New Economics Papers
on Efficiency and Productivity
Issue of 2007‒10‒27
eight papers chosen by

  1. The Quantile Regression Approach to Efficiency Measurement: Insights from Monte Carlo Simulations By ChunpingLiu; Audrey Laporte; Brian Ferguson
  2. Efficiency Gains from Trade Reform: Foreign Technology or Import Competition? Evidence from South Africa’s Manufacturing Sector By Riham Shendy
  3. The Role of the Structural Transformation in Aggregate Productivity By Margarida Duarte; Diego Restuccia
  4. FDI and Host Country Productivity: A Review By Argentino Pessoa
  5. Do regulation and institutional design matter for infrastructure sector performance ? By Straub, Stephane; Guasch, Jose Luis; Andres, Luis
  6. The Impact of Research Grant Funding on Scientific Productivity By Brian Jacob; Lars Lefgren
  8. Determinants of access to external finance: evidence from Spanish firms By Raquel Lago González; Jose A. Lopez; Jesús Saurina

  1. By: ChunpingLiu; Audrey Laporte; Brian Ferguson
    Abstract: In the health economics literature there is an ongoing debate over approaches used to estimate the efficiency of health systems at various levels, from the level of the individual hospital- or nursing home –up to that of the health system as a whole. The two most widely used approaches to evaluating the efficiency with which various units deliver care are non-parametric Data Envelopment Analysis (DEA) and parametric Stochastic Frontier Analysis (SFA). Productivity researchers tend to have very strong preferences over which methodology to use for efficiency estimation. In this paper, we use generated experimental datasets and Monte Carlo simulation to compare the performance of DEA and SFA in terms of their ability to accurately estimate efficiency. We also evaluate Quantile regression as a potential alternative approach. A Cobb-Douglas production function, random error terms and a technical inefficiency term with different distributions are used to calculate the observed output. The results, based on these experiments, suggest that neither DEA nor SFA can be regarded as clearly dominant, and that Quantile regression because it yields more reliable estimates, represents a useful alternative approach in efficiency studies.
    Keywords: Technical efficiency, data envelopment analysis, stochastic frontier estimation, quantile regression.
    Date: 2007–07
  2. By: Riham Shendy
    Abstract: The empirical trade literature examining the effect of tariff reductions on productivity commonly proxies the former with Nominal Tariff Rates (NTR) and estimates the latter as the production function residual. In the context of the South African trade reform experience we examine the different channels by which tariff cuts affect productivity growth. Using industry level data for the manufacturing sector and covering the reform period from 1994 to 2004, we disentangle the differential effect of increased foreign competition, proxied by reductions in NTR, and that of the imported technology, proxied by the reductions in Input Tariff Rates (ITR), on productivity growth. Our measure of efficiency growth controls for the effect of tariff reductions on markups. The results suggest that the efficiency difference between foreign and domestic inputs have the major effect on productivity gains. Declines in ITR significantly raise productivity growth compared to an insignificant effect for NTR. Additionally, we find that higher protection rates are associated with higher markups, albeit this finding is not robust across all specifications.
    Keywords: Productivity, Trade Reform, Tariffs, Manufacturing, South Africa
    JEL: F12 F14 O55
    Date: 2007
  3. By: Margarida Duarte; Diego Restuccia
    Abstract: We investigate the role of sectoral differences in labor productivity and the process of structural transformation (the secular reallocation of labor across sectors) in accounting for the time path of aggregate productivity across countries. Using a simple model of the structural transformation that is calibrated to the growth experience of the United States, we measure sectoral labor productivity differences across countries. These differences are large and systematic: labor productivity differences between rich and poor countries are large in agriculture and services and smaller in manufacturing. When fed into the model, these sectoral labor productivity differences and the structural transformation they produce account for more than 50 percent of the fast catch-up in aggregate productivity observed in less developed economies and all of the stagnation and decline observed in more developed economies in recent decades.
    Keywords: labor productivity, structural transformation, sectoral productivity, employment, hours, cross-country data
    JEL: O1 O4
    Date: 2007–10–22
  4. By: Argentino Pessoa (Faculdade de Economia, Universidade do Porto, Portugal)
    Abstract: This paper reviews arguments and empirical findings on positive effects of FDI on host country firms. With the exception of the only unambiguous result of microeconometric studies, which is the superior productivity of foreign firms, the main conclusion extracted from empirical studies is the diversity of results. This diversity suggests that FDI will have different effects depending on the ‘technological congruence’ and ‘social capability’ of the host economy, as well as the familiarity of indigenous firms to products and technology of a given multinational corporation.
    Keywords: Economic Growth, Foreign Direct Investment, Multinational Corporations, Spillovers, Technology Transfer
    JEL: D21 D62 F21 F23 F43
    Date: 2007–10
  5. By: Straub, Stephane; Guasch, Jose Luis; Andres, Luis
    Abstract: This paper evaluates the impact of economic regulation on infrastructure sector outcomes. It tests the impact of regulation from three different angles: aligning costs with tariffs and firm profitability; reducing opportunistic renegotiation; and measuring the effects on productivity, quality of service, coverage, and prices. The analysis uses an extensive data set of about 1,000 infrastructure concessions grant ed in Latin America from the late 1980s to the early 2000s. The analysis finds that as the theory indicates, regulation matters. The empirical work here reported shows that in three relevant economic aspects-aligning costs and tariffs; dissuading renegotiations; and improving productivity, quality of service, coverage, and tariffs-the structure, institutions, and procedures of regulation matter. Thus, significant efforts should continue to be made to improve the structure, quality, and institutionality of regulation. Regulation matters for protecting both consumers and investors, for aligning closely financial returns and the costs of capital, and for capturing higher levels of benefits from the provision of infrastructure services by the private sector.
    Keywords: Emerging Markets,Debt Markets,Private Participation in Infrastructure,Infrastructure Economics,Infrastructure Regulation
    Date: 2007–10–01
  6. By: Brian Jacob; Lars Lefgren
    Abstract: In this paper, we estimate the impact of receiving an NIH grant on subsequent publications and citations. Our sample consists of all applications (unsuccessful as well as successful) to the NIH from 1980 to 2000 for postdoctoral training grants (F32s) and standard research grants (R01s). Both OLS and regression discontinuity estimates show that receipt of either an NIH postdoctoral fellowship or research grant leads to about one additional publication over the next five years. The estimates represent about 20 and 7 percent increases in research productivity for F32 and R01 recipients respectively. The limited research impact of NIH grants may be explained in part by a model in which the market for research funding is competitive, so that the loss of an NIH grant simply causes researchers to shift to another source of funding.
    JEL: H0 H51 I1 I12 I18 O3 O38
    Date: 2007–10
  7. By: George Grantham
    Abstract: Owing to the high cost of transporting farm produce before the railway age, the land-intensiveness of European mixed farming caused both production and consumption of foodstuffs and intermediate farm inputs in the steady state to be highly dispersed, a spatial configuration offering weak inducement to reorganize farm structure or to invest available labour and capital with a view to increasing output. In such conditions the most common cause of rising agricultural productivity was spatial concentration of demand, which raised the demand price of farm produce and farm inputs within the privileged space bounded by discontinuities in the cost of land transport. The ultimate cause of observed changes in agricultural productivity before the nineteenth century must therefore be sought outside the farming sector in the development of markets for tradable manufactures, tradable services, and the economies of scale in their provision that supported spatial concentration of population.
    JEL: B10 N53 N74 N93 O18 Q13 R12 R14 R40
    Date: 2007–09
  8. By: Raquel Lago González; Jose A. Lopez; Jesús Saurina
    Abstract: Access to external finance is a key determinant of a firm's ability to develop, operate and expand. To date, the literature has examined a variety of macroeconomic and microeconomic factors that influence firm financing. In this paper, we examine access by Spanish firms to external financing, both from bank and non-bank sources. We use dynamic panel data estimation techniques to estimate our models over a sample of 60,000 firms during the period from 1992 to 2002. We find that Spanish firms are quite dependent on short-term non-bank financing (such as trade credit), which makes up about 65 percent of total firm debt. Our results indicate that this type of financing is less sensitive to firm characteristics than short-term bank financing. However, we also find that short-term bank debt seems to be accessed more during economic expansions, which may suggest a substitution away from non-bank financing as firm conditions improve. Short-term bank debt also seems to be accessed more as funding rates rise, possibly again suggesting a substitution away from higher-priced non-bank alternatives. Using data from the Spanish Credit Register maintained by the Banco de Espana, we find that the impact of funding costs on access to external financing, whether from banks or non-banks, is affected by the nature of borrowing firms' bank relationships and collateral. In particular, we provide evidence of a potential hold-up problem in loan markets. Moreover, collateral plays a key role in making long-term finance available to firms.
    Keywords: Bank competition
    Date: 2007

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