New Economics Papers
on Efficiency and Productivity
Issue of 2009‒09‒26
seventeen papers chosen by

  1. Productivity Growth and Efficiency under Leontief Technology: An Application to US Steam-Electric Power Generation Utilities By Margarita Genius; Spyro Stefanou; Vangelis Tzouvelekas
  3. Is Corporate R&D Investment in High-Tech Sectors More Effective? By Raquel Ortega-Argilés; Mariacristina Piva; Lesley Potters; Marco Vivarelli
  4. Technology shape, distance to frontier, or frontier shift? Modeling the determinants of TFP growth By Camilla Mastromarco; Angelo Zago
  5. Globalization, Productivity and Plant Exit - Evidence from Japan - By INUI Tomohiko; Rechard KNELLER; MATSUURA Toshiyuki; Danny McGWAN
  6. State-Led or Market-Led Green Revolution? Role of Private Irrigation Investment vis-a-vis Local Government Programs in West Bengal’s Farm Productivity Growth By Pranab Bardhan
  7. Yet Another Look at Pest Damage and Pesticide Productivity By Robert Chambers; Giannis Karagiannis; Vangelis Tzouvelekas
  8. The Efficiency of Labor Input in the Tree Nut Growers Industry: A Stochastic Frontier Production Approach Study in Butte County, California By Kuo-Liang Matt Chang; Todd A. Lone
  9. Product and Process Innovation in a Growth Model of Firm Selection By Cristiana Benedetti Fasil
  10. Student Network Centrality and Academic Performance: Evidence from United Nations University By Zhang, Ying; Rajabzadeh, Iman; Lauterbach, Rodolfo
  11. Measurement of Consumption efficiency in Price-Quantity Space: A Distance Function Approach By Vasiliki Fourmouzi; Margarita Genius; Peter Midmore; Vangelis Tzouvelekas
  12. Intra-Industry Adjustment to Import Competition: Theory and Application to the German Clothing Industry By Horst Raff ,; Joachim Wagner
  13. Count Data Stochastic Frontier Models, with an application to the patents-R&D Relationship By Eduardo Fé-Rodríguez; Richard Hofler
  14. How market power influences bank failures: Evidence from Russia By Fungacova, Zuzana; Weill, Laurent
  16. Impact of water user associations on agricultural productivity in Chile: By McCarthy, Nancy; Essam, Timothy
  17. Factors Influencing the Profitability of Fertilizer Use on Maize in Zambia. By Zhiying Xu; Zhengfei Guan; T.S. Jayne; Roy Black

  1. By: Margarita Genius (Department of Economics, University of Crete, Greece); Spyro Stefanou (Pennsylvania State University); Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece)
    Abstract: A theoretical framework is developed for decomposing partial factor productivity and measuring technical inefficiency when the underlying technology is characterized by factor non-substitution. With Farrell's (1957) radial index of technical inefficiency being inappropriate in this case, Russell's (1985; 1987) non-radial indices are adapted to measure technical inefficiency in a Leontief model. A system of factor demand equations with a regime specific technical inefficiency term is proposed and estimated allowing for dependence across inputs using a copula approach. Then the paper presents a complete decomposition of partial factor productivity changes using a dataset of U.S. steam-power electric generation utilities.
    Date: 2009–07–29
  2. By: Mita Bhattacharya; Paresh K. Narayan; Stephen Popp; Badri N. Rath
    Abstract: This paper investigates the long-run relationship between labour productivity and employment, and between labour productivity and real wages in the case of the Indian manufacturing sector. The panel data set consists of 17 two-digit manufacturing industries for the period 1973-74 to 1999-2001. We find that productivity-wages and productivity-employment are panel cointegrated for all industries. We find that both employment and real wages exert a positive effect on labour productivity. We argue that flexible labor market has a significant influence on manufacturing productivity, employment and real wages in case of Indian manufacturing.
    Keywords: Labour Productivity; Real Wages; Panel Unit Root Tests; Panel Cointegartion Tests; Manufacturing.
    JEL: O47 O30 O53
    Date: 2009–04–02
  3. By: Raquel Ortega-Argilés (European Commission, Joint Research Center (JRC), Institute for Prospective Technological Studies (IPTS)); Mariacristina Piva (DISCE, Università Cattolica); Lesley Potters (European Commission, Joint Research Center (JRC), Institute for Prospective Technological Studies (IPTS)); Marco Vivarelli (DISCE, Università Cattolica)
    Abstract: This paper discusses the link between R&D and productivity across the European industrial and service sectors. The empirical analysis is based on both the European sectoral OECD data and on a unique micro longitudinal database consisting of 532 top European R&D investors. The main conclusions are as follows. First, the R&D stock has a significant positive impact on labour productivity; this general result is largely consistent with previous literature in terms of the sign, the significance and the magnitude of the estimated coefficients. More interestingly, both at sectoral and firm levels the R&D coefficient increases monotonically (both in significance and magnitude) when we move from the low-tech to the medium and high-tech sectors. This outcome means that corporate R&D investment is more effective in the high-tech sectors and this may need to be taken into account when designing policy instruments (subsidies, fiscal incentives, etc.) in support of private R&D. However, R&D investment is not the sole source of productivity gains; technological change embodied in gross investment is of comparable importance on aggregate and is the main determinant of productivity increase in the low-tech sectors. Hence, an economic policy aiming to increase productivity in the low-tech sectors should support overall capital formation.
    Keywords: R&D, productivity, high-tech sectors, innovation, industrial policy
    JEL: O33
    Date: 2009–07
  4. By: Camilla Mastromarco; Angelo Zago (Department of Economics (University of Verona))
    Abstract: We investigate the determinants of TFP growth of Italian manufacturing firms. Using stochastic frontier techniques, we consider three approaches to take into account the influence of external factors, i.e., the determinants of growth. First, external factors may affect the shape of the technology. Second, they may influence the distance from the frontier. Third, in a novel approach, the external factors influence the technological progress, that is the shift of the frontier. Using a sample of manufacturing firms in 1998-2003, we find that the exports, technological investments and spillovers, public infrastructures, and banking efficiency all have a positive effect on TFP growth. We also find that the first model best fits the data.
    Keywords: TFP, growth accounting, stochastic frontiers, R&D spillovers, banking efficiency, infrastructures
    JEL: O47 C23 G21 H54
    Date: 2009–09
  5. By: INUI Tomohiko; Rechard KNELLER; MATSUURA Toshiyuki; Danny McGWAN
    Abstract: During the 1980s and 1990s, Japanese manufacturers began to relocate production from sites in Japan to low-wage East Asian countries such as China, Malaysia and Thailand. Imports of manufacturing goods increased substantially over the same period. This rapid rise in imports, and proliferation of globalization, has led to concerns among policymakers that firms and plants may close. The media portray foreign multinationals as closing down productive Japanese plants and relocating them elsewhere in Asia. We find that this is not the case. Equally, the plants that are closed are below average productivity and the exit component contributes a very small fraction to productivity growth (using both the GR and FHK methods). In short, plant exit has not been the reason for Japan's low productivity growth in the 1990s. Instead a lack of productivity growth within plants is identified as being the main cause.
    Date: 2009–09
  6. By: Pranab Bardhan
    Abstract: This paper estimates respective roles of private investments in irrigation and local government programs (land reforms, extension services, and infrastructure investments) in the growth of farm productivity in West Bengal, India between 1981-95. A farm panel from a stratified random sample of farms from major agricultural districts of West Bengal is used.
    Keywords: productivity, west bengal, land reforms, tenancy, irrigation, agricultural development, public-private linkages, infrastructure investment, farm
    Date: 2009
  7. By: Robert Chambers (University of Maryland); Giannis Karagiannis (Department of Economics, University of Macedonia, Greece); Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece)
    Date: 2009–07–01
  8. By: Kuo-Liang Matt Chang (Department of Economics,South Dakota State University); Todd A. Lone (Department of Agricultural Economics, Jordan College of Agricultural Sciences and Technology, California State University, Fresno)
    Abstract: This paper aims to examine the contribution of the labor input to agricultural production efficiency. If an increase in numbers of labor does not increase production efficiency, we should have reason to question the current quantity-oriented labor policies in terms of solving the labor shortage issue. In addition, we want to examine the marginal rate of technical substitution (MRTS) between the labor input and other inputs. The MRTS will provide a clear idea of how labor can be replaced with other inputs without losing total production. Finally, the influence of farm labor on economies of scale and economies of scope will also be discussed. We will investigate whether the scale and size of the farm has a significant role in determining production efficiency for our target farmers.
    Keywords: Labor, Stochastic Frontier
    JEL: J43 Q12
    Date: 2009–09
  9. By: Cristiana Benedetti Fasil
    Abstract: Recent empirical evidence based on firm level data emphasizes firm heterogeneity in innovation activities and the different effects of process and product innovations on the productivity level and productivity growth. To match this evidence, this paper develops an endogenous growth model with two sources of firm heterogeneity: production efficiency and product quality.Both attributes evolve endogenously through firms’ innovation choices. Growth is driven by innovation and self-selection of firms and sustained by entrants who imitate incumbents. Calibrating the economy to match the Spanish manufacturing sector, the model enables to quantify the different effects of selection, innovation, and imitation as well as product and process innovation on growth. Compared to single attribute models of firm heterogeneity, the model provides a more complete characterization of firms’ innovation choices explaining the partition of firms along different innovation strategies and generating consistent firm size distributions.
    Keywords: endogenous growth theory, firm dynamics, heterogeneous firms, productivity, quality, innovation
    JEL: L11 L16 O14 O31 O40
    Date: 2009
  10. By: Zhang, Ying (UNU-MERIT); Rajabzadeh, Iman (UNU-MERIT); Lauterbach, Rodolfo (UNU-MERIT)
    Abstract: In this paper we empirically studied the relationship between network centrality and academic performance among a group of 47 PhD students from UNU-MERIT institute. We conducted an independent email survey and relied on social networks theory as well as standard econometric procedures to analyse the data. We found a significant reversed U-shaped relation between network centrality and students' academic performance. We controlled our results by several node's characteristics such as age, academic background, and research area. Additional evidence shows that there is a negative impact of age on academic performance at PhD student level. Contributions of this paper can refer to the input into studies that aim to explore peereffect. Also it contributes to the methodological approach by combining elements of network analysis and econometric theories. This study demonstrates that when evaluating the impact of network centrality on performance, there is no significant difference between various network centrality measurements.
    Keywords: Networks analysis, Network centrality, Peer-effect, Academic performance
    JEL: D85 I21 I23 L14
    Date: 2009
  11. By: Vasiliki Fourmouzi (University of Crete); Margarita Genius (Department of Economics, University of Crete, Greece); Peter Midmore (Institute of Rural Studies, The University of Wales, UK); Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece)
    Abstract: In standard consumer demand analysis, it is implicitly assumed that consumers behave optimally and, thus, efficiently. However, optimality is a restrictive assumption to make for consumers' actual behaviour. This study moves away from this restrictive assumption and develops a theoretical model for the analysis of consumer's inefficiency in price-quantity space. The consumption efficiency measures which are developed allow consumer's efficiency to be studied not only in terms of budget that is wasted (i.e., as in the past attempts to study consumption efficiency in price-quantity space), but also in terms of quantities that are wasted. As regards to the empirical measurement of consumer's efficiency, an approach is proposed under which estimation of a distance function representing consumer's preferences is carried out via treatment of the unobserved utility level as a random error term.
    Date: 2009–07–01
  12. By: Horst Raff ,; Joachim Wagner
    Abstract: This paper uses an oligopoly model with heterogeneous firms to examine how an industry adjusts to rising import competition. The model predicts that in the short run the least efficient firms in the industry become inactive, surviving firms face a fall in output, mark-ups and profits, and the average productivity of survivors increases. These pro-competitive effects of import penetration on the domestic industry disappear in the long run. The predictions for the short run are confirmed in an empirical study of the German clothing industry
    Keywords: international trade, firm heterogeneity, productivity, clothing industry
    JEL: F12 F15
    Date: 2009–09
  13. By: Eduardo Fé-Rodríguez; Richard Hofler
    Date: 2009
  14. By: Fungacova, Zuzana (BOFIT); Weill, Laurent (BOFIT)
    Abstract: There has been a notable debate in the banking literature on the impact of bank competition on financial stability. While the dominant view sees a detrimental impact of competition on the stability of banks, this view has recently been challenged by Boyd and De Nicolo (2005) who see the reverse effect. The aim of this paper is to contribute to this literature by providing the first empirical investigation of the role of bank competition on the occurrence of bank failures. We analyze this issue based on a large sample of Russian banks over the period 2001-2007 and employ the Lerner index as the metric of bank competition. The Russian banking industry is a unique example of an emerging market which has undergone a large number of bank failures during the last decade. Our findings clearly support the view that tighter bank competition is detrimental for financial stability. This result is robust to tests controlling for the measurement of market power, the definition of bank failure, the set of control variables, and the particular linear specification of the relationship. The normative implication of our findings is therefore that measures that increase bank competition could undermine financial stability.
    Keywords: bank competition; bank failure; Russia
    JEL: G21 P34
    Date: 2009–09–10
  15. By: Chiara Franco; Subash Sasidharan
    Abstract: The role of Foreign Direct Investments (FDI) in the process of economic development is of particular relevance since they bring in some specific technological assets that are not immediately available in the host country. The literature related to the microeconomic impact of FDI has been mainly concentrated in explaining the final effect on productivity, caused by the fact that Multinational Enterprises (MNEs) are not completely able to protect their superior assets from spilling over. However, there is a relatively unexplored effect that has recently been at the center of some studies that is the export spillover effect. Up to now, the literature has found out only mixed results with regard to the possibility that MNEs influence both export decision and export intensity of local firms. In the present paper, we provide some empirical evidence for that specific effect examining a case of an emerging economy, namely India for the period 1994-2006 by using a firm level dataset of more than 3000 firms belonging to manufacturing industries. In particular, we introduce the theoretical argument related to the MNEs heterogeneity which has not been properly investigated especially in empirical studies trying to understand whether, by using different measures characterizing MNEs behaviour, it is possible to distinguish between different impacts that MNEs have on export performance of local firms. We estimate the model through the Heckman selection technique after having built spillover variables that take into account five types of heterogeneity: the degree of involvement in trade networks, the level of embeddedness inside the innovation system of the host country, the asset seeking vs asset exploiting motivations(technological intensity), the type and amount of inputs sourced from abroad rather than from the host country and the percentage of the foreign equity stake. The second step of the analysis we perform is that of testing the relationship between the heterogeneity of MNEs with the heterogeneity of local firms splitting the sample according to the level of R&D intensity, the level of embeddness into the innovation system and the involvement in trade activities. Results confirm the hypothesis of different impacts caused by different MNEs behaviour especially with regard to the export intensity, while a greater impact on export decision is found when heterogeneity of local firms is accounted for.
    Keywords: Exports, spillover, MNCs
    JEL: F23 O14 O53
    Date: 2009–04–01
  16. By: McCarthy, Nancy; Essam, Timothy
    Abstract: "This article uses combined household- and community-level data collected from the Maule Region (VII) of Chile to evaluate factors affecting the decision to participate in yearly irrigation maintenance activities, and the influence of current behavior on farm revenues. Empirical results indicate that water user association characteristics explain much of the variation in participation decisions, contribution amounts, variable input purchases, and subsequent farm revenues." from authors' abstract
    Keywords: Water user association, Participation, Irrigation, Water resources, Environmental impacts,
    Date: 2009
  17. By: Zhiying Xu; Zhengfei Guan; T.S. Jayne; Roy Black
    Abstract: Fertilizer use remains very low in most of Africa despite widespread agreement that much higher use rates are required for sustained agricultural productivity growth. This study estimates maize yield response functions in agro-ecological Zone IIA, a relatively high potential zone of Zambia, to determine the profitability of fertilizer use under a range of small farm conditions found within this zone. The theoretical framework used in this study incorporates agronomic principles of the crop growth process. The model distinguishes different roles of inputs and non-input factors in crop production. We estimate the effects of conventional production inputs as well as household characteristics and government programs on maize yield for households in the dominant acrisols soil type. Results indicate that even within this particular soil type within Zone IIA, the maize-fertilizer response rate in the two specific years varied widely across households. The main factors explaining the variability in maize-fertilizer response rates were the rate of application, the timeliness of fertilizer availability, the use of animal draught power during land preparation, and whether the household incurred the death of an adult member in the past three years. These modifying factors, as well as variations in input and output prices due to proximity to roads and markets, substantially affected the profitability of fertilizer use on maize. Fertilizer use on maize tended to be unprofitable at full commercial fertilizer prices for farmers who received fertilizer late and who were located in relatively remote areas.
    Keywords: zambia, maize, fertilizer, profitability
    JEL: Q12
    Date: 2009–06

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