New Economics Papers
on Efficiency and Productivity
Issue of 2008‒06‒27
nine papers chosen by

  1. Regulation, Allocative Efficiency and Productivity in OECD Countries: Industry and Firm-Level Evidence By Jens Arnold; Giuseppe Nicoletti; Stefano Scarpetta
  2. International R&D Spillovers and Institutions By Coe, David T; Helpman, Elhanan; Hoffmaister, Alexander
  3. Productivity and the Sourcing Modes of Multinational Firms: Evidence from French Firm-Level Data By Fabrice Defever; Farid Toubal
  4. Estimation of semiparametric stochastic frontiers under shape constraints with application to pollution generating technologies By Kortelainen, Mika
  5. Intangible Capital and Productivity: An Exploration on a Panel of Italian Manufacturing Firms By Maria Elena Bontempi; Jacques Mairesse
  6. The Productivity Impact of R&D Investment: Evidence from European Microdata By Raquel Ortega-Argilés; Lesley Potters; Marco Vivarelli
  7. European Economic Growth, 1950-2005: An Overview By Crafts, Nicholas; Toniolo, Gianni
  8. Corporate performance, board structure, and their determinants in the banking industry By Renée B. Adams; Hamid Mehran
  9. Banking Globalization: International Consolidation and Mergers in Banking By Claudia M. Buch; Gayle L. DeLong

  1. By: Jens Arnold; Giuseppe Nicoletti; Stefano Scarpetta
    Abstract: This paper relates diverging productivity performances across OECD countries over the past fifteen years to differences in the stringency of regulations in the product market. We first summarize industry-level evidence linking these diverging patterns to delays in service markets reforms in the wake of the ICT shock. The evidence we survey suggests that, especially in continental EU countries, tight regulation of services has slowed down growth in ICT-using sectors, which use intermediate service inputs intensively. Based on harmonised cross-country firm-level data, we then provide new evidence that one of the key channels through which inappropriate service regulations affect productivity growth is by hindering the allocation of resources towards the most dynamic and efficient firms. At the industry level, resources were allocated less efficiently across firms in countries where service regulations are less market-friendly. Firmlevel econometric estimates confirm that anti-competitive service regulations hamper productivity growth in ICT-using sectors, with a particularly pronounced effect on firms that are catching up to the technology frontier and that are close to international best practice. In other words, regulations hurt in particular those firms that have the potential to excel in domestic and international markets. <P>Réglementation, allocation des ressources et productivité dans les pays de l’OCDE : évidence empirique au niveau des secteurs et des entreprises <BR>Cette étude établi un rapport entre trajectoires divergentes de productivité dans les pays OCDE pendant les dernières 15 années, et différences dans la rigidité de la réglementation sur les marchés des biens. La première partie du papier résume les résultats empiriques existants au niveau des industries sur le rapport entre productivité et réglementation dans les secteurs de services, ainsi que son rapport avec le choc technologique dans les technologies de l'information et de la communication (TIC). L’évidence empirique que nous examinons suggère qu’en particulier dans les pays d’Europe continentale la réglementation rigide a ralenti la croissance dans les secteurs «utilisateur des TIC», qui utilisent de manière intensive les services réglementés. Sur la base de données harmonisées au niveau des entreprises, ce papier présente ensuite des résultats nouveaux qui montrent que l’effet de la réglementation sur la croissance de la productivité se transmet principalement à travers des obstacles à l’allocation des ressources vers les entreprises les plus dynamiques et efficientes. L’allocation des ressources au sein de chaque industrie est moins efficiente dans les pays ayant une réglementation plus rigide dans les secteurs des services. Nos estimations économétriques au niveau des entreprises montrent ensuite que la réglementation des services réduit la croissance de la productivité dans les secteurs « utilisateur des TIC », avec un effet particulièrement prononcé sur les entreprises qui sont proches de la frontière technologique et y convergent rapidement. Autrement dit, la réglementation nuit surtout aux entreprises qui ont le plus haut potentiel de succès dans les marchés nationaux et internationaux.
    Keywords: product market regulation, productivity, productivité, allocative efficiency, firm-level data, réglementation dans les marchés des biens, efficience dans l’allocation de ressources, données individuelles d’entreprise
    JEL: D24 E23 K23 L11 L51
    Date: 2008–06–13
  2. By: Coe, David T; Helpman, Elhanan; Hoffmaister, Alexander
    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: Institutions; Productivity; R&D; Spillovers
    JEL: O31 O40 O43
    Date: 2008–06
  3. By: Fabrice Defever; Farid Toubal
    Abstract: We investigate the role of a firm's total factor productivity in its decision to import from theiraffiliates rather than from independent input suppliers. We propose a slightly modifiedversion of the Antràs and Helpman (2004) model. We assume higher fixed costs underoutsourcing and a firm-specific production function. We use detailed French firm-level datathat provides a geographical breakdown of French firms' import at product level and theirsourcing modes in 1999. We find strong empirical support for the theoretical predictions ofthe model. In particular, high-productivity firms that have a production process intensive insuppliers' inputs source their inputs through independent foreign suppliers.
    Keywords: Productivity, Incomplete Contracts, Intra-firm Trade, Outsourcing
    JEL: F23 F14 L22 L23
    Date: 2007–12
  4. By: Kortelainen, Mika
    Abstract: A number of studies have explored the semi- and nonparametric estimation of stochastic frontier models by using kernel regression or other nonparametric smoothing techniques. In contrast to popular deterministic nonparametric estimators, these approaches do not allow one to impose any shape constraints (or regularity conditions) on the frontier function. On the other hand, as many of the previous techniques are based on the nonparametric estimation of the frontier function, the convergence rate of frontier estimators can be sensitive to the number of inputs, which is generally known as “the curse of dimensionality” problem. This paper proposes a new semiparametric approach for stochastic frontier estimation that avoids the curse of dimensionality and allows one to impose shape constraints on the frontier function. Our approach is based on the singleindex model and applies both single-index estimation techniques and shape-constrained nonparametric least squares. In addition to production frontier and technical efficiency estimation, we show how the technique can be used to estimate pollution generating technologies. The new approach is illustrated by an empirical application to the environmental adjusted performance evaluation of U.S. coal-fired electric power plants.
    Keywords: stochastic frontier analysis (SFA); nonparametric least squares; single-index model; sliced inverse regression; monotone rank correlation estimator; environmental efficiency
    JEL: C51 Q52 C14 D24
    Date: 2008–06–20
  5. By: Maria Elena Bontempi; Jacques Mairesse
    Abstract: The paper examines the size and productivity of total intangible capital relative to total tangible capital for a large panel of Italian Manufacturing firms. In the analysis, we decompose total intangibles in two different ways: in intangibles expensed in firms' current accounts (as usually considered in empirical studies) versus intangible capitalized in firms' balance sheets (usually not considered); and in "intellectual capital" (i.e. R&D expenditures, and patenting and related costs) versus "customer capital" (i.e., advertising expenditure, and trademarks and related costs). We systematically assess the robustness of our results by using different specifications of the production functions implying different elasticities of substitution between tangible and intangible capital, and comparing different panel data estimates. Our results underscore that firms' accounting information on intangible investments is genuinely informative, showing that intangible capital and its different components are at least as productive as tangible capital.
    JEL: C23 C52 D24
    Date: 2008–06
  6. By: Raquel Ortega-Argilés (Joint Research Centre-European Commission, IPTS Seville); Lesley Potters (Joint Research Centre-European Commission and Utrecht School of Economics); Marco Vivarelli (Joint Research Centre-European Commission, Catholic University, Milan and Max Planck Institute of Economics, Jena)
    Abstract: The aim of this study is to investigate the relationship between a firm's R&D activities and its productivity using a unique micro data panel dataset and looking at sectoral peculiarities which may emerge; more specifically, we used an unbalanced longitudinal database consisting of 532 top European R&D investors over the six-year period 2000-2005. Our main findings can be summarised along the following lines: knowledge stock has a significant positive impact on a firm's productivity, with an overall elasticity of about 0.125; this general result is largely consistent with previous literature in terms of the sign, the significance and the estimated magnitude of the relevant coefficient. More interestingly, the coefficient increases monotonically when we move from the low-tech to the medium-high and high-tech sectors, ranging from a minimum of 0.05/0.07 to a maximum of 0.16/0.18. This outcome, in contrast with recently-renewed acceptance of low-tech sectors as a preferred target of R&D investment, suggests that firms in high-tech sectors are still far ahead in terms of the impact on productivity of their R&D investments, at least as regards top European R&D investors.
    Keywords: R&D, productivity, knowledge stock, panel data, perpetual inventory method
    JEL: O33
    Date: 2008–06–18
  7. By: Crafts, Nicholas; Toniolo, Gianni
    Abstract: This paper surveys the extensive literature on European economic growth since 1950. It presents an overview of comparative growth performance together with benchmarked growth accounting estimates. The growth experience is considered in terms of three periods, the Golden Age of 1950-73, the Growth Slowdown of 1973-1995, and the New Economy period since the mid-1990s, both across countries and across regions. The key conclusion is that study of the historical record underlines the importance of incentive structures for growth outcomes while sustaining growth performance over the long run requires the (often difficult) adaptation of institutions and policies as catch up becomes more complete and new technological epochs arrive.
    Keywords: catch-up growth; Golden Age; ICT; slowdown; total factor productivity
    JEL: N14 O47 O52
    Date: 2008–06
  8. By: Renée B. Adams; Hamid Mehran
    Abstract: The subprime crisis highlights how little we know about the governance of banks. This paper addresses a long-standing gap in the literature by analyzing board governance using a sample of banking firm data that spans forty years. We examine the relationship between board structure (size and composition) and bank performance, as well as some determinants of board structure. We document that mergers and acquisitions activity influences bank board composition, and we provide new evidence that organizational structure is significantly related to bank board size. We argue that these factors may explain why banking firms with larger boards do not underperform their peers in terms of Tobin's Q. Our findings suggest caution in applying regulations motivated by research on the governance of nonfinancial firms to banking firms. Since organizational structure is not specific to banks, our results suggest that it may be an important determinant for the boards of nonfinancial firms with complex organizational structures such as business groups.
    Keywords: Bank management ; Bank mergers ; Corporate governance ; Bank directors ; Competition
    Date: 2008
  9. By: Claudia M. Buch; Gayle L. DeLong
    Abstract: This paper surveys recent literature on international mergers and acquisitions in banking. We focus on three main questions. First, what are the determinants of cross-border mergers of commercial banks? Second, do cross-border mergers affect the efficiency of banks? Third, what are the risk effects of international bank mergers? We begin with a brief summary of the stylized facts, and we conclude with implications for policymakers.
    Keywords: mergers and acquisition, international banking, survey
    JEL: F23 G21
    Date: 2008–01

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