G. Porto (The World Bank)
    Abstract: This paper investigates the impacts of cotton marketing reforms on farm productivity, a key element for poverty alleviation, in rural Zambia. The reforms comprised the elimination of the Zambian cotton marketing board that was in place since 1977. Following liberalization, the sector adopted an outgrower scheme, whereby firms provided extension services to farmers and sold inputs on loans that were repaid at the time of harvest. There are two distinctive phases of the reforms: a failure of the outgrower scheme, and a subsequent period of success of the scheme. Our findings indicate that the reforms led to interesting dynamics in cotton farming. During the phase of failure, farmers were pushed back into subsistence and productivity in cotton declined. With the improvement of the outgrower scheme of later years, farmers devoted larger shares of land to cash crops, and farm productivity significantly increased.
    Keywords: cotton marketing reforms, farm productivity
    JEL: O12 O13 Q12 Q18
  3. By: Isabel Proenca (ISEG-UTL); Maria Paula Fontoura (ISEG-UTL); Nuno Crespo (ISEG-UTL)
    Abstract: Evidence on productivity spillovers from FDI to domestic firms is ambiguous. Incorrect estimation procedures may be one of the sources for the contradictory results obtained in empirical studies on this subject. We observe that inadequacy of the estimation procedures leads to a severe underestimation of the spillover effect. In discussing the appropriated econometric methodology, inconsistency due to simultaneity of FDI and other explanatory variables and endogeneity related to firm unobserved heterogeneity are specially addressed. Additionally, incorrect inference and the possible lack of precision in estimation due to the availability of few periods in the panel are also analysed.
    Keywords: domestic firm productivity; multinational corporations; technological spillovers; panel data; Extended GMM.
    JEL: F21 F23
    Date: 2005–08–05
  4. By: Halpern, László; Koren, Miklós; Szeidl, Adam
    Abstract: What is the effect of imports on productivity? To answer this question, we estimate a structural model of producers using product-level import data for a panel of Hungarian manufacturing firms from 1992 to 2001. In our model with heterogenous firms, producers choose to import or purchase domestically varieties of intermediate inputs. Imports affect firm productivity through expanding variety as well as improved input quality. The model leads to a production function where the total factor productivity of a firm depends on the share of inputs imported. To estimate this import-augmented production function, we extend the Olley and Pakes (1996) procedure for a setting with an additional state variable, the number of input varieties imported. Our results suggest that the role of imports is both statistically and economically significant. Imports are responsible for 30% of the growth in aggregate total factor productivity in Hungary during the 1990s. About 50% of this effect is through imports advancing firm level productivity, while the remaining 50% comes from the reallocation of capital and labour to importers.
    Keywords: imports; intermediate inputs; productivity
    JEL: F12 F14 L25
    Date: 2005–07
  5. By: Orsetta Causa; Daniel Cohen
    Abstract: <P>Raising manufacturing productivity is of central importance to the developing world and an essential element of policy making. <I>Overcoming Barriers to Competitiveness</I> is about establishing the most reliable analysis of manufacturing productivity possible and helping policy makers set their priorities. The paper demonstrates that productivity rests on five elements of the economy: infrastructure, capital, trade, education and aggregate efficiency. These factors, when multiplied together, give a true picture of a country’s situation on the productivity “league table”. More than a simple comparison, this ranking system allows the identification of which elements in each particular national or regional case require most attention. This approach can be viewed as another way of addressing the so-called “competitiveness problem” of poor countries. It does not say, however, that other areas can be totally neglected; one of the main points of the paper is that all five elements have to be ...</P> <P>L’accroissement de la productivité manufacturière est une priorité essentielle des pays en voie de développement. <I>Vers une meilleure productivité industrielle des pays pauvres</I> se donne pour objectif de fournir une analyse de la productivité manufacturière qui soit susceptible d’aider les décideurs politiques de ces pays à fixer leurs priorités. L’article démontre que la productivité repose sur cinq facteurs: les infrastructures, le capital, le commerce, l’éducation, et l’efficacité globale. Il permet ce faisant de classer les pays relativement les uns aux autres eu égard leur dotation en chacun de ces facteurs. Plus qu’une simple comparaison, ce système de classement permet d’identifier les éléments qui, à un niveau régional ou national, requièrent une attention particulière. L’une des thèses centrales de l’article est que les pays pauvres doivent le plus souvent s’atteler à la résolution de ces cinq handicaps à la fois, l’idée sous-jacente est en effet d’éviter que l’un d’entre ...</P>
    Date: 2004–12
  6. By: Rudiger Ahrend
    Abstract: <P>This article investigates issues related to industrial restructuring in Russia. Based on extensive sectoral data it examines, more particularly, levels and changes in labour productivity, unit labour costs and revealed comparative advantages for a large number of Russian industrial sectors. The main findings are the following. First, impressive increases in labour productivity have been achieved since 1997, especially during the post-crisis period. Secondly, this has been true for all major sectors, with the exception of those which are still predominantly state controlled or which suffer from strong state interference. Thirdly, there have been significant relative adjustments within the industrial sector, as labour productivity increased more in less productive sectors. Since the crisis, relative unit labour costs have also adjusted considerably, as less competitive sectors experienced relatively slower wage growth and larger labour force reductions. Fourthly, international ...</P> <P>La restructuration du secteur industriel russe: évolutions de la productivité, de la compétitivité et de l‘Avantage comparatif <P>Cet article étudie des questions relatives à la restructuration industrielle russe. Fondé sur une base étendue de données sectorielles, il examine plus spécifiquement les niveaux et les variations de la productivité du travail, des coûts unitaires de main d’œuvre et des avantages comparatifs révélés pour un grand nombre de secteurs industriels. Les principaux résultats sont les suivants. Premièrement, des augmentations importantes dans la productivité du travail ont été atteintes depuis 1997, notamment dans la période qui a suivi la crise. Deuxièmement, ceci a été vrai pour la totalité des principaux secteurs à l’exception de ceux qui sont encore majoritairement contrôlés par l’État ou qui souffrent d’une forte intervention de l’État. Troisièmement, il y a eu de significatifs ajustements relatifs dans le secteur industriel puisque l’augmentation de la productivité du travail a été plus importante dans les secteurs les moins productifs. Depuis la crise, les coûts unitaires relatifs ...</P>
    Keywords: productivity, productivité, Transition, Transition, restructuring, restructuration, Russia, Russie, Industry, Sector, Competitiveness, Revealed Comparative Advantage, Unit Labour Costs, Wages, Private Sector, State Control, industrie, secteur, compétitivité, avantage comparatif révélé, coût unitaire de main d’œuvre, salaires, secteur privé, contrôle de l’État
    JEL: L1 O52 P2 P31
    Date: 2004–10–22
  7. By: Jens Høj; Michael Wise
    Abstract: <P>Following the deep recession in the early 1990s growth has been strong, but the scope for economic catch-up remains considerable and cross-country empirical evidence suggests that enhancing competition is an important means of achieving this. Structural reforms to strengthen competition in the early 1990s did boost growth and were also ahead of similar developments in the EU. However, indicators suggest that relatively weak competition remains in a number of sectors. Moreover, potential competition is reduced by a sparse population and relative long distances to large markets, which together with the prevalence of local monopolies and public ownership in many network industries, point to the need for greater vigilance to sustain and promote competition. Further reforms to promote product market competition should focus on fundamental changes in the regulatory approach as well as more incremental measures to intensify competition. The competition authority should concentrate ...</P> <P>Concurrence sur le marché des biens et performance économique en Finlande <P>Après la sévère récession des années 1990, la croissance économique a été forte mais la convergence en termes de la productivité est encore loin d’être complète et les comparaisons empiriques internationales suggèrent qu’un renforcement de la concurrence pourrait résorber une part significative de ce retard. Certes, les réformes structurelles mises en œuvre au début des années 1990 pour renforcer la concurrence ont soutenu la croissance et ont même souvent été plus précoces qu’au sein de l’Union Européenne. Néanmoins, divers indicateurs suggèrent que le degré de concurrence reste insuffisant dans de nombreux secteurs. En outre, le degré potentiel de concurrence reste contenu en raison de l’éparpillement de la population et l’éloignement par rapport des longues distances d’accès aux grands marchés, qui, combinés à l’importance des monopoles locaux et de l’actionnariat de l’état dans de nombreuses industries de réseaux, suggèrent la nécessité d’une vigilance renforcée pour ...</P>
    Keywords: regulatory reform, network industries, Finland, Finlande, competition law, productivity and growth, retail sector, public procurement, droit de la concurrence, productivité et croissance, product market competition, public ownership, concurrence sur le marché des biens, réforme structurelle, vente au détail, industries de réseaux, achat public, secteur public
    JEL: K21 L11 L16 L33 L43 L81 L87 L9 O57
    Date: 2004–12–20
  8. By: Jeffrey Carpenter (Middlebury College and IZA Bonn); Erika Seki (University of Aberdeen)
    Abstract: We provide a reason for the wider economics profession to take social preferences, a concern for the outcomes achieved by other reference agents, seriously. Although we show that student measures of social preference elicited in an experiment have little external validity when compared to measures obtained from a field experiment with a population of participants who face a social dilemma in their daily lives (i.e., team production), we do find strong links between the social preferences of our field participants and their productivity at work. We also find that the stock of social preferences evolves endogeously with respect to how widely team production is utilized.
    Keywords: field experiment, social preference, income pooling, productivity
    JEL: C93 D21 D24 H41 J24 M52 M54 Z13
    Date: 2005–07
  9. By: Lennart Goranson; Martin Jørgensen; Deborah Roseveare
    Abstract: <P>Vigorous product market competition plays a central role in bolstering productivity growth. Sweden has strengthened competition legislation and deregulated a number of sectors, including electricity, telecommunications and parts of transport, over the past 10 to 15 years. This paper examines the current state of product market competition and proposes further measures. A stronger institutional framework would facilitate identification and elimination of anti-competitive behaviour, such as hard-core cartels. Efforts to inject effective competition into a range of network industries have been broadly successful, but specific measures could increase competition in several sectors, such as retail and construction. There is also room to boost competition in Sweden’s large and decentralised public sector and in its interactions with the private sector, so that competitive neutrality applies to all public sector activities ...</P> <P>La vigueur de la concurrence sur les marchés de produits joue un rôle central dans la stimulation des gains de productivité. La Suède a renforcé la législation concernant la concurrence et déréglementé un certain nombre de secteurs, dont l’électricité, les télécommunications et certains segments des transports. Cette étude examine l’état actuel de la concurrence en Suède et propose des mesures supplémentaires. Un cadre institutionnel renforcé faciliterait la détection et l’élimination des comportements anticoncurrentiels, don’t les ententes injustifiables. Des efforts ont été accomplis pour introduire un peu plus de concurrence active dans un éventail d’industries de réseau et ils ont globalement été couronnés de succès, mais quelques mesures concrètes seront nécessaires pour améliorer la concurrences dans plusieurs autres secteurs, dont la distribution et la construction. Il y a lieu également d’intensifier les efforts pour stimuler la concurrence dans le vaste secteur public ...</P>
    Keywords: Sweden, Regulation, network industries, Réglementation, industries de réseau, competition, concurrence, public procurement, marchés publics, product markets, retail distribution, construction, public sector, competitive neutrality, La Suède, marchés de produits, grande distribution, construction, neutralité de concurrence
    JEL: H4 K21 L1 L32 L33 L41 L43 L44 L8 L9 O52
    Date: 2004–05–12
  10. By: Yuen Ping Ho (Entrepreneurship Centre, National University of Singapore); Poh Kam Wong (Entrepreneurship Centre, National University of Singapore); Mun Heng Toh (School of Business, National University of Singapore)
    Abstract: Much of the literature on the impact of R&D on economic performance is founded on the advanced countries, where the intensity of R&D expenditure has been relatively high and stable for many years. In this paper, we provide empirical estimates of the impact of R&D on the economic growth of a Newly Industrialised Economy, Singapore, where R&D expenditure intensity has been low initially, bur rising rapidly in recent years. The Cobb-Douglas based analysis provided empirical evidence that R&D investment in Singapore had a significant impact on its total factor productivity performance in the last 20 years and established a long-term equilibrium relationship between R&D investments and TFP. However, compared to the OECD nations, the impact of R&D investment on economic growth in Singapore is not as strong, as evidenced by lower estimated elasticity values. The long run elasticity of output with respect to R&D was computed to be 8.1% for Singapore compared to long run elasticities of over 10% estimated by other researchers for OECD countries. This suggests that Singapore still has some way to go in catching up with the advanced nations in terms of R&D productivity. This not only means increasing the level of R&D intensity in Singapore but also more efficient exploitation of domestic R&D activity.
    Keywords: Economic Growth, R&D Expenditure, Total Factor Productivity
    JEL: O30 O40 O53
    Date: 2005–08–03
  11. By: Carl Gjersem; Philip Hemmings; Andreas Reindl
    Abstract: <P>The establishment of competitive markets has been one of the cornerstones Hungarian economic policy over the past decade, alongside a successful strategy of attracting foreign investment. Broad statistical measures show no signs of endemically weak domestic competition, though the country’s relatively low productivity among domestic business likely signals some sheltering from international competition. The generally healthy level of competition is partly because competition legislation and its enforcement are of a good standard. Nevertheless, room for improvement is suggested in a number of areas. In particular, it is argued that individuals should be able to initiate legal actions directly, <I>i.e.</I> without having to proceed via the competition authority. And, it is suggested that sanctions against individuals in hard-core cartel cases are introduced. In examining specific sectors, this paper is critical of the pace of progress towards competition in the network industries. The rail ...</P> <P>Concurrence sur les marches de produits et performance economique en Hongrie <P>La mise en place de marchés concurrentiels a été l’une des pierres angulaires de la politique économique menée par la Hongrie au cours de la dernière décennie, parallèlement à des mesures qui ont permis d’attirer l’investissement étranger. Bien que les indicateurs statistiques généraux ne mettent pas en évidence d’insuffisance systématique de la concurrence sur le marché intérieur, la productivité relativement faible des entreprises locales témoigne probablement d’une certaine protection vis-à-vis de la concurrence internationale. Le niveau généralement soutenu de la concurrence tient en partie à la qualité de la réglementation en matière de concurrence et de son application. Néanmoins, des améliorations seraient sans doute possibles dans plusieurs domaines. En particulier, il semblerait souhaitable que les particuliers puissent engager directement des actions en justice, sans avoir à passer par l’autorité de la concurrence. De même, il serait probablement utile que des sanctions ...</P>
    Keywords: Hungary, Hongrie, regulatory reform, réforme de la réglementation, Regulated industries, competition, concurrence, antitrust law, protection, aggregate productivity and growth, protection, productivité globale et croissance, competition legislation, législation antitrust, législation en matière de concurrence, secteurs réglementés
    JEL: F13 K21 K23 O47 O52 O57
    Date: 2004–03–02
  12. By: Anita Wölfl
    Abstract: <P>Improving the performance of the services sector is important to enhance aggregate economic growth. This is primarily since the service sector has become the quantitatively most important sector in all OECD economies. The growing role of services is not only the result of a resource re-allocation towards services, as the sector with low productivity growth. It is also related to demand side factors, such as a high income elasticity of demand for some services, demographic developments, the provision of certain services as public goods, and the growing role of services as providers of intermediate inputs. The empirical evidence points to several areas where employment and productivity growth in services is held back. For example, labour-intensive production in many services industries may reduce the potential for productivity growth. Innovation is held back by obstacles that are particularly relevant for services industries. The evidence also shows that the regulatory environment for ...</P> <P>L’économie de services dans les pays de l’OCDE <P>Il est important d’améliorer les performances du secteur des services pour renforcer la croissance économique globale. Celui-ci est en effet devenu dans tous les pays de l’OCDE le secteur le plus important sur le plan quantitatif. Le rôle croissant des services ne résulte pas seulement d’une réaffectation des ressources en direction de cette branche d’activité, dont la productivité augmente peu. D’autres facteurs entrent en ligne de compte du côté de la demande, comme la forte élasticité revenu de la demande de certains services, l’évolution démographique, la fourniture de certains services à titre de biens publics et le rôle croissant des services en tant que fournisseurs de facteurs de production intermédiaires. Les données empiriques dont on dispose montrent que l’emploi et la productivité progressent peu dans plusieurs domaines. La forte intensité de main-d’œuvre de nombreux secteurs de services peut réduire les possibilités de croissance de la productivité. L’innovation est ...</P>
    Date: 2005–02–11
  13. By: Thierry Lallemand (DULBEA, Université libre de Bruxelles, Brussels); Robert Plasman (DULBEA, Université libre de Bruxelles, Brussels); François Rycx (DULBEA, Université libre de Bruxelles, Brussels)
    Abstract: The objective of this paper is twofold. First, we analyse the structure of wages within and between Belgian firms. Next, we examine how the productivity of these firms is influenced by their internal wage dispersion. To do so, we use a large matched employer-employee data set (i.e., a combination of the 1995 ‘Structure of Earnings’ and ‘Structure of Business’ Surveys). On the basis of the methodology developed by Winter-Ebmer and Zweimüller (1999), we find that within-firm wage dispersion has a positive and significant effect on firm productivity. This result is robust to controls for individual and firm characteristics as well as to instrumenting the wage inequality variable. Findings also suggest that the intensity of this effect is stronger within firms with: i) a majority of blue-collar workers, and ii) a high degree of monitoring. These results are more in line with the ‘tournament’ models than with the ‘fairness, morale and cohesiveness’ models.
    Keywords: Wage structure, Personnel economics, Matched employer-employee data.
    JEL: J24 J31 J41
    Date: 2005–05

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.