nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2008‒04‒29
fourteen papers chosen by
Angelo Zago
University of Verona

  1. Evaluating Productivity Change in Turkish Banking Industry: A Micro Approach By Elmas Yaldiz; Ertugrul Deliktas
  2. Long Run and Short Run Dynamics in Italian Manufacturing Labour Productivity By Cesaroni, Tatiana; Pappalardo, Carmine
  3. Welfare Losses Due To Inefficient Structure – Turkey Case By Ensar Yesilyurt; Filiz Yesilyurt
  4. Foreign Direct Investment, Competition and Industry Performance. By Jürgen Bitzer; Holger Görg
  5. Characterizing Euro Area Multinationals By Ingo Geishecker; Holger Görg; Daria Taglioni
  6. Does Hedonic Price Indexing Change Our Interpretation of Economic History? Evidence from Swedish Electrification By Edquist, Harald
  7. On the Tang and Wang Decomposition of Labour Productivity Growth into Sectoral Effects By Diewert, Erwin
  8. An Examination of Public Capital's Role in Production By Macdonald, Ryan
  9. Why Should Regional Agricultural Productivity Growth Converge? Evidence from Italian Regions By Roberto ESPOSTI
  10. Are private banks more efficient than public banks? Evidence from Russia By Karas, Alexei; Schoors , Koen; Weill, Laurent
  11. How many banks does it take to lend? Empirical evidence from Europe By Christophe J. Godlewski; Ydriss Ziane
  12. The impact of structural changes in industrial manufacturing sector on productivity and employment trends in the Iraqi economy By Alrubaie, falah.K.Ali
  13. Interregiona;Decomposition of labor productivity differences in China, 1987-1997 By Yang, Ling; Lahr, Michael/L
  14. Determinants of Competitiveness of the Indian Auto Industry By Badri Narayanan G; Pankaj Vashisht

  1. By: Elmas Yaldiz (Department of Economics, Izmir University of Economics); Ertugrul Deliktas (Department of Economics, Ege University)
    Abstract: The main goal of this paper is to estimate the most appropriate production function for Turkish banking industry over the 1980–2006 period. The empirical analysis shows that Cobb-Douglas type production function and with credit dependent variable is the most appropriate model of the banking sector. This function indicates that constant return to scale is valid for Turkish banking sector. Accepting personnel and fixed assets as inputs, it is found that as personnel use increases in the production process, the output level increases more than the increase in personnel. Thus If the main purpose is to increase the credit amount, banks should employ much more personnel rather than fixed assets considering the substitution relationship between labor and capital and the parameters of the production function is found to be changed with restructuring program.
    Keywords: Turkish banking sector, production function, marginal and average productivity
    JEL: G21 D24
    Date: 2008–02
  2. By: Cesaroni, Tatiana; Pappalardo, Carmine
    Abstract: This paper examines structural changes in the Italian manufacturing sector, focusing labour productivity in recent decades. To this end it distinguishes between trend movements in the data using a multivariate unobserved components model. Changes relative importance of cyclical and trend components in labour productivity allow discrimination among the impacts of the factors affecting the performance of the manufacturing sector during the 1980s, 1990s and in the more recent period.
    Date: 2008–04
  3. By: Ensar Yesilyurt (Department of Economics, Pamukkale University); Filiz Yesilyurt (Department of Economics, Ege University)
    Abstract: Purpose: The present study is intended to analyze the ignored parts of data envelopment analysis, such as congestion and slacks, which are used mostly in efficiency analyses. Methodology/approach: The method used in this study is the data envelopment analysis (variable returns to scale-DEA). With this method, the efficiency levels of the active training hospitals in Turkey have been determined. Findings: The order of many effective training hospitals in Turkey is as follows: Social security institute hospitals, private university hospitals, public hospitals and state university hospitals. The total welfare loss which stems from this inefficient structure in these hospitals is calculated as $76.379.920. Research limitation: The difficulty of attaining the data has limited the researh to the year 2003. Originality/value: In this study, slacks and congestion have been used as the complementaries of the efficiency analyses. Therefore, the results obtained from DEA have been used in order to attain political implications and thus political propositions
    Keywords: DEA, efficiency, Hospital, congestion, slack
    JEL: D2 D6 I0
    Date: 2007–12
  4. By: Jürgen Bitzer; Holger Görg
    Abstract: Abstract: This paper investigates the productivity effects of inward and outward foreign direct investment using industry and country level data for 17 OECD countries over the period 1973 to 2001. Controlling for national and international knowledge spillovers we argue that effects of FDI work through direct compositional effects as well as changing competition in the host country. Our results show that there are, on average, productivity benefits from inward FDI, although we can identify a number of countries which, on aggregate, do not appear to benefit in terms of productivity. On the other hand, a country’s stock of outward FDI is, on average, negatively related to productivity. However, again there is substantial heterogeneity in the effect across OECD countries
    Keywords: Foreign direct investment, inward FDI, outward FDI, productivity, competition
    JEL: F23
    Date: 2008–04
  5. By: Ingo Geishecker; Holger Görg; Daria Taglioni
    Abstract: This study uses firm-level data on a large sample of European manufacturing firms to investigate the links between opening up foreign affiliates and firms' productivity. The analysis is guided by recent theoretical models of international trade with firm heterogeneity. The paper finds that while only a small share of euro area firms locate affiliates abroad, these firms account for over-proportionally large shares of output, employment and profits in their home countries. They have higher survival rates and their productivity growth is also higher. The strongest contribution is by productivity growth of existing firms with a multinational status rather than entry into the multinational status. Finally, there are performance premia for multinationals with a large number of affiliates abroad relative to those with a small number
    Keywords: multinational enterprises, productivity growth, productivity decomposition, survival
    JEL: F23 F43 L25
    Date: 2008–04
  6. By: Edquist, Harald (Research Institute of Industrial Economics (IFN))
    Abstract: Rapid price decreases for ICT-products in the 1990s have been largely attributed to the introduction of hedonic price indexes. Would hedonic price indexing also have large effects on measured price and productivity during other technological breakthroughs? This paper investigates the impact of hedonic and matched model methods on historical data for electric motors in Sweden 1900–35. The results show that during the productivity boom of the 1920s, the constant prices for electric motors decreased by 9.7 and 8.1 percent per year depending on whether hedonic or matched model price indexes were used. This indicates high productivity growth in the industry producing electric motors 1920–29. In contrast to Sweden, the US annual total factor productivity was only, according to current best estimates, 3.5 percent in Electric machinery compared to 5.3 percent in manufacturing 1920–29. However, hedonic price indexes were not used to calculate US productivity. Moreover, in comparison to the matched model, the hedonic price index on average overestimates price decreases when prices are decreasing and overestimates price increases when prices are increasing. However, the total effect of the two different price indexes remains approximately the same in 1900–35. Finally, it is shown that the price decreases for electric motors in the 1920s are not in par with the price decreases for ICT-equipment in the 1990s, even if hedonic indexing is used.
    Keywords: Hedonic Price Index; Electric Motor; Productivity Growth; Electrification; ICT Revolution; Productivity Growth; General Purpose Technologies
    JEL: L60 N60 O10 O14 O33 O40
    Date: 2008–04–02
  7. By: Diewert, Erwin
    Abstract: Tang and Wang provided a decomposition of economy wide labour productivity into sectoral contribution effects. The present note reworks their methodology to provide a more transparent and simple decomposition. This new decomposition is then related to another decomposition due to Gini and analyzed by Balk. Overall growth in labour productivity is due to three factors: (i) growth in the labour productivity of individual sectors; (ii) changes in real output prices of the sectors and (iii) changes in the allocation of labour across sectors.
    Keywords: Index numbers, labour productivity, decompositions of aggregate labour productivity into sectoral effects.
    JEL: C43 D24
    Date: 2008–04–16
  8. By: Macdonald, Ryan
    Abstract: This paper examines whether or not the long-term government bond rate could reasonably be employed as the rate of return on public capital when calculating public sector gross domestic product. It finds that the rate of return on public capital is lower than often reported and is roughly consistent with the rate of return on private capital. Given that there is a range of estimates that are plausible, the paper concludes that the long-run government bond rate could be used as a conservative estimate for the rate of return for public infrastructure. Previous studies have shown that production function estimates tend to find rates of return that are implausibly large, while cost function estimates appear more reasonable. This paper shows that public capital and total factor productivity (TFP) growth behave similarly, and argues that production function estimates for the impact of public capital overstate its impact as a result, catching part of what belongs in estimates of TFP. It also shows that the similarity between the growth in public capital and TFP leads to a large confidence interval around public capital elasticity estimates derived from the production function framework. The paper then proceeds by generating a confidence interval from the production function estimated first with and then without TFP growth. It then uses a cost function to pinpoint more precisely estimates for the marginal cost savings from public capital. Importantly, the estimate derived from the cost function is found in the lower part of the confidence interval derived from the production function. The rate of return associated with the overlapping estimates is then shown to cover a range that extends from the average long-run government bond rate to the rate of return on private capital.
    Keywords: Business performance and ownership, Construction, Economic accounts, Non-residential building construction, Non-residential engineering construction, Productivity accounts
    Date: 2008–04–15
  9. By: Roberto ESPOSTI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: The paper analyses agricultural TFP growth across Italian regions during the 1952-2002 period, and aims at identifying those factors that favour or hinder regional agricultural TFP growth convergence. Among them, idiosyncratic, R&D-spillover and learning components are included. Of major relevance is whether regions, despite their inescapable heterogeneity, tend to share common technological improvements, that is, to move along the same productivity growth rate TFP growth decomposition ultimately allows attributing observed productivity performance to convergence and divergence forces. Appropriate testing and estimation procedures are adopted to take into account panel unitroot issues and cross-sectional dependence.
    Keywords: TFP growth, convergence, panel data, spillover, unit root
    JEL: O13 O18 Q10 Q16
    Date: 2008–04
  10. By: Karas, Alexei (BOFIT); Schoors , Koen (BOFIT); Weill, Laurent (BOFIT)
    Abstract: We study whether bank efficiency is related to bank ownership in Russia. We find that foreign banks are more efficient than domestic private banks and – surprisingly – that domestic private banks are not more efficient than domestic public banks. These results are not driven by the choice of production process, the bank’s environment, management’s risk preferences, the bank’s activity mix or size, or the econometric approach. The evidence in fact suggests that domestic public banks are more efficient than domestic private banks and that the efficiency gap between these two ownership types did not narrow after the introduction of deposit insurance in 2004. This may be due to increased switching costs or to the moral hazard effects of deposit insurance. The policy conclusion is that the efficiency of the Russian banking system may benefit more from increased levels of competition and greater access of foreign banks than from bank privatization.
    Keywords: Bank Efficiency; State Ownership; Foreign ownership; Russia
    JEL: G21 P30 P34 P52
    Date: 2008–04–21
  11. By: Christophe J. Godlewski (Laboratoire de Recherche en Gestion et Economie, Université Louis Pasteur); Ydriss Ziane (BETA, Université de Nancy)
    Abstract: We provide empirical evidence on the determinants of the number of bank lenders using a sample of more than 3000 loans to firms from 24 European countries. Our testable hypotheses are built upon different theoretical frameworks drawn from the existing literature, referring to firm characteristics, strategic considerations, geographical distances, bank market concentration, efficiency of legal system, and development of alternative sources of funds. Our main results show that the number and the international diversity of lenders is increased by loan and firm characteristics which reduce agency costs, and by financial structure and legal environment characteristics which mitigate expropriation risk.
    Keywords: Lending relationships, number of lenders, bank loans, financial governance, asymmetric information, Europe.
    JEL: G21 G32 G33
    Date: 2008
  12. By: Alrubaie, falah.K.Ali
    Abstract: the three dimensions of value-added, employment, labour productivity, Represent the most important vector defining the nature of sectoral development in terms of the rate and content and mode, in this scope the industrial manufacturing sector progression to other productive activities for a sector of higher productivity, investment in this sector ensuring a structural shift and create many job opportunities that absorb surplus agricultural labour along with the natural increase in the labour force, to increase the flexibility of the sector about the changes in each of the relative contributions of labour and capital; productivity, which increases the rate of overlap between changes taking place in three dimensions mentioned whenever the growing role This sector in the national economy, and can be seen when comparing the prevailing event in both developed and developing economies. Based on these facts, this study has demonstrated that the industrial manufacturing sector in Iraq have failed at the level of branches and patterns and productive scales , in the provision of adequate opportunities for productive employment increases achieved in the labour force (natural and derived from the agricultural sector) and this was due to the relative inflexible Manufacturing activities are productive and technological content in high absorb workers, particularly chemical and oil industries, which dominate the major contributing added value achieved in this sector, as well as the relative decline in the rates of absorption of the activities with high employment flexibility (light manufacturing activities) in connection with the growing trend patterns towards intensive capital, enhance the imbalance in the labour market between the qualifications and conditions required before the one hand, and a non- proportionality structure professional work and got between the high productivity and low productivity activities on the other, non-interaction of the branches the patterns of industrial manufacturing sector and torn between two separated limb , first petroleum industry intensive capital and enhanced export, which is linked to international market conditions, and secondly, include assembly Industries and other consumer industries and import substitutes, which linkages with foreign inputs sources ,and the almost total absence of the active role of intermediate and capital industries, especially in industries and means of production, has weakened the ability of the manufacturing activities based on the creation of productive linkages or deepened within the productive potential of local, and that any positive change can happen in employment drop rapidly due to the loss or weakness of the existing workshops, and the surpluses generated by increased productivity, not supplying local production capacities Capacity better, but working to support consumer demand and speculation unproductive. Thus, the imbalance structural conditions in the industrial sector at the level of branches and patterns in this sector ,We Calls for non continuation in industrial expansion based on repetition and duplication, and attention instead to develop designs to distribution industries, according to activities and spot and regulations, and patterns, provided that this is a disclosure of the potential abilities to deepen the linkages for productivity and spots., in this regard, we suggest that industrial base is being built around a number of key core seen industrial compounds, based on Integrated technological links horizontally and vertically.
    Keywords: أثر التغيرات الهيكلية في قطاع الصناعة التحويلية على اتجاهات الإنتاجية والتشغيل في الاقتصاد العراقي
    JEL: L60
    Date: 2000–01–06
  13. By: Yang, Ling; Lahr, Michael/L
    Abstract: The literature on regional disparities in China is both broad and deep. Nonetheless much of its focus has been on the effects of trade liberalization and national policies toward investment in interior provinces. Few pieces have examined whether the disparities might simply be due to differences in industry mix, final demand, or even interregional trade. Using multiregional input-output tables and disaggregated employment data, we decompose change in labor productivity growth for seven regions of China between 1987 and 1997 into five partial effects—changes in value added coefficients, direct labor requirements, aggregate production mix, interregional trade, and final demand. Subsequently we summarize the contributions to labor productivity of the different factors at the regional level. In this way, we present a new perspective for recent causes of China’s interregional disparity in GDP per worker.
    Keywords: Decomposition; input-output analysis; productivity; regional disparity; China
    JEL: O1 C6 R11 O4
    Date: 2008–04–04
  14. By: Badri Narayanan G (Indian Council for Research on International Economic Relations); Pankaj Vashisht (Indian Council for Research on International Economic Relations)
    Abstract: This paper analyses the determinants of competitiveness of auto industry in India, based on a field survey and a quantitative analysis of secondary data. It highlights that all segments of Indian auto sector are growing at a fairly high rates and their productivity as well as export intensity is on the rise. Domestic sales are rising, but they have declined in certain sub-segments of vehicles. However, the R&D expenditure has been scarce. Effective rate of protection of automobile assembly is far higher than that of auto-components manufacturing. Unorganised sector, which is quite significant in auto-component manufacturing, has grown more rapidly in the urban areas than in the rural areas. The econometric analysis suggests various measures that could be taken by the government, particularly, the credit facilitation for SMEs. A field survey comprising auto manufacturers in India underlines various constraints faced by the sector, such as the shortage of skilled manpower along with poor infrastructure, fluctuating steel prices and unavailability of land at reasonable price. This suggests that the government could facilitate the industry in becoming more competitive by taking steps such as structural fiscal reforms, cut in import duties of raw materials and capital goods, promotion of R&D and FDI, training facilities, research-backed negotiations of FTAs, roadmap for harmonising emission norms across the country and infrastructure improvement. Industry, on the other hand, should improve its R&D capabilities and market research.
    Keywords: Indian Auto Industry, Competitiveness, Efficiency and Indian Auto Policy
    JEL: L62 F14 O25 D24
    Date: 2008–01

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