New Economics Papers
on Efficiency and Productivity
Issue of 2008‒09‒13
twelve papers chosen by

  1. Key Parameters and Efficiency of Mexican Manufacturing - Are There Still Differences between the North and the South? : An Application of Nested and Stochastic Frontier Panel Data Models By Frauke G. Braun; Astrid Cullmann
  2. The Shadow of Death: Analysing the Pre-Exit Productivity of Portuguese Manufacturing Firms By Carlos Carreira; Paulino Teixeira
  3. Distance to Frontier and Appropriate Business Strategy By Alex Coad
  4. Ownership, R&D and productivity change : assessing the catch-up in China’s high-tech industries By Yu, J.; Nijkamp, P.
  5. The Impact of Intergovernmental Grants on Cost Efficiency: Theory and Evidence from German Municipalities By Kalb, Alexander
  6. Understanding Efficiency Differences of Schools: Practitioners' Views on Students, Staff Relations, School Management and the Curriculum By Tanja Kirjavainen
  7. Foreign Market Conditions and Export Performance: Evidence from Italian Firm-Level Data By Holger Breinlich; Alessandra Tucci
  8. Does gender matter for firm performance ? evidence from Eastern Europe and Central Asia By Sabarwal, Shwetlena; Terrell, Katherine
  9. The Knowledge Production of ‘R’ and ‘D’ By Czarnitzki, Dirk; Kraft, Kornelius; Thorwarth, Susanne
  10. A Stochastic Frontier Model with Correction for Sample Selection By William Greene
  11. Performance of export-oriented small and medium-sized manufacturing enterprises in Viet Nam By Tran Quoc Trung; Nguyen Thanh Tung; Tran Duy Dong; Phan Hoai Duong
  12. Effects of improving infrastructure quality on business costs : evidence from firm-level data By Iimi, Atsushi

  1. By: Frauke G. Braun; Astrid Cullmann
    Abstract: This study explores the prevalence and nature of the regional divide for the Mexican manufacturing production across sub-national regions. We utilize a unique panel of municipality-level data from the manufacturing sector. An important contribution is the use of different panel methods to account for latent regional characteristics and the computation of performance indicators for each municipality which will enable detailed regional rankings. Firstly, we apply nested panel methods to estimate regional production functions and to analyze production characteristics and scale economies. Subsequently, we use stochastic frontier analysis methods to test for productivity and efficiency differences in manufacturing throughout the country. Our results suggest that the economic structure and productivity of southern Mexico is considerably different from the centrally located manufacturing belt and the north. Remarkably, rankings based on nested panel and stochastic frontier estimations confirm very similar regional patterns. Nevertheless, efficiency varies strongly within states, indicating that 'islands of excellence' prevail in otherwise highly inefficient and lagging states.
    Keywords: Mexico, Manufacturing, Efficiency Analysis, Stochastic Frontier Analysis, Panel Data Models
    JEL: C23 D24 O18
    Date: 2008
  2. By: Carlos Carreira (GEMF and Faculdade de Economia, Universidade de Coimbra); Paulino Teixeira (GEMF and Faculty of Economics of the University of Coimbra)
    Abstract: In this study, we examine the pre-exiting productivity profile of mature firms relatively to survivors. We also evaluate how the observed productivity pattern affects the probability of exit. Our approach is an empirical one, and it is based on an unbalanced panel of Portuguese manufacturing firms covering the period of one decade. Our findings confirm that market selection forces low-productivity firms to exit, but we also found that there is a sizeable portion of firms located at the bottom of the distribution that do not shut down. Conversely, there is a non-negligible fraction of high-productivity firms that do actually fail. In line with some key theoretical predictions, exiting firms reveal a falling productivity level in a number of years prior to exit. Finally, our results from the probit model on the likelihood of exiting show that low productivity firms are much more likely to shut down.
    Keywords: Exit pattern, Productivity, Firm survival, Portugal
    JEL: L25 D24 D21 L60
    Date: 2008
  3. By: Alex Coad
    Abstract: This paper is an empirical test of the hypothesis that the appropriateness of different business strategies is conditional on the firm’s distance to the industry frontier. We use data on four 2-digit high-tech manufacturing industries in the US over the period 1972-1999, and apply semi-parametric quantile regressions to investigate the contribution of firm behavior to market value at various points of the conditional distribution of Tobin’s q. Among our results, we observe that innovative activity, measured in terms of R&D expenditure or patents, has a strong positive association with market value at the upper quantiles (corresponding to the leader firms) whereas the innovative efforts of laggard firms are valued significantly less. Laggard firms, we suggest, should instead achieve productivity growth through efficient exploitation of existing technologies and imitation of industry leaders. Employment growth in leader firms is encouraged whereas growth of backward firms is not as well received on the stock market.
    Keywords: Distance to frontier; Strategy; Market value; Innovation; Firm growth
    JEL: L25 L21 D21 O31
    Date: 2008
  4. By: Yu, J. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Nijkamp, P.
    Abstract: This study contributes to the debate on whether China’s domestic enterprises (DEs) have experienced a significant catch-up compared with foreign-funded enterprises (FFEs) in high-tech industries. Our paper tries to estimate a new set of capital stock and R&D capital stock by ownership for China’s high-tech industries. Then, using this newly constructed data set, it assesses the comparative productivity performance of state-owned enterprises (SOEs) (as the most important proxy for DEs) in high-tech industries from 1996 to 2006. The results show that SOEs as a whole have experienced an inverted U-shape trajectory of catch-up for 1996-2006, while those SOEs which originate from competitive industries tend to show a better performance. With respect to the technology catch-up, SOEs in particular are still lagging behind because of their failure to develop indigenous technology capabilities.
    Keywords: Productivity; R&D; Catch-up; Indigenous technology capability
    JEL: E22 L63 O47 P27
    Date: 2008
  5. By: Kalb, Alexander
    Abstract: In this paper we use a simple bureaucracy model of fiscal illusion to analyze the impact of intergovernmental grants on the cost efficiency of local jurisdictions. We find that a higher degree of redistribution within a system of fiscal equalization or an increase in the amount of grants received by a local jurisdiction leads to an extension of organizational slack or X-inefficiency in that jurisdiction. This theoretical prediction is tested by conducting an empirical analysis using a broad panel of German municipalities. The results of the empirical analysis are consistent with the theoretical findings and therefore support the existence of a negative incentive effect of intergovernmental grants on local authorities' cost efficiency.
    Keywords: Cost efficiency, Fiscal equalisation, Intergovernmental grants, Bureaucracy, Stochastic frontier analysis, German municipalities
    JEL: H11 H77
    Date: 2008
  6. By: Tanja Kirjavainen
    Abstract: This study analyses the views of the staff members of nine upper secondary schools in Finland that were in the upper or lower tails of the efficiency distribution measured with stochastic frontier analysis. Teachers and principals were interviewed on their views about the students, staff relations, school management, curriculum work, parent-school relations, teacher training, and evaluation .In efficient schools, views concerning the students were caring, appreciating all students. Respecting views were also present, with students? own initiative being appreciated. In inefficient schools there was more often frustration or disappointment at the low performance of the students. In efficient schools, staff relations were professional, whereas in some inefficient schools it was characterized as tense. Management and decision making were participative in efficient schools and teachers were happy with their possibilities to influence school matters. In inefficient schools, there were disappointments and frustrated views about the management and possibilities to have an influence. Curriculum work was seen as way to develop the school and the work in efficient schools. In inefficient schools, it was considered as an administrative measure.
    Keywords: Efficiency, upper secondary schools, school management, staff relations, stochastic frontier analysis
    Date: 2008–09–02
  7. By: Holger Breinlich; Alessandra Tucci
    Abstract: A large body of literature in International Economics has analysed the impact of increased import competition on domestic firms. The link between firm-level exports and changes in the competitive environment on foreign markets is less well understood, however. This is despite the fact that exports make up a significant and growing share of total manufacturing production in most countries. We derive a theory-based econometric specification linking destination-specific exports to foreign demand and the degree of competitiveness or "crowdedness" of a foreign market. The latter is a summary measure of the number and productive efficiency of firms competing in a given market and the barriers impeding their access, such as tariffs or physical distance. We estimate this specification on a large sample of Italian manufacturing firms in 1992-2003 and use the results for a series of counterfactual experiments. Our findings indicate that increased numbers and efficiency of foreign firms and improvements in their access to destination markets have reduced Italian exports by around 0.2-0.4% per year. This is similar to the effects of tariff reductions for Italian firms (+0.3%/year) but smaller than the impact of higher unit labour costs (-1.4%/year) and less favourable exchange rates (-2.0%/year). By far the most important determinant of export performance was foreign demand growth, however, raising Italian exports by up to 5.3% per year or almost 60% over the sample period. Our results also indicate that China's impact on Italian export performance is small and if anything positive. Much more important in explaining the loss of export market shares in recent years has been the relatively slow demand growth in Italy's main export market, the EU15.
    Date: 2008–09–07
  8. By: Sabarwal, Shwetlena; Terrell, Katherine
    Abstract: Using 2005 firm level data for 26 countries in Eastern and Central Europe, this paper estimates performance gaps between male and female-owned businesses, while controlling for location by industry and country. The findings show that female entrepreneurs have a significantly smaller scale of operations (as measured by sales revenues) and are less efficient in terms of total factor productivity, although the difference is small. However, women entrepreneurs generate the same amount of profit per unit of revenue as men. Although both male and female entrepreneurs in the region are sub-optimally small, women's returns to scale are significantly larger than men's, implying that women would gain more from increasing their scale. The authors argue that the main reasons for the sub-optimal size of female-owned firms are that they are both capital constrained and concentrated in industries with small firms.
    Keywords: Access to Finance,,Banks&Banking Reform,Gender and Health,Gender and Law
    Date: 2008–09–01
  9. By: Czarnitzki, Dirk; Kraft, Kornelius; Thorwarth, Susanne
    Abstract: Many studies investigate the relationship between R&D expenditures as an input and patents as an intermediate product or output of a knowledge production function. We suggest that the productivity of research in patent production functions has been underestimated in the literature, as scholars typically use information about R&D, i.e. the sum of research expenditure and development expenditure, due to data availability. However, in most industries only (applied) research will lead to patentable knowledge, and development happens after the initial research phase that may have led to a patent. Instead of using data on R&D, we separate the knowledge creating process into `R’ and `D’. This data stems from R&D surveys of Belgian firms. It turns out that only the `R’ part of R&D expenditure has a significant effect on patents and that development expenditure are insignificant. Thus previous literature relying on R&D expenditure suffers from a measurement error, such that the coefficient of R&D is biased towards zero, as R&D includes a large fraction of irrelevant expenditure, i.e. development expenditure, with respect to patenting.
    Keywords: Patents, Research, Development, Knowledge Production Function
    JEL: O31 O32
    Date: 2008
  10. By: William Greene
    Date: 2008
  11. By: Tran Quoc Trung; Nguyen Thanh Tung; Tran Duy Dong; Phan Hoai Duong (Ministry of Planning and Investment, Viet Nam)
    Abstract: The study recommends the formulation of policies that support the development of business linkages and networking, and which promote subcontracting arrangements between small and large enterprises or between domestic firms and foreign investment enterprises. It is also necessary to support and facilitate the direct involvement of SMMEs in exporting or indirectly through large manufacturing enterprises.
    Keywords: Export-oriented, SME,SMME, Viet Nam
    JEL: F1
    Date: 2008–04
  12. By: Iimi, Atsushi
    Abstract: Economic development is affected by infrastructure services in both volume and quality terms. However, the quality of infrastructure is relatively difficult to measure and assess. The current paper, using firm-level data collected by a business environment assessment survey in 26 countries in Europe and Central Asia, estimates the marginal impacts on firm costs of infrastructure quality. The results suggest that the reliability or continuity of services is important for business performance. Firm costs significantly increase when electricity outages occur more frequently and the average outage duration becomes longer. Similarly, increased hours of water supply suspensions also reduce firms'competitiveness. In these countries, it is found that the total benefit for the economy from eliminating the existing electricity outages ranges from 0.5 to 6 percent of gross domestic product. If all water suspensions are removed, the economy could receive a gain of about 0.5 to 2 percent of gross domestic product. By contrast, the quality of telecommunications services seems to have no significant impact.
    Keywords: Transport Economics Policy&Planning,Town Water Supply and Sanitation,Private Participation in Infrastructure,Infrastructure Economics,Urban Slums Upgrading
    Date: 2008–03–01

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