New Economics Papers
on Efficiency and Productivity
Issue of 2007‒11‒17
sixteen papers chosen by

  1. Neural Network Based Models for Efficiency Frontier Analysis: An Application to East Asian Economies' Growth Decomposition By Hailin Liao; Bin Wang; Tom Weyman-Jones
  2. Efficiency and Productivity of the US Banking Industry, 1998-2005: Evidence from the Fourier Cost Function Satisfying Global Reg By Guohua Feng; Apostolos Serletis
  3. Swedish Health Care Performance – Quantity versus Quality By Janlöv, Nils
  4. Off-shoring and productivity growth in the Italian manufacturing industries By F. Daveri; C. Jona-Lasinio
  5. Export-Total Factor Productivity Growth Nexus in East Asian Economies By Hailin Liao; Xiaohui Liu
  6. Productivity response to reduction in trade barriers: Evidence from Turkish manufacturing plants By Kamil Yılmaz; Şule Özler
  7. Learning-by-Exporting? Firm-Level Evidence for UK Manufacturing and Services Sectors By Richard Harris; Qian Cher Li
  8. Productivity Growth and Resource Reallocation in Japan By Fukao Kyoji; Tsutomu Miyagawa; Miho Takizawa
  9. Productivity Trends in U.S. Manufacturing: Evidence from the NQ and AIM Cost Functions By Guohua Feng; Apostolos Serletis
  10. Does public sector efficiency matter? Revisiting the relation between fiscal size and economic growth in a world sample By Konstantinos Angelopoulos; Apostolis Philippopoulos; Efthymios Tsionas
  11. Agriculture and Aggregate Productivity: A Quantitative Cross-Country Analysis By Diego Restuccia; Dennis Tao Yang; Xiaodong Zhu
  12. A Maximum Entropy Approach to the Indenitication of Productive Technology Spillovers By Esteban Fernández Válszquez; Bart Los
  13. The Contribution of Sectoral Productivity Differentials to Inflation in Greece By Heather D. Gibson; Jim Malley
  14. Tracking Canadian Trend Productivity: A Dynamic Factor Model with Markov Switching By Michael Dolega
  15. Localized Technological Knowledge: Pecuniary Knowledge Externalities And Appropriability By Cristiano Antonelli
  16. Assessing the Competitiveness of International Financial Services in Particular Locations: A Survey of Methods and Perspectives By George von Furstenberg

  1. By: Hailin Liao (Dept of Economics, Loughborough University); Bin Wang (Dept of Economics, Loughborough University); Tom Weyman-Jones (Dept of Economics, Loughborough University)
    Abstract: There has been a long tradition in business and economics to use frontier analysis to assess a production unit’s performance. The first attempt utilized the data envelopment analysis (DEA) which is based on a piecewise linear and mathematical programming approach, whilst the other employed the parametric approach to estimate the stochastic frontier functions. Both approaches have their advantages as well as limitations. This paper sets out to use an alternative approach, i.e. artificial neural networks (ANNs) for measuring efficiency and productivity growth for seven East Asian economies at manufacturing level, for the period 1963 to 1998, and the relevant comparisons are carried out between DEA and ANN, and stochastic frontier analysis (SFA) and ANN in order to test the ANNs’ ability to assess the performance of production units. The results suggest that ANNs are a promising alternative to traditional approaches, to approximate production functions more accurately and measure efficiency and productivity under non-linear contexts, with minimum assumptions.
    Keywords: total factor productivity, neural networks, stochastic frontier analysis, DEA, East Asian economies
    JEL: D24 C45 O47 O53 L60
    Date: 2007–11
  2. By: Guohua Feng; Apostolos Serletis
    Date: 2007–10–26
  3. By: Janlöv, Nils (Department of Economics, Lund University)
    Abstract: This paper investigates the relative efficiency of 21 Swedish county councils through two efficiency models; one focusing on a traditional productivity measure (activity model) in terms of the production of intermediate outputs, and the other on quality outputs in the form of health-related outcomes (outcome model). Efficiency is estimated using Data Envelopment Analysis (DEA) and the two models are used to test whether there are significantly different efficiency estimates among the councils. The efficiency concept used consists of technical efficiency, here measured as cost efficiency, where the relationship between inputs and outputs for each council is compared to a “best practice” consisting of a production frontier. A weak positive correlation is found between the two models, indicating that cost efficiency regarding activities and outcomes may foremost be seen as complements in the production process. In a second stage, the efficiency scores in both models are used as dependent variables in multiple regressions with several independent structural factors that may be used to explain differences in efficiency. The paper finds that councils which are net receivers in the equalization grant system have lower efficiency scores in both models.
    Keywords: Productive efficiency; quality indicators; data envelopment analysis; Tobit regression; Sweden
    JEL: C14 I11
    Date: 2007–10–31
  4. By: F. Daveri; C. Jona-Lasinio
    Abstract: We employ input-output tables to study the relation between off-shoring and productivity growth in the Italian manufacturing industries in 1995-2003. Our results indicate that not all types of off-shoring are positively related to productivity growth. In particular, the international outsourcing of intermediates within the same industry (“narrow off-shoring”) is beneficial for productivity growth, while the off-shoring of services is not. We also find that the way in which off-shoring is measured may matter considerably. The positive relation between off-shoring of intermediates and productivity growth disappears when our direct measure of off-shoring is replaced with the Feenstra-Hanson measure employed in other studies.
    Keywords: International trade, Productivity growth; offshoring; Italian economy
    JEL: F16 F23 O4
    Date: 2007
  5. By: Hailin Liao (Dept of Economics, Loughborough University); Xiaohui Liu (Business School, Loughborough University)
    Abstract: Despite increasing interest in the relationship between trade and macroeconomic performance in development economics, very limited studies have been conducted on the causal links between exports and productivity growth in Asian economies. This paper examines empirically the interplay between exports and productivity growth for eight East Asian economies in a multivariate framework by applying bound tests and modified Wald tests. The results indicate that causality is bi-directional in the case of Korea, Singapore and Taiwan, while unidirectional from productivity to exports for Mainland China, Hong Kong, Indonesia, Malaysia and the Philippines. These findings provide little support for the conventional export-led growth hypothesis.
    Keywords: TFP, exports, bound tests, lag-augmented VAR, East Asian economies
    Date: 2007–11
  6. By: Kamil Yılmaz (Department of Economics, Koç University); Şule Özler (UCLA)
    Abstract: We examine the effects of trade policy changes on the evolution of plant productivity. Plant level productivities are estimated for the 1983-96 period following the procedure of Olley and Pakes (1996). Industry averages indicate that productivity gains are largest in import competing industries with highest gains reaching to 8% per year during periods of rapid decline in protection rates. A decomposition of industry level productivity gains also suggests important differences across sectors by trade orientation. Though reallocation of market shares to more productive plants are important in both export oriented, and import competing sectors, within plant productivity improvements are significant only in export-oriented sectors. We also investigate the effects of changes in protection rates on plant level productivities using regressions that control for endogeneity of protection rates (tariff and non-tariff). We find that productivity improvements resulting from declining protection levels are statistically significant and economically important, especially in import competing sectors. This analysis also suggests that there is a huge degree of heterogeneity, measured by plant size, in response to changes in protection rates.
    Keywords: Production function; semi-parametric estimation; protection; import penetration; domestic competition.
    JEL: F13 D24 C14
    Date: 2004–07
  7. By: Richard Harris; Qian Cher Li
    Abstract: This study empirically assesses the microeconomic exporting-productivity nexus for both the UK manufacturing and services sectors during 1996-2004, based on a weighted FAME dataset. Our results show that firms that are older, that possess intangible assets or that have higher (labour) productivity in the year prior to exporting, are significantly more likely to sell overseas. In testing the post-entry ‘learning-by-exporting’ effect, we employ three approaches to controlling for endogeneity and sample selection, viz. instrumental variables, control function and matching, and find that this effect is present in many industries but not universal, and also varies amongst different types of exporting firms. Our overall estimate for the UK economy suggests a substantial post-entry productivity effect for firms new to exporting; a negative effect for firms exiting overseas markets; and large productivity gains while exporting for those that both enter and exit.
    Keywords: exports; control function; GMM; matching; TFP; sample selection
    JEL: D24 F14 L25 R38
    Date: 2007–08
  8. By: Fukao Kyoji; Tsutomu Miyagawa; Miho Takizawa
    Date: 2007–11
  9. By: Guohua Feng; Apostolos Serletis
    Date: 2007–10–26
  10. By: Konstantinos Angelopoulos; Apostolis Philippopoulos; Efthymios Tsionas
    Abstract: This paper revisits the relationship between fiscal size and economic growth. Our work differs from the empirical growth literature because this relationship depends explicitly on the efficiency of the public sector. We use a sample of 64 countries, both developed and developing, in four 5-year time-periods over 1980-2000. Building on the work of Afonso, Schuknecht and Tanzi (2005), we construct a measure of public sector efficiency in each country and each time-period by calculating an output to input ratio. In addition, we get an estimate of technical efficiency of public spending for 52 countries for the time-period 1995-2000 by employing a stochastic frontier analysis. Using these two measures, we find evidence of a non-monotonic relation between fiscal size and economic growth that depends critically on government efficiency.
    Keywords: Fiscal policy, government efficiency, growth
    JEL: H1 E6
    Date: 2007–09
  11. By: Diego Restuccia; Dennis Tao Yang; Xiaodong Zhu
    Abstract: A decomposition of aggregate labor productivity based on internationally comparable data reveals that a high share of employment and low labor productivity in agriculture are mainly responsible for low aggregate productivity in poor countries. Using a two-sector general-equilibrium model, we show that differences in economy-wide productivity, barriers to modern intermediate inputs in agriculture, and barriers in the labor market generate large cross-country di?erences in the share of employment and labor productivity in agriculture. The model implies a factor difference of 10.8 in aggregate labor productivity between the richest and the poorest 5 percent of the countries in the world, leaving the unexplained factor at 3.2. Overall, this two-sector framework performs much better than a single-sector growth model in explaining observed differences in international productivity.
    Keywords: Productivity, International Comparisons, Agriculture, Intermediate Inputs, Barriers, Two-sector Model
    Date: 2007
  12. By: Esteban Fernández Válszquez; Bart Los
    Abstract: ABSTRACT : R&D activities by one industry often have positive effects on the productivity performance of other industries, as a consequence of technology spillovers. Econometric problems (such as multicollinearity), however, have prevented researchers from identifying the industries that have been responsible for the most important technology spillovers. This paper proposes an alternative estimation approach (Generalized Maximum Entropy econometrics), which can cope with datasets characterized by a high degree of multicollinearity. For a number of industries, rates of return to R&D expenditures by other industries are estimated on a bilateral basis. Furthermore, productivity effects of spillovers from the foreign counterparts of the industry are estimated. The analysis is done for eighteen industries in twelve OECD countries in the period 1976-1999.
    Date: 2007–11–12
  13. By: Heather D. Gibson; Jim Malley
    Date: 2007–10
  14. By: Michael Dolega
    Abstract: The author attempts to track Canadian labour productivity over the past four decades using a multivariate dynamic factor model that, in addition to the labour productivity series, includes aggregate compensation and consumption information. Productivity is assumed to switch between two regimes (the high-growth state and the low-growth state) with different trend growth rates according to a first-order Markov process. The author finds that labour productivity in Canada fell from the high-growth to the low-growth state towards the end of the 1970s, and that it has not yet reverted to the high-growth state. In particular, the model primarily attributes the resurgence of labour productivity growth in the late nineties to transitory effects.
    Keywords: Productivity
    JEL: O4 O51 C32
    Date: 2007
  15. By: Cristiano Antonelli
    Abstract: Recent advances in the economics of knowledge highlight the key role of pecuniary knowledge externalities in explaining the system dynamics of total factor productivity growth. When non-exhaustible technological knowledge is an input both in the production of new goods and of further knowledge, and the acquisition of external knowledge, as a non-disposable input in the production of new knowledge, is not free, pecuniary externalities, as opposed to technological externalities, provide an important clue to understanding the key role of knowledge governance mechanisms in assessing the rate of growth of total factor productivity and economic systems at large. The negative effects upon appropriability limit the advantages of agglomeration.
    JEL: O33
    Date: 2007–11
  16. By: George von Furstenberg (National Science Foundation and Indiana University Bloomington)
    Abstract: The International Financial Services (IFS) industry is restructuring internally and by location. This paper outlines the economic forces and analytical methods that may be applied to examine the economic drivers of these processes as ever more cities, particularly in East Asia, are vying to attract IFS providers and their clients. The ICT revolution has made those IFS that can be commoditized footloose in search of cost efficiency. High value-added financial services, however, will continue to be developed and coordinated in a few major IFS centers that have invested in, or capitalized on, regional or global advantages for themselves and their clients. The resulting pattern of functional fragmentation and geographic dispersal may facilitate analyses of the competitiveness of different lines of the financial services business in a particular location by methods such as Data Envelopment and Stochastic Frontier Analysis. These forms of comparative efficiency analysis have recently been questioned and their results reinterpreted.
    Keywords: offshore centers, international financial services, Data Envelopment Analysis, Stochastic Frontier Analysis
    JEL: E44 F30 G20
    Date: 2007–11

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