New Economics Papers
on Efficiency and Productivity
Issue of 2008‒10‒28
fourteen papers chosen by

  1. International Technology Spillovers, Human Capital and Productivity Linkages: Evidence from the Industrial Sector By Nicholas Apergis; Claire Economidou; Ioannis Filippidis
  2. Age-structured Human Capital and Spatial Total Factor Productivity Dynamics By Mishra, Tapas; Jumah, Adusei; Parhi, Mamata
  3. A benchmarking model for measuring the efficiency of a humanitarian aid program: a case study of an international NGO. By Malki, Elli
  4. Fast Track Land Reform and Agricultural Productivity in Zimbabwe By Zikhali, Precious
  5. Banks and Labor as Stakeholders: Impact on Economic Performance By Stijn Claessens; Kenichi Ueda
  6. International Benchmarking in Electricity Distribution : A Comparison of French and German Utilities By Astrid Cullmann; Hélène Crespo; Marie-Anne Plagnet
  7. Does Gender Matter for Firm Performance? Evidence from Eastern Europe and Central Asia By Sabarwal, Shwetlena; Terrell, Katherine
  8. Optimal Bandwidth Selection for Conditional Efficiency Measures: a Data-driven Approach By Luiza Badin; Cinzia Daraio; Léopold Simar
  9. Does Openness to International Financial Flows Raise Productivity Growth? By M. Ayhan Kose; Eswar Prasad; Marco Terrones
  10. Capital Use Intensity and Productivity Biases By Andersen, Matt A.; Alston, Julian M.; Pardey, Philip G.
  11. The Quality-Complementarity Hypothesis: Theory and Evidence from Colombia By Maurice Kugler; Eric Verhoogen
  12. Military R&D: the productivity puzzle By Ruttan, Vernon W.
  13. Impact of ICT and Human Skills on the European Financial Intermediation Sector By Erber, Georg; Madlener, Reinhard
  14. Innovation, Technology Transfer and Labor Productivity Linkages: Evidence from a Panel of Manufacturing Industries By Nicholas Apergis; Claire Economidou; Ioannis Filippidis

  1. By: Nicholas Apergis; Claire Economidou; Ioannis Filippidis
    Abstract: The paper estimates an empirical model that is consistent with a variety of R&D-driven model of growth where technology is transmitted via trade to other industries, both domestically and internationally, by being embodied in differentiated intermediate goods. The evidence is based on data from 21 manufacturing industries in six EU countries for the period 1980-1997. The contribution of the paper lies in showing how by including human capital in the model and employing suitable econometric procedures, the magnitude of R&D spillovers reported in the existing literature can be affected, while pointing to a major role of human capital in economic growth process.
    Keywords: total factor productivity, technology spillovers, human capital, panel cointegration, manufacturing industries
    JEL: C23 F1 L6 O33
    Date: 2008–10
  2. By: Mishra, Tapas (World Population Program, International Institute for Applied Systems Analysis, Laxenburg, Austria); Jumah, Adusei (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria, and Department of Economics, University of Vienna, Vienna, Austria); Parhi, Mamata (BETA, Louis-Pasteur University, Strasbourg, France)
    Abstract: This paper models total factor productivity (TFP) in space and proposes an empirical model for TFP interdependence across spatial locations. The interdependence is assumed to occur due to age-structured human capital dynamics. A semi-parametric spatial vector autoregressive framework is suggested for modeling spatial TFP dynamics where the role of demographic state and technological change are explicitly incorporated in the model to influence their spatial TFP co-movements. Empirical scrutiny in case of Asian countries suggests that cross-country human capital differences in their accumulation and appropriation pattern significantly influenced TFP volatility interdependence. The finding of complementarity in TFP in spatial locations calls for joint policy program for improving aggregate and individual country welfare.
    Keywords: Total factor productivity, Spatial growth, Non-linearity, Human capital, Age-structure, Semi-parametric VAR
    JEL: C14 C31 E61 N10 O30 O47
    Date: 2008–10
  3. By: Malki, Elli
    Abstract: This article presents a benchmarking model for measuring the efficiency of organizations that provide humanitarian aid. The model was developed and implemented in the framework of a large international aid program. The model is based on measuring the labor productivity of each organization that provides services and comparing it to the benchmark. Two main results came out from the estimation of the model: (a) there were positive economies of scale in the program meaning that larger organizations were inherently more efficient than smaller ones; (b) the source of the inefficiency was identified, not in the administrative part of the organization, but rather in the programmatic part.
    Keywords: NGO; humanitarian aid; efficiency; productivity;
    JEL: I38 L31
    Date: 2008–10–22
  4. By: Zikhali, Precious (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: In the year 2000 the government of Zimbabwe launched the Fast Track Land Reform Programme (FTLRP) as part of its ongoing land reform and resettlement programme, which seeks to address the racially skewed land distribution pattern inherited at independence in 1980. This paper uses data on beneficiaries of the programme and a control group of communal farmers to investigate the programme’s impact on the agricultural productivity of its beneficiaries. The data reveals significant differences between the two groups, not only in household and parcel characteristics but also in input usage. The results suggest that FTLRP beneficiaries are more productive than communal farmers. The source of this productivity differential is found to lie in differences in input usage. In addition we find that FTLRP beneficiaries gain a productivity advantage not only from the fact that they use more fertiliser per hectare, but also from attaining a higher rate of return from its use. Furthermore we find evidence that soil conservation, among other factors, has a significant impact on productivity. Our results also confirm the constraints imposed on agricultural productivity by poverty, suggesting that policies aimed at alleviating poverty would have a positive impact on agricultural productivity.
    Keywords: Land reform; Agricultural productivity; Zimbabwe
    JEL: D24 Q12 Q15 Q18
    Date: 2008–10–21
  5. By: Stijn Claessens; Kenichi Ueda
    Abstract: Traditionally, the impacts of the rights of financial institutions and workers on corporate performance have been analyzed independently. Yet, theory clearly indicates that the combination of relative powers of different stakeholders affects a firm overall performance. Using U.S. state level and state-industry level data, we investigate how output growth is affected by bank branch deregulation and employment protection occurring over 1972-1993. We find that financial liberalization positively impact overall state growth but greater workers' rights affects it ambiguously. At the industry level, however, employment protection promotes those industries that are more knowledge intensive, while the effect of financial liberalization does not differ across industries that vary in external financing dependency. The results hold controlling for changes in shareholders' rights, which itself is not significant. The findings suggest that financial liberalization operates mostly through an efficiency channel, better reallocating resources across sectors, while employment protection creates higher incentives and encourages more sector-specific, human capital investments. Overall, the results show that the strength of stakeholders' protection affects performance through efficiency channels and provide support for a stakeholders' view of corporate governance.
    Keywords: Banks , Labor , Corporate governance , Employment policy , Industrial investment , Industrial production , Economic models , Working Paper ,
    Date: 2008–09–30
  6. By: Astrid Cullmann; Hélène Crespo; Marie-Anne Plagnet
    Abstract: In this paper we present an international cross-country benchmarking analysis for utility regulation of France and Germany, the two largest electricity distribution countries in Europe. We examine the relative performance of 99 French and 77 German distribution companies operating within two different market structures. This paper applies several parametric benchmarking approaches to assess the relative technical efficiency of the utilities, such as deterministic Corrected Ordinary Least Squares (COLS) and Stochastic Frontier Analysis (SFA). Our base model uses the number of employees as a proxy for labor and network length as a proxy for capital as inputs. Units sold and the numbers of customers are considered as outputs. Our model variations and extensions analyze the effect of different characteristics of distribution areas (e.g. population density and the choice of investment in underground cable network). We find that utilities operating in urban areas feature higher efficiency scores and that investment in underground cables increase the technical efficiency of the distribution utilities.
    Keywords: International benchmarking, electricity distribution, parametric efficiency analysis
    JEL: L94 L11 C40
    Date: 2008
  7. By: Sabarwal, Shwetlena (World Bank); Terrell, Katherine (University of Michigan)
    Abstract: Using 2005 firm level data for 26 ECA countries, this paper estimates performance gaps between male- and female-owned businesses, while controlling for their location by industry and country. We find that female entrepreneurs have significantly smaller scale of operations (as measured by sales revenues) and are less efficient in terms of Total Factor Productivity (TFP), although this difference is very small. However, they generate the same amount of profit per unit of revenue as men. We find that while both male and female entrepreneurs in ECA are sub-optimally small, women's returns to scale are significantly larger than men's implying that they would gain more from increasing their scale. We 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: entrepreneurship, finance, gender, Eastern Europe, Central Asia
    JEL: D24 M21 O12 O16
    Date: 2008–10
  8. By: Luiza Badin; Cinzia Daraio; Léopold Simar
    Abstract: In productivity analysis an important issue is to detect how external (environmental) factors, exogenous to the production process and not under the control of the producer, might influence the production process and the resulting efficiency of the firms. Most of the traditional approaches proposed in the literature have serious drawbacks. An alternative approach is to describe the production process as being conditioned by a given value of the environmental variables (Cazals, Florens and Simar, 2002, Daraio and Simar, 2005). This defines conditional efficiency measures where the production set in the input × output space may depend on the value of the external variables. The statistical properties of nonparametric estimators of these conditional measures are now established (Jeong, Park and Simar, 2008). These involve the estimation of a nonstandard conditional distribution function which requires the specification of a smoothing parameter (a bandwidth). So far, only the asymptotic optimal order of this bandwidth has been established. This is of little interest for the practitioner. In this paper we fill this gap and we propose a data-driven technique for selecting this parameter in practice. The approach, based on a Least Squares Cross Validation procedure (LSCV), provides an optimal bandwidth that minimizes an appropriate integrated Mean Squared Error (MSE). The method is carefully described and exemplified with some simulated data with univariate and multivariate environmental factors. An application on real data (performances of Mutual Funds) illustrates how this new optimal method of bandwidth selection outperforms former methods.
    Keywords: Nonparametric efficiency estimation, conditional efficiency measures, environmental factors, conditional distribution function, bandwidth.
    JEL: C14 C40 C60 D20
    Date: 2008–10–24
  9. By: M. Ayhan Kose; Eswar Prasad; Marco Terrones
    Abstract: This paper provides a comprehensive analysis of the relationship between financial openness and total factor productivity (TFP) growth using an extensive dataset that includes various measures of productivity and financial openness for a large sample of countries. We find that de jure capital account openness has a robust positive effect on TFP growth. The effect of de facto financial integration on TFP growth is less clear, but this masks an important and novel result. We find strong evidence that FDI and portfolio equity liabilities boost TFP growth while external debt is actually negatively correlated with TFP growth. The negative relationship between external debt liabilities and TFP growth is attenuated in economies with higher levels of financial development and better institutions.
    Keywords: Capital flows , Productivity , Production growth , Capital account , Foreign direct investment , Development , Debt , Economic models ,
    Date: 2008–10–07
  10. By: Andersen, Matt A.; Alston, Julian M.; Pardey, Philip G.
    Abstract: Measures of productivity growth are often pro-cyclical. This study focuses on measurement errors in capital inputs, associated with unobserved variations in capital utilization rates, as an explanation for the existence of pro-cyclical patterns in measures of agricultural productivity. Recently constructed national and state-specific indexes of inputs, outputs, and productivity in U.S. agriculture for 1949-2002 are used to estimate production functions in growth rate form that include proxy variables for changes in the utilization of durable inputs. The proxy variables include an index of farmers€٠terms of trade and an index of local seasonal growing conditions. We find that utilization responses by farmers are significant and bias measures of productivity growth in a pro-cyclical pattern. We quantify the bias, adjust the measures of productivity for the estimated utilization responses, and compare the adjusted and conventional measures.
    Keywords: Productivity Analysis,
    Date: 2008–02–26
  11. By: Maurice Kugler; Eric Verhoogen
    Abstract: This paper presents a tractable formalization and an empirical investigation of the quality-complementarity hypothesis, the hypothesis that input quality and plant productivity are complementary in generating output quality. We embed this complementarity in a general-equilibrium trade model with heterogeneous, monopolistically competitive firms, extending Melitz (2003), and show that it generates distinctive implications for two simple, observable within-sector correlations -- between output prices and plant size and between input prices and plant size -- and for how those correlations vary across sectors. Using uniquely rich and representative data on the unit values of outputs and inputs of Colombian manufacturing plants, we then document three facts: (1) output prices are positively correlated with plant size within industries on average; (2) input prices are positively correlated with plant size within industries on average; and (3) both correlations are more positive in industries with more scope for quality differentiation, as measured by the advertising and R&D intensity of U.S. industries. The predicted and observed correlations between export status and input and output prices are similar to those for plant size. We present additional evidence that market power of either final-good producers or input suppliers does not fully explain the empirical patterns we observe. These findings are consistent with the predictions of our model and difficult to reconcile with alternative models that impose symmetry or homogeneity of either inputs or outputs. We interpret the results as broadly supportive of the quality-complementarity hypothesis.
    JEL: F12 L11 O14
    Date: 2008–10
  12. By: Ruttan, Vernon W.
    Abstract: A number of very careful econometric studies have been interpreted as showing that publicly funded research and development conducted by private firms has had little discernable impact on firm level profits or productivity. In contrast historical studies have shown that military and defense-related research development and procurement conducted by private firms has been an important source of technology development across a broad spectrum of U.S. manufacturing industries. Careful narrative analysis represents a more effective way of capturing the complementarities between military and defense-related research, development, and procurement on commercial technology development than econometric analysis.
    Keywords: Political Economy, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies,
    Date: 2008–02–23
  13. By: Erber, Georg (Department of Information Society and Competition, DIW Berlin â German Institute for Economic Research); Madlener, Reinhard (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))
    Abstract: This paper investigates the impact of ICT- and non-ICT capital, and of labour at different skill levels, on productivity and employment in the financial intermediation sector of twelve EU member countries plus the US and Japan. A stochastic possibility frontiers (SPF) approach is applied to assess the relation between the production inputs and to compute both time-varying and average inefficiencies. For the empirical analysis, annual data from 1995 to 2005 are employed that were obtained from recently released data contained in the EU KLEMS database. The results obtained shed some light on the relative impact of ICT- and non-ICT capital and labour inputs, and provide new insights about the structural dynamics between these factor inputs. We find that the financial sectors in the twelve EU member states studied are quite similar in terms of efficiency, and that efficiency and productivity depends much more on human capital than on physical capital. We conclude that learning-by-doing and learning-by-using are more decisive elements in shaping the productivity growth path than ICT investment alone, which can leave managers and employees overwhelmed by the complexity and needs of structural adjustments in the companiesâ organisation.
    Keywords: stochastic production possibility frontiers; ICT; structural dynamics
    JEL: C23 C51 D23 E23 O33 O47 O57
    Date: 2008–09
  14. By: Nicholas Apergis; Claire Economidou; Ioannis Filippidis
    Abstract: The paper explores the linkages between labor productivity, innovation and technology spillovers in a panel of manufacturing industries. The roles of R&D, human capital and international trade are considered in stimulating innovation and/or facilitating technology transfer. Using panel-based unit root tests and cointegration analysis, the results indicate the existence of a single long-run equilibrium relation between labor productivity, innovation and technology transfer. Further, R&D, trade and human capital have statistically and, especially the latter, quantitatively important effects on labor productivity both directly via innovation and indirectly as they enhance technology diffusion.
    Keywords: productivity, innovation, technology transfer, manufacturing industries, panel cointegration.
    JEL: C23 L60 O30
    Date: 2008–10

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