New Economics Papers
on Efficiency and Productivity
Issue of 2007‒10‒13
thirteen papers chosen by

  1. Innovation Sources and Productivity: A Quantile Regression Analysis. By Agustí Segarra-Blasco
  2. Sector Switching: An Unexplored Dimension of Firm Dynamics in Developing Countries By Carol Newman; John Rand; Finn Tarp
  3. The Historical Roots Of India’s Service-Led Development : A Sectoral Analysis Of Anglo-Indian Productivity Differences, 1870-2000 By Broadberry, Stephen; Gupta, Bishnupriya
  4. "Bank Distress and the Borrowers' Productivity" By Keiichiro Kobayashi; Noriyuki Yanagawa
  5. The impact of productive efficiency and quality of a regulated local public utility on final goods prices By Alessandro Petretto
  6. DEA models for ethical and non ethical mutual funds with negative data By Antonella Basso; Stefania Funari
  7. A Brief History of Production Functions By Mishra, SK
  8. Cost implications of agricultural land degradation in Ghana: By Diao, Xinshen; Sarpong, Daniel B.
  9. Competitiveness in the CFA Franc Zone By Charalambos G. Tsangarides; Gustavo Ramirez
  10. Mergers & Acquisitions and Innovation Performance in the Telecommunications Equipment Industry By Tseveen Gantumur; Andreas Stephan
  11. Firm Performance and International Trade - evidence from a small open economy By Andersson, Martin; Johansson, Sara; Lööf, Hans
  12. Innovation, Ownership and Profitability By James H. Love; Stephen Roper; Jun Du
  13. On the Consistency of Approximate Maximizing Estimator Sequences in the Case of Quasiconcave Functions By Gordon Kemp

  1. By: Agustí Segarra-Blasco (Grup de Recerca en Indústria i Territori(GRIT), Departament d'Economia, Universitat Rovira i Virgili.)
    Abstract: This paper explores the effects of two main sources of innovation —intramural and external R&D— on the productivity level in a sample of 3,267 Catalan firms. The data set used is based on the official innovation survey of Catalonia which was a part of the Spanish sample of CIS4, covering the years 2002-2004. We compare empirical results by applying usual OLS and quantile regression techniques both in manufacturing and services industries. In quantile regression, results suggest different patterns at both innovation sources as we move across conditional quantiles. The elasticity of intramural R&D activities on productivity decreased when we move up the high productivity levels both in manufacturing and services sectors, while the effects of external R&D rise in high-technology industries but are more ambiguous in low-technology and services industries.
    Keywords: Innovation sources, R&D, Productivity, Quantile Regression
    JEL: O30 C10 O14
    Date: 2007–10
  2. By: Carol Newman (Trinity College Dublin); John Rand (Department of Economics, University of Copenhagen); Finn Tarp (Department of Economics, University of Copenhagen)
    Abstract: Much of the literature on industry evolution has found firm dynamics to be an important source of sector-level productivity growth. In this paper, we ask whether the delineation of entry and exit firms matters in assessing the impact of firm turnover. Using detailed firm level data from Vietnam, it emerges that efficiency differences between sector switchers and exit/entry firms exist. Distinguishing between switchers and firm entry/exit is crucial for understanding the contribution of firm turnover to overall productivity growth. Moreover, we uncover distinct and illuminating firm and sector-level determinants of firm exit and switching, which need to be carefully considered in the search for effective policy.
    Keywords: firm dynamics; sector switching; efficiency; Vietnam
    JEL: D21 L6 O14
    Date: 2007–09
  3. By: Broadberry, Stephen (Department of Economics, University of Warwick); Gupta, Bishnupriya (Department of Economics, University of Warwick)
    Abstract: Overall labour productivity in India was already only around 15 per cent of the UK level between the early 1870s and the late 1920s. Between 1929 and 1950 India fell further behind and remained at around 10 per cent of the UK level until the 1970s. India has been catching-up since the 1970s, but by the end of the twentieth century was still further behind than in the late nineteenth century. Agriculture has played an important role in India’s relative decline to 1950 and subsequent delay in catching up, since comparative India/UK labour productivity in this sector has declined continuously and agriculture still accounts for around two-thirds of employment in India. Comparative India/UK labour productivity in industry has fluctuated around a level of around 15 per cent. The only sector to exhibit trend improvement in comparative India/UK labour productivity over the long run is services, rising from around 15 per cent to around 30%. India’s recent emergence as a dynamic service-led economy appears to have long historical roots.
    Keywords: Labour productivity ; sectoral disaggregation ; international comparison
    JEL: N10 N30 O47 O57
    Date: 2007
  4. By: Keiichiro Kobayashi (Research Institute of Economy, Trade, and Industry); Noriyuki Yanagawa (Faculty of Economics, University of Toyama)
    Abstract: In this paper, we propose a theoretical model in which a banking crisis (or bank distress) causes declines in the aggregate productivity. When borrowing firms need additional bank loans to continue their businesses, a high probability of bank failure discourages ex ante investments (i.e., "specialization") by the firms that enhance their productivity. In a general equilibrium setting, we also show that there may be multiple equilibria, in one of which bank distress continues and the borrowers' productivity is low, and in the other equilibrium, banks are healthy and the borrowers' productivity is high. We show that the bank capital requirement may be effective to eliminate the bad equilibrium and may lead the economy to the good equilibrium in which the productivity of borrowing firms and the aggregate output are both high and the probability of bank failure is low.
    Date: 2007–10
  5. By: Alessandro Petretto (Università degli Studi di Firenze, Dipartimento di Scienze Economiche)
    Abstract: In this note we reconstruct the process by a which the decisions of a regulated local public utility, in terms of productive efficiency and quality of the service provided, impact on prices of final consumption goods, supplied in a oligopolistic market operating in the same geographic area. We obtain some formula for these effects which can be quantified by estimating firms’ conditional input demand function of the public service and firms’ inverse demand function for the public good, non-rival, component of this.
    Keywords: regulation, x-efficiency, oligopoly
    JEL: L51 D11 D21
    Date: 2007
  6. By: Antonella Basso (Department of Applied Mathematics, University of Venice); Stefania Funari (Department of Applied Mathematics, University of Venice)
    Abstract: This paper tackles the problem of the presence of negative average rates of returns in the evaluation of the performance of mutual funds using a DEA approach. We present some extensions of DEA models for the evaluation of the performance of mutual funds that enable to compute the performance measure also in the presence of negative rates of returns. These extensions regard a model that can be used for investments in mutual funds which have profitability as main objective and two models specifically formulated for ethical mutual funds that include also the ethical objective among the outputs and differ in the way the ethical goal is pursued by investors. The models proposed are applied to the European market of ethical mutual funds. In order to do so, a measure of the ethical level which takes into account the main socially responsible features of each fund is built.
    JEL: C6 G1
    Date: 2007–06
  7. By: Mishra, SK
    Abstract: This paper gives an outline of evolution of the concept and econometrics of production function, which was one of the central apparatus of neo-classical economics. It shows how the famous Cobb-Douglas production function was indeed invented by von Thunen and Wicksell, how the CES production function was formulated, how the elasticity of substitution was made a variable and finally how Sato’s function incorporated biased technical changes. It covers almost all specifications proposed during 1950-1975, and further the LINEX production functions and incorporation of energy as an input. The paper in divided into (1) single product functions, (2) joint product functions, and (3) aggregate production functions. It also discusses the ‘capital controversy’ and its impacts.
    Keywords: Production function; Cobb-Douglas; CES; Transcendental; translog; Zellner-Revankar; VES; Bruno; Kadiyala; Diewert; Kummel; Mundlak; Engineering production function; Multi-output; joint product; Data Envelopment; Household production function; Humbug production function; capital controversy; Cambridge controversy.
    JEL: C30 C20 D24 B16 B13
    Date: 2007–10–09
  8. By: Diao, Xinshen; Sarpong, Daniel B.
    Abstract: "An economywide, multimarket model is constructed for Ghana and the effects of agricultural soil erosion on crop yields are explicitly modeled at the subnational regional level for eight main staple crops. The model is used to evaluate the aggregate economic costs of soil erosion by taking into account economywide linkages between production and consumption, across sectors and agricultural subsectors. To fill a gap in the literature regarding economic cost analysis of soil erosion, this paper also analyzes the poverty implications of land degradation. The model predicts that land degradation reduces agricultural income in Ghana by a total of US$4.2 billion over the period 2006–2015, which is approximately five percent of total agricultural GDP in these ten years. The effect of soil loss on poverty is also significant at the national level, equivalent to a 5.4 percentage point increase in the poverty rate in 2015 compared to the case of no soil loss. Moreover, soil loss causes a slowing of poverty reduction over time in the three northern regions, which currently have the highest poverty rates in the country. Sustainable land management (SLM) is the key to reducing agricultural soil loss. The present findings indicate that through the adoption of conventional SLM practices, the declining trend in land productivity can be reversed, and that use of a combination of conventional and modern SLM practices would generate an aggregate economic benefit of US$6.4 billion over the period 2006–2015. SLM practices would therefore significantly reduce poverty in Ghana, particularly in the three northern regions." Authors' Abstract
    Keywords: Land degradation, Costs, Agricultural soil loss, Economywide modeling, Modeling cost of land degradation,
    Date: 2007
  9. By: Charalambos G. Tsangarides; Gustavo Ramirez
    Abstract: This paper reviews the evolution of competitiveness in the CFA franc zone using a proposed comprehensive competitiveness framework. In particular, we examine competitiveness in the WAEMU and CEMAC regions by analyzing the "environment" and "policy" components of competitiveness and their quantifiable determinants, including indicators to measure productivity and labor market conditions, prices and costs, macroeconomic performance, business environment, governance, and technology and infrastructure. Our findings suggest that despite some recent improvements-particularly for the CEMAC-both regions face serious competitiveness challenges when compared to pier groups of countries. In order to become more competitive, raise growth, and improve the quality of life, there is a need for structural reform to improve productivity, reduce factor costs, and create the right business, legal, and political environment to attract economic activity.
    Keywords: Working Paper , Export competitiveness , CFA franc , Exports , West African Economic and Monetary Union , Central African Economic and Monetary Community ,
    Date: 2007–08–30
  10. By: Tseveen Gantumur; Andreas Stephan
    Abstract: The telecommunications in the 1990s witnessed an enormous worldwide round of Mergers & Acquisitions (M&A). This paper examines the innovation determinants of M&A activity and the consequences of M&A transactions on the technological potential and the innovation performance. We examine the telecommunications equipment industry over the period 1988-2002 using a newly constructed data set with firm-level data describing M&A and innovation activity as well as financial characteristics. Based on a matching propensity score procedure, the study provides evidence that M&A realize significantly positive changes to the firm's post-merger innovation performance.
    Keywords: Mergers & Acquisitions, Innovation Performance, Telecommunications Equipment Industry
    JEL: L63 O30 L10
    Date: 2007
  11. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Sara (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: This paper presents a comprehensive description and analysis of the international trading activities of firms based on novel detailed Swedish data. As a small open economy with a limited domestic market, Sweden constitutes an interesting contrast to existing evidence. We show that much of the stylized facts from large countries (specifically the US) about firms’ participation in international trade also pertain to a small open economy. We provide robust evidence of selection operating from market to market which is consistent with that low productive firms are confined to markets with low productivity thresholds. We further show that selection also applies to number of products traded. Both export and import productivity premiums increase in number of markets and number of products traded, respectively. There is a substantial heterogeneity among exporters and importers in terms of the number of markets they trade with and in terms of the number of products they trade.
    Keywords: international trade; exports; imports; firm heterogeneity; productivity; import premium; export premium
    JEL: D21 D24 F14 F23
    Date: 2007–10–03
  12. By: James H. Love; Stephen Roper; Jun Du
    Abstract: This paper considers the relationship between innovation, ownership and profitability for a panel of manufacturing plants in Ireland and Northern Ireland. Previous literature suggests that innovators are persistently more profitable than non-innovators, but little is known about how this link is moderated by external versus domestic ownership. We consider the link between innovation and profits separately for innovators and non-innovators, and for indigenous innovators and non-innovators and externally-owned plants. We also consider the determinants of innovation over the distribution of plant-level profitability, and find that the determinants of profitability – including innovation and external ownership – vary over the distribution from low to high profitability plants. We find support for the view that innovators and non-innovators have different profitability determinants, and that the profitability of externally-owned plants depends on very different factors to that of indigenously-owned enterprises.
    Keywords: Innovation; Ownership; Profitability; Ireland; Northern Ireland
    JEL: O32 F14 L60
    Date: 2007
  13. By: Gordon Kemp
    Abstract: This paper demonstrates consistency for estimators obtained by approximately maximizing a sequence of stochastic quasiconcave functions on RP that converges in probability pointwise to a non-stochastic function. In the scalar parameter case all that is necessary for consistency is that the parameter value of interest is a unique maximizer of the limiting function. However, in the vector parameter case certain further conditions on the limiting function are necessary to establish consistency. The paper also discusses the relation of these results to existing results on the consistency of estimators obtained by approximately maximizing concave functions and to the concepts of hypoconvergence and epiconvergence.
    Date: 2007–09–28

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