New Economics Papers
on Efficiency and Productivity
Issue of 2006‒06‒10
six papers chosen by

  1. The impact of privatization on the performance of the infrastructure sector : the case of electricity distribution in Latin American countries By Guasch, Jose Luis; Foster, Vivien; Andres, Luis
  2. Deteriorating Cost Efficiency in Commercial Banks Signals an Increasing Risk of Failure By Anca Podpiera; Jiri Podpiera
  3. Total Factor Productivity equation and development accounting: New evidence. By KOCH, Wilfried
  4. Internal and external R&DF complements or substitutes? Evidence from a dynamic panel data model By Boris Lokshin; Rene Belderbos; Martin Carree
  5. FDI and the Consequences Towards more complete capture of spillover effects By B. MERLEVEDE; K. SCHOORS
  6. The Impact of Trade on Plant Scale, Production-Run Length and Diversification By Baldwin, John R.; Gu, Wulong

  1. By: Guasch, Jose Luis; Foster, Vivien; Andres, Luis
    Abstract: The authors analyze the impact of privatization on the performance of 116 electric utilities in 10 Latin American countries. The analysis makes a number of contributions to the literature on changes in infrastructure ownership. First, this is the first systemic analysis of the impact of privatization on the distribution of the electricity sector. Second, it constructs an unbalanced panel data set of key indicators for each country. Third, it includes a broader-than in past studies-range of indicators, such as output, employment, productivity, efficiency, quality, coverage, and prices, offering a fuller picture of the effects of privatization on consumers. Fourth, this research covers a longer period of time, and evaluates three stages-before, transition, and after-allowing for the identification of the short- and long-run effects of privatization, as opposed to previous analyses ' short time series data that do not identify long-run outcomes. Finally, the counterfactual is considered through the analysis in trends. The authors apply two different methodologies. The first methodology uses means and medians from each period and tests the significance of the changes between periods. The second methodology consists of an econometric model that captures firm fixed effects, firm-specific time trends, and heteroscedasticity corrections. When needed, the authors used firm-specific time trends to better understand the outcomes. The results suggest that changes in ownership generate significant improvements in labor productivity, efficiency, and product and service quality, and that most of those changes occur in the transition period. Improvements in the post transition period-beyond two years after the change in ownership-are much more modest.
    Keywords: Economic Theory & Research,Energy Production and Transportation,Public Sector Economics & Finance,Labor Markets,Science Education
    Date: 2006–06–01
  2. By: Anca Podpiera; Jiri Podpiera
    Abstract: While it is generally consented that management quality is often the key determinant of banks' success in a risky world, somewhat paradoxically early warning systems are mainly built on financial ratios driving management quality assessment to the periphery. In this paper we show, using estimated cost efficiency scores for the Czech banking sector, that cost inefficient management was a predictor of bank failures during the years of banking sector consolidation, and thus suggest the inclusion of cost efficiency in early warning systems.
    Keywords: Bank failure, cost efficiency, stochastic frontier, hazard model.
    JEL: J21 J28 E58
    Date: 2005–12
  3. By: KOCH, Wilfried (LEG - CNRS UMR 5118 - Université de Bourgogne)
    Abstract: The aim of this paper is reconciliating spatial autocorrelation often observed in the world distribution of wealth and its effects on development gap. Neglecting spatial autocorrelation potentially biased our vision on the role of physical capital in development process. We therefore show that the total contribution of physical capital account almost 90% of differences between developing countries and the most richest countries.
    Keywords: Development accounting ; Total Factor Productivity ; Spatial Autocorrelation ; Technological interdependence.
    JEL: C21 O33 O40
    Date: 2006–04
  4. By: Boris Lokshin; Rene Belderbos; Martin Carree
    Abstract: We examine the impact of internal and external R&D on labor productivity in a 6-year panel of 304 innovating firms. We apply a dynamic linear panel data model that allows for decreasing returns to scale in internal and external R&D with a non-linear approximation of changes in the knowledge stock. We find complementarity between internal and external R&D, with a positive impact of external R&D only evident in case of sufficient internal R&D. The findings confirm the role of internal R&D in enhancing absorptive capacity and hence the effective utilization of external knowledge. These results suggest that empirical studies examining complementarities between continuously measured practices should adopt more general non-linear specifications to allow for correct inferences.
    Keywords: R&D, Innovation, Complementarity, Dynamic panel data, Productivity
    JEL: O32 O33 D24
    Date: 2006–05
    Abstract: We analyze productivity spillovers of FDI on domestic companies, both within and across industries. In the identification of intraindustry spillovers, we separate out labor market effects from other effects. Interindustry spillovers are identified through upstream, downstream, and supply-backward linkage effects. Dynamic input output tables are used to construct the linkages. For a panel of Romanian firms, we find evidence that labor market effects differ from other intraindustry effects. Spillovers across industries dominate those within industries. The supply-backward effect behaves as predicted by theory. Firm-specific level of technology, firm size, and ownership structure are all found to affect spillovers.
    Keywords: FDI, spillovers, absorptive capability, firm size, ownership structure
    JEL: F2
    Date: 2006–03
  6. By: Baldwin, John R.; Gu, Wulong
    Abstract: This paper examines the effect of trade liberalization on plant scale, production-run length and product diversification. We first develop a model of trade in differentiated products with multi-product plants. We then present empirical evidence using a large panel of Canadian manufacturing plants and their experience with the 1989 Canada-U.S. Free Trade Agreement (FTA). The model predicts that the bilateral tariff reduction reduces the product diversification of exporting plants, increases the production-run length and has an ambiguous effect on the size of those plants. It also reduces the product diversification and size of non-exporting plants, and has no effect on the production-run length of those plants. The empirical evidence on non-exporting plants provides broad support for the model. The evidence on exporting plants shows that exporters reduce product diversification, and increase production-run length and plant size, but those changes do not appear to be related to tariff cuts. Once in the export markets, plants respond to forces other than tariff cuts. Further tariff cuts have less effect on those plants.
    Keywords: Trade, Manufacturing, Exports, Manufacturing industries
    Date: 2006–05–19

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