New Economics Papers
on Efficiency and Productivity
Issue of 2009‒06‒03
ten papers chosen by

  1. Hospital productivity and the Norwegian ownership reform – A Nordic comparative study By Kittelsen, Sverre A.C.; Magnussen, Jon; Sarheim Anthun, Kjartan; Häkkinen, Unto; Linna, Miika; Medin, Emma; Olsen, Kim Rose; Rehnberg, Clas
  2. A Sequential Malmquist-Luenberger Productivity Index By Oh, Donhyun; Heshmati, Almas
  3. Efficiency of the Bulgarian Banking System: Traditional Approach and Data Envelopment Analysis By Nikolay Nenovsky; Petar Chobanov; Gergana Mihaylova; Darina Koleva
  4. Productivity, Net Returns and Efficiency: Land and Market Reform in Vietnamese Rice Production By Tom Kompas, Tuong Nhu Che, Ha Quang Nguyen and Hoa Thi Minh Nguyen
  5. Performance and ownership in the governance of urban water By Miguel A. García-Rubio; Francisco González-Gómez; Jorge Guardiola
  6. Efficiency and patient satisfaction in Norwegian hospitals By Hagen, Terje P.; Veenstrab, Marijke; Stavem, Knut
  7. Heterogenety in hospitals responses to a financial reform: A random coefficient analysis of the impact of activity-based financing on efficiency By Eric, Biørn; Hagen, Terje P.; Iversen, Tor; Magnussen, Jon
  8. Firm Size Distribution and Returns to Scale. Non-Parametric Frontier Estimates from Italian Manufacturing By Lisa Crosato; Sergio Destefanis; Piero Ganugi
  9. Market Power versus Efficient-Structure in Arab GCC Banking By Al-Muharrami, Saeed; Matthews, Kent
  10. Which Portuguese firms are more innovative? The importance of multinationals and exporters By Armando Silva; Ana Paula Africano; Oscar Afonso

  1. By: Kittelsen, Sverre A.C. (Ragnar Frisch Centre for Economic Research); Magnussen, Jon (Department of Public Health and Community Medicine); Sarheim Anthun, Kjartan (SINTEF Health Research); Häkkinen, Unto (Centre for Health Economics); Linna, Miika (Centre for Health Economics); Medin, Emma (Medical Management Centre); Olsen, Kim Rose (Danish Institute for Health Services Research); Rehnberg, Clas (Medical Management Centre)
    Abstract: In a period where decentralisation seemed to be the prominent trend, Norway in 2002 chose to re-centralise the hospital sector. The reform had three main aims; cost control, efficiency and reduced waiting times. This study investigates whether the hospital reform has improved hospital productivity using the other four major Nordic countries as controls. Hospital productivity measures are obtained using data envelopment analysis (DEA) on a comparable dataset of 728 Nordic hospitals in the period 1999 to 2004. First a common reference frontier is established for the four countries, enveloping the technologies of each of the countries and years. Bootstrapping techniques are applied to the obtained productivity estimates to assess uncertainty and correct for bias. Second, these are regressed on a set of explanatory variables in order to separate the effect of the hospital reform from the effects of other structural, financial and organizational variables. A fixed hospital effect model is used, as random effects and OLS specifications are rejected. Robustness is examined through alternate model specifications, including stochastic frontier analysis (SFA). The SFA approach in performed using the Battese & Coelli (1995) one stage procedure where the inefficiency term is estimated as a function of the set of explanatory variables used in the second stage in the DEA approach. Results indicate that the hospital reform in Norway seems to have improved the level of productivity in the magnitude of approximately 4 % or more. While there are small or contradictory estimates of the effects of case mix and activity based financing, the length of stay is clearly negatively associated with estimated productivity. Results are robust to choice of efficiency estimation technique and various definition of when the reform effect takes place.
    Keywords: Efficiency; productivity; DEA; SFA; hospitals
    JEL: C14 D24 I12
    Date: 2009–06–02
  2. By: Oh, Donhyun (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Heshmati, Almas (Technology Management, Economics and Policy Program, Seoul National University)
    Abstract: This study proposes an alternative methodology for measuring environmentally sensitive productivity growth. The rationale of this methodology is to consider the features of technology appropriately by excluding a spurious technical regress based on the macroeconomic perspective. In order to consider this condition and to develop an alternative index, a directional distance function and the concept of the successive sequential production possibility set are combined. With this combination, the conventional Malmquist-Luenberger productivity index is modified to give the alternative sequential environmentally sensitive productivity index. This proposed index is employed in measuring productivity growth and its decomposed components of OECD countries for the period 1970-2003. We distinguish two main empirical findings. First, even though the components of the conventional Malmquist-Luenberger productivity index and the proposed index are different, the developments of productivity are similar. Second, unlike in previous studies, the efficiency change is the main contributor to the earlier study period, whereas the effect of technical change has prevailed over time.
    Keywords: efficiency change; environmentally sensitive; productivity growth index; directional distance function; Malmquist-Luenberger; productivity index; productivity; sequential production; possibility set; technical change
    JEL: D24 D57 D61
    Date: 2009–06–04
  3. By: Nikolay Nenovsky; Petar Chobanov; Gergana Mihaylova; Darina Koleva
    Abstract: The present paper traces the trends in the development of the Bulgarian banking system focusing on the dynamics of bank efficiency. Although the financial crisis in 1996-1997 and the following shift in monetary regime (introduction of Currency Board Arrangement) exerted significant influence on the development of the banking sector characteristics, the study covers only the period of 1999-2006 because of the lack of consistent available data prior to 1999. During the period analysed, the impact on bank efficiency of the following factors is studied: change in property, penetration of foreign commercial banks on the local banking market, competition, structure of bank assets and liabilities, central bank policy in regard to credit activity, etc. The limits of traditional accounting approaches to bank efficiency evaluation are discussed, as well as the implementation of non-parametric methods, in particular Data Envelopment Analysis (DEA). Different specifications of DEA like the intermediation and operating approaches were applied to separate groups and sub-groups. The results show that: firstly, foreign banks perform better than domestic and state-owned banks because of the technological and managerial improvements; and secondly, large banks are more efficient than small banks due to decreasing operating costs and scale economies.
    Keywords: DEA, bank efficiency, Bulgarian banking system, foreign banks
    JEL: G21 C61
    Date: 2008–06
  4. By: Tom Kompas, Tuong Nhu Che, Ha Quang Nguyen and Hoa Thi Minh Nguyen
    Abstract: Extensive land and market reform in Vietnam has resulted in dramatic increases in rice output over the past thirty years. The land and market reforms in agriculture were pervasive, moving the system of rice production from commune-based public ownership and control to one with effective private property rights over land and Farm assets, competitive domestic markets and individual decision making over a wide range of agricultural activities. The effect of this reform period and beyond is detailed with measures of total factor productivity (TFP), terms of trade and net returns in rice production in Vietnam from 1985 to 2006. Results show that TFP rises considerably in the major rice growing areas (the Mekong and Red River Deltaareas) during the early years of reform, and beyond, but also that there is clear evidence of a productivity `slow-down' since 2000. The differences over time and by region speak directly to existing land use regulations and practices, suggesting calls for further land and market reform. To illustrate this, additional frontier and efficiency model estimates detail the effects of remaining institutional and policy constraints, including existing restrictions on land consolidation and conversion and poorly developed markets for land and capital. Estimates show that larger and less land-fragmented farms, farms in the major rice growing areas, and those farms that are better irrigated, have a greater proportion of capital per unit of cultivated land, a clear property right or land use certificate and access to agricultural extension services are more efficient.
    Date: 2009
  5. By: Miguel A. García-Rubio (Universidad de Granada. Deparment of Applied Economics); Francisco González-Gómez (Universidad de Granada. Deparment of Applied Economics); Jorge Guardiola (Universidad de Granada. Deparment of Applied Economics)
    Abstract: In this paper the differences in terms of performance between public and the private governance in urban water management are investigated. A statistical ranking is implemented to determine programmatic efficiency differences in DEA, using an incomplete panel data that gathers information on 20 water utilities in Andalusia, in Southern Spain. In the model, labour and operational costs are considered as inputs. The volume of revenue water, the number of connections and the network length are used as outputs. The analysis indicates that private management is more efficient. The efficiency indicators adjusted by a variable related to quality are estimated and demonstrate that privatization of the service does not mean any loss in terms of quality. However, there are no significant differences between both types of management including as a desirable input hydraulic yield as a proxy of the degree of network renovation. A lower hydraulic efficiency in private management would suggest that the need to make significant investments could be an important factor when making the decision to privatize the management of the urban water service
    Keywords: : Water supply; Management; Local government;
    Date: 2009–06–02
  6. By: Hagen, Terje P. (Institute of Health Management and Health Economics); Veenstrab, Marijke (Rikshospitalet University Hospital); Stavem, Knut (Akershus University Hospital)
    Abstract: Objective for this working paper is to analyze the effects of a reimbursement reform on somatic hospitals’ efficiency and quality, measured as patient experiences. By the reform a capitation-based block grant system was replaced by an activity-based system. Methods: Data on efficiency and patient satisfaction from 213 hospital departments before (1996) and after (1998, 2000 and 2003) the reform were analyzed using a mixed model approach. The efficiency ratings were developed at the level of the hospital using data envelopment analysis, while the patient satisfaction scores were at department level data from recent patient surveys. Results: Both technical efficiency and patient satisfaction increase after the reform. Discussion: We interpret increasing technical efficiency as a direct effect of the reimbursement reform. Higher patient satisfaction is understood as an effect of lower waiting time, which in its turn is an effect of the introduction of activity-based financing.
    Keywords: Public hospitals; prospective payment system; financing; data envelopment analysis; efficiency; patient satisfaction
    JEL: I18
    Date: 2009–06–04
  7. By: Eric, Biørn (Department of Economics, University of Oslo); Hagen, Terje P. (Institute of Health Management and Health Economics); Iversen, Tor (Institute of Health Management and Health Economics); Magnussen, Jon (Department of Public Health and General Practice)
    Abstract: The paper examines the heterogeneity with respect to the impact of a financial reform - Activity Based Financing (ABF) - on hospital efficiency in Norway. Measures of technical efficiency and of cost-efficiency are considered. The data set is from a contiguous ten-year panel of 47 hospitals covering both pre-ABF years and years after its imposition. Substantial heterogeneity in the responses, as measured by both estimated and predicted coefficients, is found. Rank correlations between the estimated/predicted coefficients of the ABF dummy and the pre-ABF/post-ABF efficiencies are examined. Overall, improvement seems to be more pronounced in technical efficiency than in cost-efficiency.
    Keywords: Health econometrics; Panel data; Hospital efficiency; Activity-based financing; Random coefficients; Heterogeneity; Rank Correlation
    JEL: C23 C33 H51 I12 I18
    Date: 2009–06–04
  8. By: Lisa Crosato (Università di Milano-Bicocca); Sergio Destefanis (University of Salerno, CELPE and CSEF); Piero Ganugi (Università Cattolica del Sacro Cuore, Piacenza)
    Abstract: This paper explores the relationship between firm size distribution and technology. We analyse firm technology across selected manufacturing industries by means of a non-parametric production analysis, the Free Disposal Hull approach (Deprins et al., 1984; Kerstens and Vanden Eeckaut, 1999) and appraise the links between size and scale elasticity, finding a clear inverse relationship. Building on this result, we inquire whether the shape of the firm size distribution is related to a particular pattern of scale elasticities. We rely on the Zipf Plot (Stanley et al., 1995) of the Pareto IV distribution, which is concave up to a given threshold, and then approximately linear. Firms in the concave part of the plot are overwhelmingly found to experience increasing returns to scale. On the contrary, firms in the linear part are mainly characterised by constant returns to scale.
    JEL: L11 L6 D20 C14
    Date: 2009–05–07
  9. By: Al-Muharrami, Saeed; Matthews, Kent (Cardiff Business School)
    Abstract: This paper evaluates the performance of the Arab GCC banking industry in the context of the Structure-Conduct-Performance hypothesis in the period 1993-2002. The paper uses panel estimation differentiating between bank fixed effects and country fixed effects. It examines the Relative-Market-Power and the Efficient-Structure hypotheses differentiating between the two by employing a non-parametric measure of technical efficiency, and finds that the banking industry in the Arab GCC countries is best explained by the mainstream SCP hypothesis. The empirical results do not find any support for the Hicks (1935) "Quiet Life" version of the market power hypothesis.
    Keywords: GCC Banking; Structure Conduct Performance
    JEL: G2 L1
    Date: 2009–06
  10. By: Armando Silva (Faculdade de Economia, Universidade do Porto); Ana Paula Africano (CEF.UP, Faculdade de Economia, Universidade do Porto); Oscar Afonso (CEFUP, OBEGEF, Faculdade de Economia, Universidade do Porto)
    Abstract: In this study we test the trade Global Engagement hypothesis in which firms more globally engaged – either multinationals or exporters – are more innovative. The test is applied to 4818 Portuguese enterprises´ data for the period 2002-2004 through the use of the fourth Portuguese Community Innovation Survey. We estimated several Knowledge Production Functions assuming that knowledge outputs result from the combination of some knowledge inputs with the flow of ideas coming from existing stock of knowledge. We found that more internationally exposed firms create more knowledge output, than their domestic counterparts; indeed, more globalized firms use more inputs and have the opportunity to use a larger stock of knowledge. Notwithstand, the observed superiority of more internationally exposed firms is also the result of their globalized nature, not directly connected with knowledge inputs or information flows.
    Keywords: Multinational firms, exporting, knowledge-production functions, Portugal
    JEL: F14 F23 O31
    Date: 2009–06

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