nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2006‒11‒25
fourteen papers chosen by
Angelo Zago
Universita degli Studi di Verona

  1. Economic Growth and Total Factor Productivity in Niger By Thomson Fontaine; Jean-Claude Nachega
  2. Productivity Growth, Technological Convergence, R&D, Trade, and Labor Markets: Evidence from the French Manufacturing Sector By Tehmina S. Khan
  3. Liberalisation and Productive Efficiency of Indian Commercial Banks: A Stochastic Frontier Analysis By H P, Mahesh; Rajeev, Meenakshi
  4. Public Debt and Productivity: The Difficult Quest for Growth in Jamaica By Rodolphe Blavy
  5. Information and communications technology as a general-purpose technology: evidence from U.S industry data By Susanto Basu; John Fernald
  6. Productivity Spillovers and the Entry of Foreign-Owned Firms: The Case of Japanese Manufacturing Firms By Yukako Murakami; Kyoji Fukao
  7. What Determines the Technical Efficiency of a Firm? The Importance of Industry, Location, and Size By Oleg Badunenko; Michael Fritsch; Andreas Stephan
  8. Technical Efficiency in Production and Resource Use in Sugar Cane: A Stochastic Frontier Production Function Analysis By Gauri Khanna
  9. Mind the Gap: A Comment on Aggregate Productivity and Technology By M. Ali Choudhary; Vasco J. Gabriel
  10. An Output Orientated Non Parametric Measure of Economies of Scope By Mario Fortin; André Leclerc
  11. The Relationship between Managerial Compensation and Business Performance in Japan: New Evidence using Micro Data By Hideaki Sakawa; Naoki Watanabel
  12. Lessons for Canada from International Productivity Experience By Andrew Sharpe
  13. Efficiency of Insurance Firms with Endogenous Risk Management and Financial Intermediation Activities By J. David Cummins; Georges Dionne; Robert Gagné; Abdelhakim Nouira
  14. Rural Poverty Dynamics, Agricultural Productivity and Access to Resources By Paul Gamba; Elliot Mghenyi

  1. By: Thomson Fontaine; Jean-Claude Nachega
    Abstract: This paper investigates empirically the sources of aggregate output growth and the determinants of total factor productivity (TFP) in Niger between 1963 and 2003. A growth accounting analysis indicates that the erosion in output per capita over the sample period is due to the negative growth of both TFP and physical capital per capita. Sound macroeconomic policies, supported by official development assistance and structural reforms, are found to be key to raising TFP growth.
    Keywords: Niger , sources of growth , total factor productivity , cointegration , Economic growth , Niger ,
    Date: 2006–09–27
  2. By: Tehmina S. Khan
    Abstract: Total factor productivity (TFP) of 14 manufacturing sectors in France has kept up with that of the United States during 1980-2002 and remained well above that of the United Kingdom. Estimates using a dynamic panel equilibrium correction model indicate that sectors further behind the technological frontier experience faster productivity growth and that spending on research and development and trade with technologically advanced economies positively influences TFP growth, but not the speed of convergence. Conversely, TFP growth is negatively related to some key labor market variables, namely the replacement ratio and the ratio of the minimum wage to the median wage.
    Keywords: Economic growth , Total Factor Productivity (TFP) , Research and Development (R&D) , labor market institutions , trade , technological convergence ,
    Date: 2006–10–20
  3. By: H P, Mahesh; Rajeev, Meenakshi
    Abstract: Abstract Present study attempts to examine the changes in the productive efficiency of Indian commercial banks after the financial sector reforms initiated in 1992. Using stochastic frontier technique we estimate bank specific deposit, advance and investment efficiencies for the period 1985-2004. Our results show that deregulation has significant impacts on all three types of efficiency measures. While deposit and investment efficiencies have improved, advance efficiency has declined marginally. Public sector banks as a group ranks first in all the three efficiency measures showing that, as opposed to the general perception, these banks are doing better than their private counterparts. Private Banks however have shown marked improvement during the post-liberalisation period in terms of all three types of efficiency measures.
    Keywords: Key words: Liberalisation; Banking; Frontier; Efficiency.
    JEL: G21
    Date: 2006–10–01
  4. By: Rodolphe Blavy
    Abstract: The paper analyzes Jamaica's experience of low growth despite consistently high investment. Cross-country analysis provides evidence of a significant and negative relationship between total public debt and productivity growth. Looking at the specific channels through which high debt affects productivity growth and the allocation of resources in Jamaica, the study finds that high public debt has been associated with macroeconomic uncertainty and an output structure that relied excessively on a few maturing sectors with limited scope for productivity growth. Furthermore, public investment has been crowded out by debt service, further adversely affecting productivity growth.
    Keywords: Jamaica , growth , external debt , public debt , growth accounting , productivity ,
    Date: 2006–10–26
  5. By: Susanto Basu; John Fernald
    Abstract: Many people point to information and communications technology (ICT) as the key for understanding the acceleration in productivity in the United States since the mid-1990s. Stories of ICT as a 'general purpose technology' suggest that measured TFP should rise in ICT-using sectors (reflecting either unobserved accumulation of intangible organizational capital, spillovers, or both), but with a long lag. Contemporaneously, however, investments in ICT may be associated with lower TFP as resources are diverted to reorganization and learning. We find that U.S. industry results are consistent with GPT stories: the acceleration after the mid-1990s was broadbased--located primarily in ICT-using industries rather than ICT-producing industries. Furthermore, industry TFP accelerations in the 2000s are positively correlated with (appropriately weighted) industry ICT capital growth in the 1990s. Indeed, as GPT stories would suggest, after controlling for past ICT investment, industry TFP accelerations are negatively correlated with increases in ICT usage in the 2000s.
    Keywords: Information technology ; Labor productivity ; Industrial productivity
    Date: 2006
  6. By: Yukako Murakami; Kyoji Fukao
    Abstract: This paper shows that in the short run an increase in foreign firms' industry share lowers the TFP growth of Japanese firms as a result of the decrease in market power. However, in the long run, the entry of foreign-owned firms has a positive effect on the productivity of local firms as a result of technology spillovers. In addition, the results suggest that foreign firms exert competitive pressure that forces Japanese firms with a high level of technological capabilities raise their productivity growth.
    Keywords: Technology Spillovers, Market Power, FDI, Productivity, Absorptive Capacity
    JEL: F11
    Date: 2006–11
  7. By: Oleg Badunenko (European University Viadrina Frankfurt (Oder), Germany); Michael Fritsch (University of Jena, Faculty of Economics, Max Planck Institute of     Economics Jena, and Institute for Economic Research (DIW Berlin)); Andreas Stephan (European University Viadrina Frankfurt (Oder) and the German Institute for Economic Research (DIW Berlin))
    Abstract: This paper investigates the factors that explain the level of technical efficiency of a firm. In our empirical analysis, we use a unique sample of about 35,000 firms in 256 industries from the German Cost Structure Census over the years 1992-2004. We estimate the technical efficiency of the firms and relate it to firm- and industry-specific characteristics. One third of the explanatory power is due to industry effects. Size accounts for another 25 percent and the headquarters? location explains ten percent of the variation in efficiency. Most other firm characteristics such as ownership structure, legal form, age of the firm and outsourcing activities have an extremely small explanatory power. R&D activity does not exert any positive influence on technical efficiency.
    Keywords: Frontier analysis, determinants of technical efficiency, firm     performance, industry effects, regional effects.
    JEL: D24 L10 L25
    Date: 2006–11–06
  8. By: Gauri Khanna (IUHEI, The Graduate Institute of International Studies, Geneva)
    Abstract: Using maximum likelihood estimation techniques, the stochastic production frontier is employed to estimate technical efficiency at the plot level by ownership types of water amongst a cross section of sugar cane growing farmers using primary survey data. Inefficiency effects are modelled as a function of farmer specific explanatory variables. Tests reveal that the null hypothesis of no inefficiency and no influence of farmer specific variables on inefficiency can be rejected. Education, land area, discharge of tubewell and distance of plots from the water source are the causes identified in explaining inefficiency. Estimated technical efficiency scores are highest on plots where water is sourced from a privately owned tubewell, followed by plots serviced by partnered tubewells and lowest on plots where water is bought. Income gains from improved efficiency follow the reverse patterns with the largest gains of Rs. 1082 per bigha estimated for buyers’ plots and Rs. 649 per bigha for plots with their own tubewell with the average of Rs. 867 for all plots
    Keywords: Stochastic Frontier Production, Technical Efficiency, Groundwater, Sugar cane, India
    JEL: C12 C13 C87 Q15
  9. By: M. Ali Choudhary (University of Surrey); Vasco J. Gabriel (University of Surrey)
    Abstract: This paper reconsiders the empirical results of Basu and Fernald (European Economics Review, 2002) which suggests a significant and persistent gap between the aggregate productivity and technology levels for the US private business sector. We we control for capacity utilisation, time-varying markup and use a superior system estimator, the profile of the gap is shown to change considerably.
    Keywords: productivity, technology, welfare, hours, dynamic-markups
    JEL: O47 O51 E32 E23
    Date: 2006–08
  10. By: Mario Fortin (GREDI, Département d'économique, Université de Sherbrooke); André Leclerc (GREDI, Université de Sherbrooke and GEREM, Université de Perpignan)
    Abstract: Economies of scope are present when producing jointly a diversified basket of goods and services is less costly than their separate production. Data Envelopment Analysis (DEA) can estimate economies of scope by the difference between input requirement sets of diversified and specialized firms and are applicable only when both specialized and diversified firms are present in the sample. We develop a measure of economies of scope to an output orientated DEA model even when the sample comprises only diversified firms, to obtain radial estimation of economies of scope. Our method puts in evidence that economies of scope are influenced by scale inefficiencies, and if these inefficiencies are left aside, diseconomies of scope are impossible.
    Keywords: Economies of scope, DEA
    JEL: C14 D24
    Date: 2006
  11. By: Hideaki Sakawa (Graduate School of Economics, Osaka University); Naoki Watanabel (Osaka School of International Public Policy)
    Abstract: This paper examines the relationship between the level of Japanese business managers' compensation and the quality of corporate governance, and whether weaker governance structures lead to poorer future performance. The conclusions of this paper are as follows. First, the level of Japanese business managers' compensation increases as the percentage of 'old', 'bank' and 'gray' outside directors increases. Compensation also increases with board stockholding and block holding. This suggests weak monitoring by old, bank and gray outside directors and block holders. Second, our results show that firms with weaker governance structures have poorer performance. These results suggest the existence of an overcompensation problem with Japanese managers similarly to the US.
    Keywords: Board of Directors, Corporate Governance, Managers' Compensation, Ownership Structure.
    JEL: G30 G32 J33 L22
    Date: 2006–11
  12. By: Andrew Sharpe
    Abstract: The objective of this report is to develop a more comprehensive understanding, from a policy perspective, of key drivers of labour productivity in selected OECD countries and their impact on enhanced productivity performance. The report is divided into three major parts. The first part will provide a general review of international labour productivity and income growth rates and levels in OECD countries. The second section presents some general lessons from the productivity performance of OECD countries and international evidence of productivity drivers based on the OECD growth project and productivity studies by the McKinsey Global Institute. The third part discusses the productivity experience of six OECD countries considered of particular interest to Canada – the United States, Australia, Ireland, the United Kingdom, Finland, and Sweden – and comments on possible lessons for Canada from these experiences.
    Keywords: Productivity, Public policy, ICT, Free trade, Monetary policy, Education, Labour market flexibility, Innovation system
    JEL: P00 O11 O14 O15 O23 O24 O31 O33 O38 E01
    Date: 2006–10
  13. By: J. David Cummins; Georges Dionne (IEA, HEC Montréal); Robert Gagné (IEA, HEC Montréal); Abdelhakim Nouira
    Abstract: Risk management is now present in many economic sectors. This paper investigates the role of risk management in creating value for financial institutions by analyzing U.S. property-liability insurers. Property-liability insurers are financial intermediaries whose primary role in the economy is risk pooling and risk bearing. The risk pooling and risk bearing functions performed by insurers are the primary determinants of the need for risk management. The main goal of this paper is to test how risk management and financial intermediation activities create value for insurers by enhancing economic efficiency. Insurer cost efficiency is measured relative to an econometric cost frontier. Since the prices of risk management and financial intermediation services are not observable, we consider these two activities as intermediate outputs and estimate their shadow prices. The shadow prices isolate the contributions of risk management and financial intermediation to insurer cost efficiency. The econometric results show that both activities significantly increase the efficiency of the property-liability insurance industry.
    Date: 2006–04
  14. By: Paul Gamba (Department of Agricultural Economics, Michigan State University); Elliot Mghenyi
    Abstract: The objectives of this paper are: measure the prevalence of rural poverty in 1997 and 2000, based on the nationwide Tegemeo survey; categorize households according to whether they were above the poverty line in both 1997 and 2000, entered into poverty or exited from poverty between 1997 and 2000, or were above the poverty line in both years; identifies the household-level and community-level factors associated with rural poverty through econometric analysis; and the implications of these results for the design of appropriate poverty reduction strategies. Such analysis is intended to guide donor programs and interventions designed to attack the roots of chronic poverty.
    Keywords: food security, food policy, Kenya, rural poverty
    JEL: Q18
    Date: 2005

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