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on Efficiency and Productivity |
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Issue of 2010‒04‒17
35 papers chosen by |
| By: | Gantumur, Tseveen (DIW); Stephan, Andreas (JIBS) |
| Abstract: | To quickly adapt to technological change and developments, and thus remain competitive, firms increasingly resort to the use of external technology. This paper investigates whether and to what extent the acquisition of external disembodied technology affects the efficiency and productivity in innovation of technology acquiring firms. Using the stochastic frontier analysis combined with a difference-in-difference matching approach and firm-level panel from the German Innovation Survey for the period 1992-2004, we find that manufacturing firms that acquire disembodied technology experience more growth in innovative productivity than nonacquiring firms do. Thus, this study provides evidence on complementarity between internal and external R&D in innovation production, which is attributed by increasing returns to R&D scale and increasing technical efficiency. Moreover, we find that firm size significantly contributes to innovative efficiency and productivity of external technology acquirers. |
| Keywords: | Technology Acquisition; Innovative Efficiency; Innovative Productivity; SFA; Difference-in- Difference Matching |
| JEL: | L24 L25 L60 O30 |
| Date: | 2010–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0222&r=eff |
| By: | Kim, Sangho (Honam University); Park, Donghyun (Asian Development Bank); Park, Jong-Ho (Sunchon National University) |
| Abstract: | Based on Cuesta (2000), this paper develops a stochastic frontier production model that allows for different groups of firms to have different patterns of technical efficiency over time. The authors apply the model to the Malaysian manufacturing sector to decompose total factor productivity growth into technical efficiency change and technical progress for different firm sizes— e.g., large and small—in seven industries during 2000–2004. The empirical results indicate that technical efficiency has worsened across all industries and firm sizes. In contrast, evidence of substantial technical progress was found in all industries. In fact, technical progress has been larger than technical efficiency deterioration in most industries and firm sizes, leading to total factor productivity growth. The analysis identifies the industries and firm sizes that lag the most in productivity, and thus have the greatest scope for policies that facilitate productivity growth. |
| Keywords: | Capital mobility; financial crises; investment-saving gap; Asia |
| JEL: | O53 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0176&r=eff |
| By: | Dong-hyun Oh; Almas Heshmati; Hans Loof (Technology Management, Economics and Policy Program(TEMEP), Seoul National University) |
| Abstract: | This paper presents the parametric estimation of the rates of technical change and total factor productivity (TFP) growth of 7,462 Korean manufacturing firms for the period 1987 to 2007. Two alternative formulations of technical change measured by the time trend and the general index approaches are estimated with panel data models assuming flexible functional forms. Several extensions of each approach are also onsidered and their benefits and limitations are discussed. In addition to making estimates of the TFP growth and its decomposition, the paper compares the parametric TFP growth measure with the non-parametric Solow residual serving as a benchmark. Several hypotheses related to technology level, firm sizes, industrial sectors, skill biased technological change and macroeconomic and industrial policies are tested to explain the growth patterns and heterogeneity in technical change, input biases and TFP growth rates. Using second regression analysis, the paper explores the determinants of TFP growth and their policy implications. |
| Keywords: | Total factor productivity, technical change, manufacturing industry, determinants of growth |
| JEL: | C23 C51 D24 L25 L60 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:snv:dp2009:200922&r=eff |
| By: | Ahmad Nawaz (Pakistan Institute of Development Economics.) |
| Abstract: | The social nature of MFIs is mainly financed by subsidies from donors. Therefore, the role of subsidies cannot be under estimated in MFIs efficiency and productivity analysis. This paper is a first attempt to measure the financial efficiency and productivity of Microfinance Institutions (MFIs) worldwide taking into account the subsidies received by MFIs by using the non-parametric Data Envelopment Analysis (DEA). Towards this aim, a three-stage analysis is carried out. Firstly, technical and pure efficiency scores are calculated by splitting subsidies into input and output and entered into the DEA framework specifications depending on whether they are generating benifits (negative subsidies) or cost (positive subsidies) to the society. Secondly DEA-based Malmquist indices are calculated to analyze the intertemporal productivity change. Thirdly, Tobit Regression analysis are carried out to test a series of hypotheses concerning the relationship between financial efficiency and other indicators related to MFIs productivity, organization, outreach, sustainability and social impact. Overall subsidies contribute to financial efficiency of MFIs albeit marginally. Results uphold the tradeoff between outreach to the poor and financial efficiency. Thus MFIs which cater to the poor tend to bemore inefficient than those with clients relatively well off. Also evident is the fact that lending to women is efficient only in the presence of subsidies. MFIs in South Asia and Middle East & North Africa tend to be less efficient than the others. |
| Keywords: | Microfinance, Subsidies, Efficiency, Non-paprametric analysis |
| JEL: | G21 H2 H21 C14 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:sol:wpaper:10-009&r=eff |
| By: | Hansen, Thorsten |
| Abstract: | This paper studies the relationship between export activities and firm-level productivity. Unique matching of German and Austrian micro data from 1994 to 2003 suggests that exporters are more productive by around 40 percent compared with non-exporters. Moreover, beside other analysis techniques, instrumental variable estimations suggest that exporting causes a rise in firm-level productivity. That is, the annual average growth rate of an exporting firm's productivity is between about 1 and 1.5 percent higher than that of non-exporters. It allows the conclusion that, against other findings of existing studies, both directions hold: more productive firms self-select themselves into export markets and being active in foreign markets boosts firm-level productivity. |
| Keywords: | exports; firm-level productivity |
| JEL: | D24 F13 F23 L22 L23 O47 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:11466&r=eff |
| By: | Baoline Chen (U.S. Bureau of Economic Analysis); Peter A. Zadrozny (U.S. Bureau of Labor Statistics) |
| Abstract: | Production capital and technology (i.e., total factor productivity) in U.S. manufacturing are fundamental for understanding output and productivity growth of the U.S. economy but are unobserved at this level of aggregation and must be estimated before being used in empirical analysis. Previously, we developed a method for estimating production capital and technology based on an estimated dynamic structural economic model and applied the method using annual SIC data for 1947-1997 to estimate production capital and technology in U.S. total manufacturing. In this paper, we update this work by reestimating the model and production capital and technology using annual SIC data for 1949-2001 and partly overlapping NAICS data for 1987-2005. |
| Keywords: | Kalman filter estimation of latent variables |
| JEL: | C50 C81 D24 L60 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec090080&r=eff |
| By: | Kui-Wai Li (City University of Hong Kong, Hong Kong SAR); Tung Liu (Department of Economics, Ball State University) |
| Abstract: | This paper examines and applies the theoretical foundation of the decomposition of economic and productivity growth to the thirty provinces in China’s post-reform economy. The four attributes of economic growth are input growth, adjusted scale effect, technical progress, and efficiency growth. A stochastic frontier model with a translog production and incorporated with human capital is used to estimate the growth attributes in China. The empirical results show that input growth is the major contributor to economic growth and human capital is inadequate even though it has a positive and significant effect on growth. Technical progress is the main contributor to productivity growth and the scale effect has become important in recent years. The impact of technical inefficiency is statistical insignificant in the sample period. The relevant policy implication for a sustainable post-reform China economy is the need to promote human capital accumulation and improvement in technical efficiency. |
| Keywords: | technical progress, technical efficiency, economies of scale, human capital, China economy |
| JEL: | C2 D24 O4 O53 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:bsu:wpaper:200904&r=eff |
| By: | Adriana Camacho; Emily Conover |
| Abstract: | Following Hsieh and Klenow (2009), this paper studies productivity dispersions in Colombian industrial establishments using the Colombian Annual Manufacturing Survey (AMS) from 1982 to 1998. The United States is used as a benchmark to estimate the reallocation of capital and labor to equalize marginal products across plants in Colombia. Gains are found in manufacturing Total Factor Productivity (TFP) of approximately 3-8 percent and TPF is positively correlated with exporting status, age, size, and location in the central region of the country. There is also suggestive evidence that opening the economy in 1991 is associated with an increase in plant productivity levels for firms that export goods. The 1990 reform that reduced dismissal costs is associated with an increase in productivity, while the reform that increased labor costs in 1993 is associated with a decrease in plants’ productivity. Further work is needed to establish a causal relation between productivity and policy changes. |
| Keywords: | Total Factor Productivity, Industry, Reallocating factors of production, Colombia |
| JEL: | D24 O47 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:4654&r=eff |
| By: | John S. Greenlees (U.S. Bureau of Labor Statistics); Elliot Williams (U.S. Bureau of Labor Statistics) |
| Abstract: | Production capital and technology (i.e., total factor productivity) in U.S. manufacturing are fundamental for understanding output and productivity growth of the U.S. economy but are unobserved at this level of aggregation and must be estimated before being used in empirical analysis. Previously, we developed a method for estimating production capital and technology based on an estimated dynamic structural economic model and applied the method using annual SIC data for 1947-1997 to estimate production capital and technology in U.S. total manufacturing. In this paper, we update this work by reestimating the model and production capital and technology using annual SIC data for 1949-2001 and partly overlapping NAICS data for 1987-2005. |
| Keywords: | Aggregation, Consumer Price Index, CPI, Index Number |
| JEL: | C43 |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec090090&r=eff |
| By: | Raquel Ortega-Argilés (JRC-IPTS); Maria-Cristina Piva (Universita Cattolica di Milano); Lesley Potters (JRC-IPTS); Marco Vivarelli (Universita Cattolica di Milano) |
| 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 over the period 1987-2002 and on a unique micro longitudinal database consisting of 532 top European R&D investors over the six-year period 2000-2005. 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 it is the main determinant of the productivity increase in the low-tech sectors. Hence, an economic policy aiming to increase productivity in the low-tech sectors should support the overall capital formation. |
| Keywords: | R&D, productivity, high-tech sectors, innovation and industrial policy |
| JEL: | O33 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:wpaper:20099&r=eff |
| By: | Hansen, Thorsten |
| Abstract: | This paper studies the impact of trade liberalization in terms of tarif cuts within the Eastern European enlargement on German and Austrian firm productivity. Unique matching of data from 1994 to 2003 suggests that tarif reductions raise parent firm productivity significantly. A ten percentage point decrease in tarif rates can lead to total factor productivity gains of up to 2 percent. The data allow distinction between three types of tarifs: output, intra-firm and input tarif rates. The size of the results strongly depends on the type of tarif and country analyzed. |
| Keywords: | tariff rates; intra-firm trade; productivity; trade liberalization |
| JEL: | F12 F13 F23 L22 L23 O14 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:lmu:muenec:11465&r=eff |
| By: | Baoline Chen (U.S. Bureau of Economic Analysis); Peter A. Zadrozny (U.S. Bureau of Labor Statistics) |
| Abstract: | Production capital and total factor productivity or technology are fundamental to understanding output and productivity growth, but are unobserved except at disaggregated levels and must be estimated before being used in empirical analysis. In this paper, we develop estimates of production capital and technology for U.S. total manufacturing based on an estimated dynamic structural economic model. First, using annual U.S. total manufacturing data for 1947-1997, we estimate by maximum likelihood a dynamic structural economic model of a representative production firm. In the estimation, capital and technology are completely unobserved or latent variables. Then, we apply the Kalman filter to the estimated model and the data to compute estimates of model-based capital and technology for the sample. Finally, we describe and evaluate similarities and differences between the model-based and standard estimates of capital and technology reported by the Bureau of Labor Statistics. |
| Keywords: | Kalman filter estimation of latent variables |
| JEL: | C50 C81 D24 L60 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:bls:wpaper:ec090070&r=eff |
| By: | MORIKAWA Masayuki |
| Abstract: | This paper empirically quantifies what effect the data availability on part-timers' firm-level working hours may have on the accuracy of productivity measurement by using a data set on a large number of Japanese firms. Despite the practical importance of part-time workers in productivity measurement, this issue has not been considered seriously in past empirical studies. According to the analysis of this paper: (1) firm-level working hours of part-timers are quite heterogeneous even within the same industry; (2) when using industry average working hours, the bias of measured productivity is around 4% at the sample mean and from 1% to 2% at the sample median. The biases are especially large for service industries such as restaurant, hotel, and retail trade, where the part-time ratio is high; (3) however, the correlation between measured productivities using industry average working hours and those using firm-level hours is very high. This suggests there is only a small mismeasurement when using industry aggregate data in analyzing effects of firm characteristics or policy measures on productivity; (4) it is desirable to calculate full-time and part-time hours separately in productivity analyses covering service industries. In considering the importance of planning a valid economic growth strategy, enriching firm-level statistics is a cost-effective investment. |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:10015&r=eff |
| By: | Hasan , Iftekhar (The Lally School of Management and Technology of Rensselaer Polytechnic Institute, USA and Bank of Finland); Schmiedel , Heiko; Song, Liang |
| Abstract: | The European banking industry joined forces to achieve a fully integrated market for retail payment services in the euro area: the Single Euro Payments Area (SEPA). Against this background, the present paper examines the fundamental relationship between retail payment business and overall bank performance. Using data from across 27 European markets over the period 2000–2007, we analyse whether the provisions of retail payment services are reflected in improved bank performance, using accounting ratios and efficiency measures. The results confirm that banks perform better in countries where the retail payment service markets are more highly developed, and the relationship is stronger in countries with a relatively high adoption of retail payment transaction technologies. Retail payment transaction technology can itself also improve bank performance, and statistical evidence shows that heterogeneity in retail payment instruments is associated with enhanced bank performance. Similarly, a higher usage of electronic retail payment instruments seems to stimulate banking business. We also show that retail payment services have a more significant impact on savings and cooperative bank performance, although they do also have a positive influence on the performance of commercial banks. Additionally, our findings reveal that the impact of retail services on bank performance is dominated by fee income. Finally, an effective payment service market is found to be associated with higher bank stability. Our findings are robust to different regression specifications. The results may also be informative for the industry when reconsidering its business models in the light of current financial market developments. |
| Keywords: | retail payment; bank performance; cost and profit efficiency |
| JEL: | G21 G28 |
| Date: | 2010–02–21 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofrdp:2010_003&r=eff |
| By: | Murty, Sushama (Department of Economics, University of Warwick); Russell, R. Robert (Department of Economics, University of California, Riverside) |
| Abstract: | We distinguish between intended production and residual generation and introduce the concept of by-production. We show that by-production provides the fundamental explanation for the positive correlation that is observed between intended production and residual generation. Most of the existing literature attributes the observed positive correlation to abatement options available to firms. We show that abatement options of firms add to the phenomenon of by-production in strengthening the observed positive correlation. The existing literature usually does not explicitly model abatement options of firms, but considers a reduced form of he technology, which satisfies standard disposability assumptions with respect to all inputs and intended outputs. We show that more than one implicit production relation is needed to capture all the technological trade-offs that are implied by by-production. From our model, we are able to derive a reduced form of the technology that is in the spirit of the one that is usually studied in the literature. However, we nd that our reduced form technology violates standard disposability with respect to inputs and intended outputs that cause pollution. We derive implications from the phenomenon of by-production for the econometric and Data Envelopment Analysis (DEA) speci cations of pollution-generating technologies. We derive a DEA specification of technologies that satisfy by-production. Such a specification can be used to study issues relating to measurement of efficiency, marginal abatement costs, productivity, etc., of firms with technologies that generate pollution. JEL Codes: D20 ; D24 ; D62 ; Q50 |
| Keywords: | pollution-generating technologies ; free disposability ; weak disposability ; data envelope analysis ; technical efficiency measurement |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:931&r=eff |
| By: | Paolo Buccirossi (LEAR); Lorenzo Ciari (LEAR and EUI); Tomaso Duso (Humboldt University Berlin and WZB); Giancarlo Spagnolo (University of Rome Tor Vergata SITE, EIEF, CEPR); Cristiana Vitale (LEAR) |
| Abstract: | This paper empirically investigates the effectiveness of competition policy by estimating its impact on Total Factor Productivity (TFP) growth for 22 industries in 12 OECD countries over the period 1995-2005. We find a robust positive and significant effect of competition policy asmeasured by newly created indexes. We provide several arguments and results based on instrumental variables estimators as well as non-linearities to support the claim that the established link can be interpreted in a causal way. At a disaggregated level, the effect on TFP growth is particularly strong for specific aspects of competition policy related to its institutional setup and antitrust activities (rather than merger control). The effect is strengthened by good legal systems, suggesting complementarities between competition policy and the efficiency of law enforcement institutions. |
| Keywords: | Competition Policy, Productivity Growth, Institutions, Deterrence, OECD |
| JEL: | L4 K21 O4 C23 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:trf:wpaper:283&r=eff |
| By: | William Griffiths; Xiaohui Zhang; Xueyan Zhao |
| Abstract: | The stochastic frontier model used for continuous dependent variables is extended to accommodate output measured as a discrete ordinal outcome variable. Conditional on the inefficiency error, the assumptions of the ordered probit model are adopted for the log of output. Bayesian estimation utilizing a Gibbs sampler with data augmentation is applied to a convenient re-parameterisation of the model. Using panel data from an Australian longitudinal survey, demographic and socioeconomic characteristics are specified as inputs to health production, whereas production efficiency is made dependent on lifestyle factors. Posterior summary statistics are obtained for selected health status probabilities, efficiencies, and marginal effects. |
| Keywords: | Bayesian estimation, Gibbs sampling, ordered probit, production efficiency. |
| JEL: | C11 C21 C23 I12 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:msh:ebswps:2010-3&r=eff |
| By: | Sergio De Nardis (ISAE - Institute for Studies and Economic Analyses); Marco Ventura (ISAE - Institute for Studies and Economic Analyses) |
| Abstract: | Recent literature on heterogeneous multi-product firms predicts that elimination of marginal (less productive) products, due to fiercer competition, leads to an increase of firm efficiency. We test this prediction in the case of a sample of Italian firms during a period (2000-05) of rising competitive pressures. Adopting a propensity score matching estimator, we find evidence of a causal relationship between product dropping and higher firm productivity. We also find evidence that product dropping activity causes a fall of the share of blue collars versus white collars. We draw some policy implications regarding labour market adjustment and support to internal product switching when competition shocks take place. |
| Keywords: | product dropping, matching estimator, white collar |
| JEL: | D20 L23 L60 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:isa:wpaper:127&r=eff |
| By: | Fabio Pammolli; Massimo Riccaboni; Laura Magazzini (Department of Economics (University of Verona)) |
| Abstract: | We analyze the decline of R&D productivity in pharmaceuticals and its determinants. Since the molecular biology revolution, science has dramatically expanded the set of plausible therapeutic targets. However, innovation has become more difficult to achieve, and attrition rates of R&D projects have increased, especially in late-phase clinical trials. We show that the R&D productivity slowdown is associated with a higher concentration of R&D investments in high-risk domains, corresponding to unsolved therapeutic needs and unexploited biological mechanisms. We compare the strategies of European and US companies, finding differences in the composition of R&D portfolios, but no evidence of any productivity gap. |
| Keywords: | R&D productivity, pharmaceutical industry |
| JEL: | O31 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:ver:wpaper:6/2010&r=eff |
| By: | Christian Daude; Eduardo Fernandez-Arias |
| Abstract: | This paper combines development and growth accounting exercises with economic theory to estimate the relative importance of total factor productivity and the accumulation of factors of production in the economic development performance of Latin America. The region’s development performance is assessed by contrast with various alternative benchmarks, both advanced countries and peer countries in other regions. The paper finds that total factor productivity is the predominant factor: low productivity and slow productivity growth, as opposed to impediments to factor accumulation, are the key to understanding Latin America’s low income relative to developed economies and its stagnation relative to other developing countries. While policies easing factor accumulation would help somewhat in improving productivity, for the most part, closing the productivity gap requires productivity-specific policies. |
| Keywords: | Economic growth, Total factor productivity, Development |
| JEL: | O11 O47 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:4653&r=eff |
| By: | Franz R. Hahn (WIFO); Peter Egger (WIFO) |
| Abstract: | This paper conducts an in-depth analysis of the impact of acquisitions, initial public offerings and management buyouts on productivity and profitability of a large sample of Europe-based manufacturing companies covering the period from 1996 to 2005. At the center of our analysis is the perception that the performance evaluation of governance-related activities in the business sector such as ownership changes is similar in spirit to the assessment of treatment effects in the evaluation literature. We use propensity score matching techniques in order to resolve the missing data and the selection problem and find evidence corroborating the view that efficiency gains are strongest for those ownership changes that establish corporate governance structures with low principal-agent costs. |
| Keywords: | sample selection, matching techniques, corporate governance, growth |
| Date: | 2010–02–19 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2010:i:358&r=eff |
| By: | Santiago Carbó; David Humphrey; Francisco Rodríguez |
| Abstract: | Measuring banking competition using the HHI, Lerner index, or H-statistic can give conflicting results. Borrowing from frontier analysis, the authors provide an alternative approach and apply it to Spain over 1992-2005. Controlling for differences in asset composition, productivity, scale economies, risk, and business cycle influences, they find no differences in competition between commercial and savings banks nor between large and small institutions, but the authors conclude that competition weakened after 2000. This appears related to strong loan demand where real loan-deposit rate spreads rose and fees were stable for activities where scale economies should have been realized. |
| Keywords: | Bank competition |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:10-8:x:1&r=eff |
| By: | Dobbelaere, Sabien (VU University Amsterdam); Mairesse, Jacques (CREST-INSEE) |
| Abstract: | This article provides evidence of rent sharing from orthogonal directions by exploiting different dimensions in the same data. Taking advantage of a rich matched employer-employee dataset for France over the period 1984-2001, we consistently compare across-industry heterogeneity in rent-sharing parameters derived from three different approaches. The accounting approach and the standard labor economics approach are compatible with distinct labor bargaining settings (right-to-manage, efficient bargaining, labor hoarding) whereas the productivity approach hinges on the assumption of efficient bargaining. Across the different approaches, we evidently find differences in dispersion of the rent-sharing parameter estimates which could be attributable to differences in modeling assumptions and/or data requirements but these estimates lie within a comparable range. We interpret the latter finding as lending empirical support to efficient bargaining as the nature of the bargaining process in France over the considered period. |
| Keywords: | rent sharing, wage equation, production function, matched employer-employee data |
| JEL: | C23 D21 J31 J51 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4871&r=eff |
| By: | Anselm Mattes |
| Abstract: | In this empirical paper I address the effects of international mergers and acquisitions (M&A) on the acquired firms. International direct investments in the home country are usually welcomed and considered to be beneficial for growth, employment, productivity and technological progress. This is mostly unquestioned for greenfield investments, i.e. the case when a foreign multinational firm sets up a new affiliate. But a majority of foreign direct investment (FDI) projects takes the form of mergers and acquisitions (M&A). This kind of inward FDI is much more critically debated. The focal point of this paper is the development of domestic German firms that are subject to a foreign takeover regarding employment and productivity. For this purpose, I use a comprehensive German micro-level dataset which includes all industries as well as firms from all size categories and all German regions. The sample covers the years from 2000 to 2007. A propensity score matching approach combined with a difference-indifference estimator is applied. Contrary to a naive comparison between foreign-owned firms and domestic firms or a comparison between firm characteristics before and after a foreign takeover, this econometric approach ensures that the causal effects are isolated. The main results are the following: Foreign owned firms are larger and more productive than domestic ones. Mostly firms with below average productivity (lemons) as well as rms with a relatively high productivity (cherries) are acquired. Market development motives seem to play an important role for foreign acquisitions. Concerning the effects of foreign takeovers, a descriptive analysis cannot find unambiguous effects of foreign takeovers. The propensity score matching estimator confirms this finding and detects neither positive nor negative significant effects of foreign takeovers. |
| Keywords: | M&A, inward FDI, foreign takeover, employment, productivtity |
| JEL: | F23 J23 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:iaw:iawdip:60&r=eff |
| By: | Subhash C. Ray (University of Connecticut) |
| Abstract: | The input-output bundle of an efficient decision making unit (DMU) is located at a specific point on the frontier of the production possibility set. Returns to Scale (RTS) at this point can be unequivocally characterized. For an inefficient DMU, however, the input- and output-oriented projections on to the frontier will be different and RTS classifications at these two points may differ. In the existing literature, one needs to solve two DEA problems, one input-oriented and another output-oriented to determine the nature of RTS at these two different efficient projections. This paper shows how one can determine the returns to scale properties of an inefficient bundle simultaneously at both projections from the optimal solution of a single CCR-DEA problem either output- or input-oriented. A data set used by Christensen and Greene in their well known study of US electric utilities is used for an illustration of the proposed method in a numerical example. |
| Keywords: | Most Productive Scale Size; Convex Technologies, Nonparametric Efficiency Analysis |
| JEL: | D2 C6 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2010-07&r=eff |
| By: | Francesco Bogliacino (Universidad EAFIT); Mario Pianta (University of Urbino) |
| Abstract: | The diversity of technological activities that contribute to growth in labour productivity is examined in this paper for manufacturing and services industries in eight major EU countries. We test the relevance of the two major strategies of technological competitiveness (based on innovation in products and markets) or cost competitiveness (relying on innovation in processes and machinery) and their impact on economic performances. We propose models for the determinants of changes in labour productivity and we carry out empirical tests both for both the whole economy and for the four Revised Pavitt classes that group manufacturing and services industries with distinct patterns of innovation. Tests are carried out by pooling industries, countries and three time periods, using innovation survey data from CIS 2, 3 and 4, linked to economic variables.The results confirm the strong diversity of the mechanisms leading to productivity growth in Europe, with different roles of sector-specific technological activities developed in the pursuit of the strategies of technological competitiveness and cost competitiveness. In all empirical tests, for all industries as well as for each revised Pavitt class, we find a presence of both strategies, with a relevance and impact that is specific for each subgroup of industries. Economic performances in European industries appear as the results of different innovation models, with strong specificities of the four Revised Pavitt classes (i.e. "Science Based industries", "Scale and Information Intensive industries", "Specialised Suppliers industries" and "Suppliers Dominated industries").A number of policy lessons emerge from our findings. Policies aiming at greater labor productivity growth may have to take into account the different mechanisms resulting from technological and cost competitiveness strategies, and the different relevance that they have in industry groups. Efforts to introduce new processes have emerged as a strong aspect of innovative activities in all industries, but their impact on productivity growth is likely to be inferior to that of a search for new products and markets, typical of "Science Based" and "Specialised Suppliers" industries alone. Policies may be more effective when they focus on the latter type of efforts. As the dynamics of demand plays a strong role in the potential for productivity growth, innovation policies should also develop a stronger integration with industrial and macroeconomic policies. |
| Keywords: | Innovation, Labour Productivity, Industry Taxonomies, Technological and Cost Competitiveness |
| JEL: | O31 O33 O41 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:wpaper:200913&r=eff |
| By: | Florida, Richard (Martin Prosperity Institute); Mellander, Charlotta (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | The role of human capital in shaping cross-national economic performance is well-understood. But human capital is an indirect measure of skill, based on educational attainment. We introduce and test a more direct measure of skill, based on work that is actually performed, measured by occupation. Recent empirical studies have shown that such occupational “classes” play an important role in regional economic performance, out-performing human capital in some cases. We develop a measure of occupational skill and examine its relation to in cross-national economic performance. We explicitly compare this measure to conventional measures of human capital (based on educational attainment) through formal models of economic performance for 55 to 78 countries, using three measures of economic performance – economic output (GDP per capita), productivity (total factor productivity) and innovative performance (patents). The results confirm the hypothesis, indicating that our occupation-based measure closely is associated with all three measures of economic performance and also that it consistently performs better than human capital in these models. |
| Keywords: | skills; creativity; productivity; growth |
| JEL: | O31 |
| Date: | 2010–02–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0220&r=eff |
| By: | Guohua Feng; Apostolos Serletis |
| Abstract: | We derive a primal Divisia technical change index based on the output distance function and further show the validity of this index from both economic and axiomatic points of view. In particular, we derive the primal Divisia technical change index by total differentiation of the output distance function with respect to a time trend. We then show that this index is dual to the Jorgenson and Griliches (1967) dual Divisia total factor productivity growth (TFPG) index when both the output and input markets are competitive; dual to the Diewert and Fox (2008) markup-adjusted revenue-share based dual Divisia technical change index when market power is limited to output markets; dual to the Denny et al. (1981) and Fuss (1994) cost-elasticity-share based dual Divisia TFPG index when market power is limited to output markets and constant returns to scale is present; and also dual to a markup-and-markdown adjusted Divisia technical change index when market power is present in both output and input markets. Finally, we show that the primal Divisia technical change index satisfies the properties of identity, commensurability, monotonicity, and time reversal. It also satisfies the property of proportionality in the presence of path independence, which in turn requires separability between inputs and outputs and homogeneity of subaggregator functions. |
| Keywords: | Output distance function; Divisia technical change index; Imperfect competition; Axiomatic properties; Path independence. |
| JEL: | C43 D24 O47 |
| Date: | 2010–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:msh:ebswps:2010-7&r=eff |
| By: | Michael Dietrich (Department of Economics, The University of Sheffield Author-Person=pdi94) |
| Abstract: | This paper examines the impact of efficiency on profitability using a panel of 11728 UK manufacturing firms for the period 1993-2007. A key contribution is estimation of the relationship between firm efficiency and profitability in a new way. Part of this novelty involves direct estimation of firm efficiency using a stochastic frontier method rather than inferences being made about the impact of efficiency based on anticipated firm and market behaviour. Two key aspects of the discussion are (1) the shape of the relationship between efficiency and profitability and (2) the way in which this changes in the short and long runs. A simple theoretical model is developed that predicts a 4th order polynomial for efficiency on the right hand side of a profit equation in levels. This model also predicts short-run and long-run impacts that can involve a switching in the sign of the impact of efficiency. Estimation of this model suggests a threshold effect of efficiency on profitability. Below the threshold efficiency has effectively no effect on profitability, but above the threshold the impact is positive in the short-run but negative in the long-run. This switching is consistent with theoretical expectations. |
| Keywords: | Firm efficiency, Firm profitability, Stochastic frontier analysis, UK manufacturing firms |
| JEL: | C23 D21 L60 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2010003&r=eff |
| By: | Michael Dietrich (Department of Economics, The University of Sheffield Author-Person=pdi94) |
| Abstract: | This paper explores the impact of transaction costs on performance at firm and industry levels using a sample of 7350 UK manufacturing firms. This is achieved by estimating a profit function with estimated transaction costs as a right hand side variable. The discussion has two specific objectives. (1) To show how firm and average industry transaction costs can be estimated using a stochastic frontier method. (2) To examine a central claim of transaction cost theory that links these costs to performance. In addition the different impacts of static and dynamic transaction costs are emphasised, with the different impacts being respectively negative and positive on profitability. Broadly speaking it is shown that such costs do impact on performance in a way consistent with both static and dynamic costs, in different industries, and that the impacts hold after a series of robustness checks. In addition it is shown that the impacts can depend on monopoly power, firm scale, and firm growth. |
| Keywords: | Transaction costs, Stochastic frontier analysis, profitability analysis, UK manufacturing |
| JEL: | C21 D23 L60 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2009011&r=eff |
| By: | Fabio Pieri; Enrico Zaninotto (DISA, Faculty of Economics, Trento University) |
| Abstract: | In this paper we made use of an econometric approach to efficiency analysis in order to capture the role of vertical integration and outsourcing on firm's efficiency. Vertical integration is considered an indicator of structure, while outsourcing represents the process of its change. We consider inefficiency measures as indicators of organizational heterogeneity, related to the firm's choices regarding the phases of the production process that are under its control. We find support for the hypothesis of a relationship between vertical integration and efficiency. The results on outsourcing activity, and in particular the interaction between outsourcing and vertical structure, indicate that heterogeneous patterns, far from tending to cancel out each other as a consequence of common external changes, are reinforcing. Moreover, the sensitivity of inefficiency variance to the cycle, indicate that different firms may have different dynamic properties. |
| Keywords: | vertical integration; outsourcing; technical efficiency; double heteroskedastic model |
| JEL: | D24 L23 L25 L64 |
| Date: | 2010–03 |
| URL: | http://d.repec.org/n?u=RePEc:trt:disawp:1001&r=eff |
| By: | Seong-Sang Lee; Yeonbae Kim (Technology Management, Economics and Policy Program(TEMEP), Seoul National University) |
| Abstract: | With the premise that patent data are reliable indicators of innovativeness, the empirical analysis of R&D?patents relationship is useful for monitoring the efficiency of the innovation process. This paper extends the research on the relationship between R&D spending and patent counts by estimating the impact of efficiency parameters. A data set from 1255 firms with nonzero R&D expenditures in Korea was studied. Results show that the difference in firms¡¯ innovative performance is attributable to firm-specific characteristics, including propensity to patent and firm size, and differences in efficiency parameters. They also indicate that firms that conduct patent searches before starting R&D activities obtain an average of 13.9% more patents with an increase of one unit on the ¡®patent search¡¯ scale. Results also show the importance of the role of IP managers and revenue splitting policy for employee-inventors in the innovation process. |
| Keywords: | Incentive for employee-inventor, Innovation process, Innovative performance, IP manager, preliminary patent search, R&D-patents relationship |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:snv:dp2009:200924&r=eff |
| By: | Eberhardt, Markus (St Catherine's College, Oxford, Department of Economics); Helmers, Christian (Wolfson College, Oxford); Strauss, Hubert (European Investment Bank, Economic and Financial Studies) |
| Abstract: | A large body of literature on the estimation of private returns to R&D adopts the Griliches knowledge production framework, ignoring the impact omitted spillover effects may have on consistent estimation. A separate body of literature is primarily interested in the presence and magnitude of spillovers but imposes a rigid ad hoc structure on the channels these can take, e.g. within-industry, within-country or determined by industry input-output matrices. In this paper we adopt a common factor approach which accounts for R&D spillovers without imposing any arbitrary structure on their nature and channels. At the same time we can account for other unobserved common processes which may aect countries or sectors dierentially, e.g. economic shocks or business cycles, as well as heterogeneous evolution of TFP over time. Panel data from 12 industrial sectors of 12 OECD and EU countries (1980-2005) is used to arrive at unbiased estimates of private returns to R&D. Our results indicate the presence of substantial cross-sectional dependence in the residuals of the Griliches knowledge production function, pointing to the presence of knowledge spillovers. Further, our estimations suggest that when ignoring the presence of spillovers, R&D produces positive returns. However, when cross-sectional dependence is accounted for, we do not nd any convincing evidence for positive private returns to R&D. These results suggest that spillovers may not be additively separable from own-R&D and need to be accounted for in the estimation even when the exclusive interest lies in obtaining estimates for private returns to R&D. |
| Keywords: | Productivity; R&D; Spillovers; Common Factor Model |
| JEL: | C23 D24 L16 |
| Date: | 2010–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:ris:eibefr:2010_001&r=eff |
| By: | Jaison R. Abel; Ishita Dey; Todd M. Gabe |
| Abstract: | We estimate a model of urban productivity in which the agglomeration effect of density is enhanced by a metropolitan area's stock of human capital. Estimation accounts for potential biases due to the endogeneity of density and industrial composition effects. Using new information on output per worker for U.S. metropolitan areas along with a measure of density that accounts for the spatial distribution of population, we find that a doubling of density increases productivity by 2 to 4 percent. Consistent with theories of learning and knowledge spillovers in cities, we demonstrate that the elasticity of average labor productivity with respect to density increases with human capital. Metropolitan areas with a human capital stock one standard deviation below the mean realize no productivity gain, while doubling density in metropolitan areas with a human capital stock one standard deviation above the mean yields productivity benefits that are about twice the average. |
| Keywords: | Urban economics ; Labor productivity ; Labor market ; Population ; Demography |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:440&r=eff |
| By: | Torberg Falch (Institutt for Samfunnsøkonomi (Department of Economics), Norges Teknisk- Naturvitenskaplige Universitet (NTNU) (Norwegian University of Science and Technology)); Justina A.V. Fischer (University of Hamburg, Institute for Public Finance) |
| Abstract: | Using a panel of international student test scores 1980 – 2000 (PISA and TIMSS), panel fixed effects estimates suggest that government spending decentralization is conducive to student performance. The effect does not appear to be mediated through levels of educational spending. |
| Keywords: | Fiscal Decentralization; Student Achievement; Federalism; PISA; TIMSS; Education; School Quality |
| JEL: | C33 H2 I2 H40 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:hce:wpaper:031&r=eff |