New Economics Papers
on Efficiency and Productivity
Issue of 2008‒06‒21
eleven papers chosen by

  1. Diferenciales de productividad según orientación exportadora de las empresas: ¿se cumple la autoselección y el aprendizaje? By Laura da Costa Ferré
  2. International R&D Spillovers and Institutions By David T. Coe; Elhanan Helpman; Alexander W. Hoffmaister
  3. The Missing Link Between Financial Constraints and Productivity By Marialuz Moreno Badia; Veerle Slootmaekers
  4. Spatial Concentration and Firm-Level Productivity in France By Martin, Philippe; Mayer, Thierry; Mayneris, Florian
  5. The driving force of labor productivity By Kitov, Ivan; Kitov, Oleg
  6. Analysing Convergence in Europe Using a Non-linear Single Factor Model By Ulrich Fritsche; Vladimir Kuzin
  7. Does the Chinese Banking System Promote the Growth of Firms? By Panicaos Demetriades; Jun Du; Sourafel Girma; Chenggang Xu
  8. Exporting and the Environment: A New Look with Micro-Data By Sourafel Girma; Aoife Hanley; Felix Tintelnot
  9. Productivity Spillovers from Foreign Direct Investment in the Cambodian Manufacturing Sector: Evidence from Establishment-Level Data By Cuyvers L.; Plasmans J.; Soeng R.; Van den Bulcke D.
  10. Estimating the Productivity Selection and Technology Spillover Effects of Imports By Acharya, Ram C.; Keller, Wolfgang
  11. Competitiveness in the Southern Euro Area: France, Greece, Italy, Portugal, and Spain By Yuan Xiao; Marialuz Moreno-Badia; Werner Schule; Herman Z. Bennett; Julio Escolano; Stefania Fabrizio; Eva Gutierrez; Bogdan Lissovolik; Stephen Tokarick; Iryna V. Ivaschenko

  1. By: Laura da Costa Ferré (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: This paper studies the relationship between productivity and export orientation of Uruguayan manufacturing firms in 1997-2001, trying to explore the self-selection and learning by exporting hypotheses. We use a constant prices plant level data panel for 1997-2001. First, we estimate a production function with several methodologies, including Levinsohn-Petrin, which corrects simultaneity and selection bias. Second, total factor productivity and labour productivity differentials of entrants, exit and permanent groups in the export market relative to non exporters is analized. We found strong evidence of exporters being more productive than non-exporters. Besides, the entrant group of firms was more productive than non exporter group before entering the export market, which is consistent with self-selection. Finally, we also found increases in productivity after firms start to export, which supports the learning by exporting hypothesis.
    Keywords: Levinsohn-Petrin, total factor productivity, exports, manufacturing firms, selfselection, learning by exporting
    JEL: D21 D24 F14 O54
    Date: 2008–03
  2. By: David T. Coe; Elhanan Helpman; Alexander W. Hoffmaister
    Abstract: The empirical analysis in "International R&D Spillovers" (Coe and Helpman, 1995) is first revisited by applying modern panel cointegration estimation techniques to an expanded data set that we have constructed for the purpose of this study. The new estimates confirm the key results reported in Coe and Helpman about the impact of domestic and foreign R&D capital stocks on TFP. In addition, we show that domestic and foreign R&D capital stocks have measurable impacts on TFP even after controlling for the impact of human capital. Furthermore, we extend the analysis to include institutional variables, such as legal origin and patent protection, in order to allow for parameter heterogeneity based on a country's institutional characteristics. The results suggest that institutional differences are important determinants of total factor productivity and that they impact the degree of R&D spillovers.
    Keywords: Working Paper , Productivity , Investment , Foreign investment , Capital , Economic models ,
    Date: 2008–04–28
  3. By: Marialuz Moreno Badia; Veerle Slootmaekers
    Abstract: This paper provides new evidence on the link between finance and firm-level productivity focusing on the case of Estonia. We contribute to the literature in two important respects: (1) we look explicitly at the role of financial constraints; and (2) we develop a methodology that corrects for the misspecification problems of previous studies. Our results indicate that young and highly indebted firms tend to be more financially constrained. Overall, a large number of firms shows some degree of financial constraints, with firms in the primary sector being the most constrained. More importantly, we find that financial constraints do not lower productivity for most sectors with the exception of R&D, where the dampening effect of financial constraints on productivity is remarkably large. These results are robust to a variety of sensitivity tests.
    Keywords: financing constraints, productivity, SMEs
    JEL: D24 G32 O16 P27
    Date: 2008
  4. By: Martin, Philippe; Mayer, Thierry; Mayneris, Florian
    Abstract: This paper analyzes empirically the effect of spatial agglomeration of activities on the productivity of firms using French individual firm data from 1996 to 2004. This allows us to control for endogeneity biases that the estimation of agglomeration economies typically encounters. French firms benefit from localization economies, but not from urbanization economies nor from competition effects. The benefits generated by increased sectoral clustering, though positive and highly significant are modest and geographically very limited. The gains from clusters are also quite well internalized by firms in their location choice: we find very little difference between the geography that would maximize productivity gains and the geography actually observed.
    Keywords: clusters; localization economies; productivity; spatial concentration
    JEL: C23 R10 R11 R12
    Date: 2008–06
  5. By: Kitov, Ivan; Kitov, Oleg
    Abstract: Labor productivity in developed countries is analyzed and modeled. Modeling is based on our previous finding that the rate of labor force participation is a unique function of GDP per capita. Therefore, labor productivity is fully determined by the rate of economic growth, and thus, is a secondary economic variable. Initially, we assess a model for the U.S. and then test it using data for Japan, France, the UK, Italy, and Canada. Results obtained for these countries validate those for the U.S. The evolution of labor force productivity is predictable at least at an 11-year horizon.
    Keywords: productivity; labor force; real GDP; prediction; modeling
    JEL: O4 J2
    Date: 2008–06–10
  6. By: Ulrich Fritsche (Department for Economics and Politics, University of Hamburg, and DIW Berlin); Vladimir Kuzin (German Institute for Economic Research (DIW) Berlin)
    Abstract: We investigate convergence in European price level, unit labor cost, income, and productivity data over the period of 1960-2006 using the non-linear time-varying coefficients factor model proposed by Phillips and Sul (2007). This approach is extremely flexible on order to model a large number of transition paths to convergence. We find regional clusters in consumer price level data. GDP deflator data and unit labor cost data are far less clustered than CPI data. Income per capita data indicate the existence of three convergence clubs without strong regional linkages; Italy and Germany are not converging to any of those clubs. Total factor productivity data indicate the existence of a small club including fast-growing countries and a club consisting of all other countries.
    Keywords: Price level, Income, Productivity, Convergence, Factor Model, European Monetary Union
    JEL: E31 O47 C32 C33 E37
    Date: 2008–06
  7. By: Panicaos Demetriades (University of Leicester); Jun Du (Aston University); Sourafel Girma (University of Nottingham); Chenggang Xu (London School of Economics)
    Abstract: Using a large panel dataset of Chinese manufacturing enterprises during 1999-2005, which accounts for over 90% of China’s industrial output, and robust econometric procedures we show that the Chinese banking system has helped to support the growth of both firm value added and TFP. We find that access to bank loans is positively correlated with future value added and TFP growth. We also find that firms with access to bank loans tend to grow faster in regions with greater banking sector development. While the effects of bank loans on firm growth are more pronounced in the case of purely private-owned and foreign firms, they are positive and statistically significant even in the case of state-owned and collectively-owned firms. We show that excluding loss-making firms from the sample does not change the qualitative nature of our results.
    Keywords: Chinese banking system development, value added and TFP growth, panel dataset
    JEL: E44 O53
    Date: 2008–02
  8. By: Sourafel Girma; Aoife Hanley; Felix Tintelnot
    Abstract: Previous aggregate studies ignore additional environmental improvements caused by intra industry reallocations to high productivity/ low pollution firms. They also fail to consider potential differences in abatement efforts by exporting status. Our estimation based on UK firm level data from 1998 to 2002 shows that exporters are 7.5 percent more likely to denote their innovation as having a ‘high’ or ‘very high’ environmental effect. Our findings also show that exporters are 17.5 percent more likely, all things equal, to report that their firm’s innovation cuts the cost of energy/ materials. Our results agree with our environment trade model which predicts that exporters amortize the fixed cost of environmental abatement over their wider output base
    Keywords: Exporting, environment, innovation, heterogeneity
    JEL: O31 Q55 Q56
    Date: 2008–06
  9. By: Cuyvers L.; Plasmans J.; Soeng R.; Van den Bulcke D.
    Abstract: Foreign Direct Investment (FDI) is generally regarded as an important source of finance, especially for the developing countries. Aitken and Harrison (1999) indicated that the largest source of external finance during the 1990s made available to the developing economies consisted of FDI. However, the role played by FDI in host countries through the transfer of technology, which in turn leads to an increase in labor productivity in the domestic firms via mainly indirect effects, is even more important. Since FDI is believed to be an important channel through which the international transfer of technology takes place, it has been identified as a major growth-enhancing factor in host countries. With a view to attracting inward FDI, governments in many countries (developed and developing) have liberalized their FDI regulations and adopted an investment-friendly policy. Additionally, handsome incentives such as tax holidays, the absence of import duties on intermediate inputs, low corporate tax rates, etc. are granted to investment projects by foreigners. Cambodia is no exception to such favorable policy for foreign investors. That host countries subsidize FDI activities is based on the expectation that, in addition to the employment generated by these activities, FDI makes available to the host country a package of capital, modern technology, know-how, and managerial and marketing skills, and consequently fosters productivity growth in the FDI-receiving country. When domestic firms in the host country also have access to the modern technologies and skills introduced by inward FDI, this in turn may lead both to improvements in the host country’s labor productivity and to increasing efficiency of domestic firms. However, some local firms may also suffer from the competitive presence of the more efficient foreign counterparts, as they may be forced to reduce their output or stop their activities. When their average cost curve is driven up, productivity is reduced. Certain home country conditions, such as institutions and the degree of competition, and the skill levels of the labor force might also affect the relative magnitudes of the costs and benefits. Given the benefits and costs, associated with the presence of FDI, the question is whether or not it is justified for the host country to take such generous measures in favor of foreign investors. Yet, Aitken and Harrison (1999) argue that if the benefits generated by FDI in the host country are not completely internalized by those firms, some types of subsidy may be justified. A large number of studies have been carried out to provide both the theoretical foundations and empirical results about the impact of FDI on the host country economy. The theoretical developments have stirred numerous empirical investigations into the role that FDI has played in the transfer of technology both in developed and developing countries. Data at the levels of the industry, firm, or plant have been used in those studies. The results of these analyses are ambiguous, with the slope parameter estimates of the “spillover” variables ranging from positive to negative. These mixed findings may be due to differences in research design, methodology, and the quality of data, and even the construction of the spillover variable. However, on balance, it is widely accepted that the entry of multinational enterprises (MNEs) generates a net positive effect on the local firms’ productivity in the host countries. The main objective of this paper is to analyze the net benefits generated by the presence of FDI in the manufacturing sector of the small, open economy of Cambodia. FDI has flowed into Cambodia since the outset of the country’s economy opening-up to the outside world after the first general election in 1993. Manufacturing FDI amounted to 43 percent of total FDI in Cambodia (see further below). From 1994 to 2004, the manufacturing sector contributed, on average, more than 70 percent to the total industrial output (Ministry of Planning, 2006). The importance of FDI in the Cambodian manufacturing sector will be studied to find an answer to the question whether FDI has played a role in improving local manufacturing productivity in Cambodia? Cross-sectional data from the latest and more informative ‘Survey of Industrial Establishments 2000’ will be used for this purpose. The remainder of this paper is organized as follows. Section 2 discusses the theoretical developments. The evidence on the FDI impact on productivity spillovers is discussed in section 3, while section 4 describes FDI in Cambodia’s manufacturing sector. Section 5 presents a testable econometric model. Data and methodology are discussed in section 6. Estimation results are presented in section 7. Section 8 concludes and provides some policy implications.
    Date: 2008–03
  10. By: Acharya, Ram C.; Keller, Wolfgang
    Abstract: In the wake of falling trade costs, two central consequences in the importing economy are, first, that stronger competition through increased imports can lead to market share reallocations among domestic firms with different productivity levels (selection). Second, the increase in imports might improve domestic technologies through learning externalities (spillovers). Each of these channels may have a major impact on aggregate productivity. This paper presents comparative evidence from a sample of OECD countries. We find that the average long run effect of an increase in imports on domestic productivity is close to zero. If the scope for technological learning is limited, the selection effect dominates and imports lead to lower productivity. If, however, imports are relatively technology-intensive, imports also generate learning that can on net raise domestic productivity. Moreover, there is somewhat less selection when the typical domestic firm is large. The results support models in which trade triggers both substantial selection and technological learning.
    Keywords: market shares; R&D; Technology investments
    JEL: F1 O3 O33
    Date: 2008–06
  11. By: Yuan Xiao; Marialuz Moreno-Badia; Werner Schule; Herman Z. Bennett; Julio Escolano; Stefania Fabrizio; Eva Gutierrez; Bogdan Lissovolik; Stephen Tokarick; Iryna V. Ivaschenko
    Abstract: This collection of studies analyzes developments in nonprice external competitiveness of France, Greece, Italy, Portugal, and Spain. While France, Italy, and Portugal have experienced substantial export market share losses, Greece and Spain performed relatively well. Export market share losses appear associated with rigidities in resource allocation (sectoral, geographical, technological) relative to peers and lower productivity gains in high value-added sectors. Disaggregated analysis of goods and services export markets provides insights on aspects such as quality, market concentration, growth of destination markets, and geographical and sectoral diversification. Also, increased import penetration, offshoring and FDI could improve productivity and export performance.
    Keywords: Working Paper , France , Greece , Italy , Portugal , Spain , Competition , Exports , Markets , International trade , Foreign investment , Exchange rates , Productivity , Resource allocation ,
    Date: 2008–05–01

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