nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2010‒07‒17
eighteen papers chosen by
Angelo Zago
University of Verona

  1. Cost Efficiency and Scale Economies in General Dental Practices in the U.S.: A Non-parametric and Parametric Analysis By Lei Chen; Subhash C. Ray
  2. Economic Restructuring and Total Factor Productivity Growth: Tunisia Over the Period 1983-2001 By Sofiane Ghali; Pierre Mohnen
  3. Measuring the effect of virtual mergers on banks’ efficiency levels:A non parametric analysis By Halkos, George; Tzeremes, Nickolaos
  4. Scope for Export-Led Growth in a Large Emerging Economy: Is India Learning by Exporting? By Saleh S. Tabrizy; Natalia Trofimenko
  5. Integrated Productivity Accounts: Contributions to the Measurement of Capital By Baldwin, John R.; Gu, Wulong; Macdonald, Ryan
  6. Product, process and organizational innovation: drivers, complementarity, and productivity effects By Polder, Michael; Van Leeuwen, George; Mohnen, Pierre; Raymond, Wladimir
  7. Production Efficiency versus Ownership: The Case of China By Shiu, Alice; Zelenyuk, Valentin
  8. Distinguishing Different Industry Technologies and Localized Technical Change By Paul, Catherine J. Morrison; Sauer, Johannes
  9. The effect of environmental cross compliance regulations on Swiss farm productivity By Bokushevar, Raushan; Kumbhakar, Subal C; Lehmann, Bernard
  10. Infrastructures and productivity: an updated survey By Angel de la Fuente
  11. Offshoring and the State of American Manufacturing By Susan Houseman; Christopher Kurz; Paul Lengermann; Benjamin Mandel
  12. Banking Efficiency and Financial Development in Sub-Saharan Africa By Sandrine Kablan
  13. Expenditure Efficiency and the Optimal Size of Government in Developing Countries By Yogi Rahmayanti; Theara Horn
  14. Impact of farmer field schools on agricultural productivity and poverty in East Africa By Davis, Kristin; Nkonya, Ephraim; Kato, Edward; Mekonnen, Daniel Ayalew; Odendo, Martins; Miiro, Richard; Nkuba, Jackson
  15. Effects of Global Climate Change on Nigerian Agriculture: An Empirical Analysis By Apata, T.G; Ogunyinka, A.I; Sanusi, R.A; Ogunwande, S
  16. The Estimation of Meta-Frontiers by Constrained Maximum Likelihood By Alexandre Repkine
  17. Productivity and Propensity: The Two Faces of the R&D-Patent Relationship By Gaétan de Rassenfosse
  18. Improving resource allocation and incomes in Vietnamese agriculture By Dewbre, Joshua

  1. By: Lei Chen (University of Connecticut); Subhash C. Ray (University of Connecticut)
    Abstract: This paper uses both the non-parametric method of Data Envelopment Analysis (DEA) and the econometric method of Stochastic Frontier Analysis (SFA) to study the production technology and cost efficiency of the U.S. dental care industry using practice level data. The American Dental Association (ADA) 2006 survey data for a number of general dental practices in Colorado are used for the empirical analyses. The result shows that the average cost efficiency score is 0.79 for DEA and 0.87 for SFA, and the cost inefficiency comes mainly from the allocative inefficiency. The minimum average cost of production is 50.6 cents for each dollar of gross billing generated. The optimal output level for a dental practice to fully exploit the economies of scale is at $1.68 million. Both DEA and SFA provide generally consistent results.
    Keywords: Dental Care, Cost Efficiency, Economies of Scale, Data Envelopment Analysis, Stochastic Frontier Analysis
    JEL: I1 C2 D2
    Date: 2010–06
  2. By: Sofiane Ghali; Pierre Mohnen
    Abstract: In this paper we aim to measure and decompose the growth of frontier total factor productivity (TFP) in Tunisia over the period 1983-2001. We define frontier TFP growth as the shift of the economy’s production frontier, which we obtain by solving for each year a linear program, a sort of aggregate DEA analysis. We then decompose this aggregate frontier TFP growth into changes in technology, terms of trade, efficiency and resource utilization. We can also attribute frontier TFP growth to its main beneficiaries: labor, decomposed into five types, capital, decomposed into two types, and the allowable trade deficit. We find that frontier TFP grew by about 1% a year after the introduction of the structural adjustment program of 1987. Labor, in particular unskilled labor, was the main beneficiary of frontier TFP growth. The Solow residual reflecting technological change was the main driver of frontier TFP growth. The terms of trade were not favorable to Tunisia. After 1992, while the Tunisian efficiency frontier moved outwards, the country moved away from its efficiency frontier. <P>Cet article mesure et décompose la croissance de la productivité totale des facteurs (PTF) potentielle en Tunisie sur la période 1983 à 2001. La croissance de la PTF potentielle est définie comme le déplacement de la frontière d’efficience de l’économie, qui est déterminée chaque année à partir d’un programme de programmation linéaire, un genre d’analyse DEA macroéconomique. Cette croissance de la PFT potentielle est décomposée de deux façons : une fois en termes de sources de la croissance, à savoir le changement technologique, les variations de taux de change, les changements d’efficience et utilisation des ressources ; et une fois en termes de bénéficiaires de cette croissance, à savoir le travail, décomposé en cinq types, le capital, décomposé en deux types, et le déficit permis de la balance commerciale. Nous trouvons que la PTF potentielle a cru de 1 % par an après l’introduction du programme d’ajustement structurel de 1987. La croissance de la PTF potentielle est surtout due au résidu de Solow, qui capte le progrès technologique, et a surtout bénéficié au travail non-qualifié. Les termes de l’échange ne furent pas favorables à la Tunisie. Après 1992, la frontière d’efficience s’est déplacée vers l’extérieur, mais la Tunisie s’est distancée de sa frontière d’efficience.
    Keywords: Total factor productivity growth, input-output, frontier analysis, Tunisia, Croissance de la productivité totale des facteurs, tableaux entrée-sortie, frontière d’efficience, Tunisie
    JEL: O47 O55
    Date: 2010–06–01
  3. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This study illustrates how the recent developments in efficiency analysis and statistical inference can be applied when evaluating banks’ performance issues from a potential merger. By using a sample of 29 Greek commercial banks the paper provides a six step procedure in order to evaluate whether a potential bank merger can exhibit economies of scale and characterized as favorable.
    Keywords: Data Envelopment Analysis; Bootstrap techniques; Virtual Mergers; Bank efficiency.
    JEL: C14 C61 C67 G21 C60
    Date: 2010–03–13
  4. By: Saleh S. Tabrizy; Natalia Trofimenko
    Abstract: The ongoing debate of the literature on learning-by-exporting is whether the conspicuously stellar performance of exporters relative to non-exporters can be, at least partially, attributed to the horizonwidening interaction with foreign consumers and learning of cost-efficient and quality enhancing production methods, or whether all of the differential is due to the self-selection of best firms into exporting. This study uses data from the 1998-2008 Prowess Database to examine how firm-level productivity paths differ between firms with varying degrees of exposure to international trade in India, the country to rank third among the most dominant economies by the year 2050. Having used Levinsohn-Petrin measure of total factor productivity and a proxy for labor productivity, we find significant ex-ante differences in productivity between exporters and non-exporters and no difference in the ex-post productivity gains. These findings suggest that even in a large emerging economy with strong absorptive capacity and a significant catch-up potential, learning-by-exporting effects are nonexistent. Rather, self-selection of more productive firms into exporting explains the productivity differential between exporters and non-exporters
    Keywords: trade, total factor productivity, exports, export-led growth, learning by exporting
    JEL: D21 F10 L60
    Date: 2010–07
  5. By: Baldwin, John R.; Gu, Wulong; Macdonald, Ryan
    Abstract: Measures of productivity are derived by comparing outputs and inputs. The System of National Accounts (SNA) in Canada provides a useful framework for organizing the information required for comparisons of this type. Integrated systems of economic accounts provide coherent, consistent alternate estimates of the various concepts that can be used to measure productivity.
    Keywords: Economic accounts, Productivity accounts
    Date: 2010–06–29
  6. By: Polder, Michael; Van Leeuwen, George; Mohnen, Pierre; Raymond, Wladimir
    Abstract: We propose a model where both R&D and ICT investment feed into a system of three innovation output equations (product, process and organizational innovation), which ultimately feeds into a productivity equation. We find that ICT investment and usage are important drivers of innovation in both manufacturing and services. Doing more R&D has a positive effect on product innovation in manufacturing. The strongest productivity effects are derived from organizational innovation. We find positive effects of product and process innovation when combined with an organizational innovation. There is evidence that organizational innovation is complementary to process innovation.
    Keywords: Innovation; ICT; R&D; productivity
    JEL: L25 O30 O32 O33 O31
    Date: 2010–06
  7. By: Shiu, Alice; Zelenyuk, Valentin
    Abstract: In this study, we explore the pattern of efficiency among enterprises in China’s 29 provinces across different ownership types in heavy and light industries and across different regions (coastal, central and western). We do so by performing a bootstrap-based analysis of group efficiencies (weighted and non-weighted), estimating and comparing densities of efficiency distributions, and conducting a bootstrapped truncated regression analysis. We find evidence of interesting differences in efficiency levels among various ownership groups, especially for foreign and local ownership, which have different patterns for light and heavy industries.
    Keywords: Efficiency; Data envelopment analysis; Bootstrapping; Ownership; China
    JEL: C13 C15 D24 O4 O12
    Date: 2009–08–01
  8. By: Paul, Catherine J. Morrison; Sauer, Johannes
    Abstract: This contribution is based on the notion that different technologies are present in an industry. These different technologies result in differential âdriversâ of economic performance depending on the kind of technology used by the individual firm. In a first step different technologies are empirically distinguished. Subsequently, the associated production patterns are approximated and the respective change over time is estimated. A latent class modelling approach is used to distinguish different technologies for a representative sample of E.U. dairy producers as an industry exhibiting significant structural changes and differences in production systems in the past decades. The production technology is modelled and evaluated by using the flexible functional form of a transformation function and measures of first- and second-order elasticities. We find that overall (average) measures do not well reflect individual firmsâ production patterns if the technology of an industry is heterogeneous. If there is more than one type of production frontier embodied in the data, it should be recognized that different firms may exhibit very different output or input intensities and changes associated with different production systems. In particular, in the context of localized technical change, firms with different technologies can be expected to show different technical change patterns, both in terms of overall magnitudes and associated relative output and input mix changes. Assuming a homogenous technology would result in inefficient policy recommendations leading to suboptimal industry outcomes.
    Keywords: Heterogenous Technologies, Transformation Function, Localized Technical Change, Production Economics, Q12, O33, C35,
    Date: 2010–03–29
  9. By: Bokushevar, Raushan; Kumbhakar, Subal C; Lehmann, Bernard
    Abstract: This paper analyzes the evolution of Swiss farm productivity during the implementation of environmental policy reforms. We employ a production model formulation with technology parameters defined as the functions of subsidies, as well as individual farm characteristics. Our estimates for two groups of farms â milk-producing and crop farms â show that introducing environmental regulations induced serious changes in the production technology and productivity of inputs, especially of land, labor and fertilizer. The overall effect of the subsidies on the production output has been found negative. At the same time, we find that farms do not use their resources optimally, which indicates some deficiencies in structural adjustments, primarily in the land and labor markets.
    Keywords: environmental regulations, productivity analysis, Swiss agriculture., Environmental Economics and Policy, Q120, D240,
    Date: 2010–03–29
  10. By: Angel de la Fuente
    Abstract: The relationship between infrastructures and productivity has been the subject of an ongoing debate during the last two decades. The available empirical evidence is inconclusive and its interpretation is complicated by econometric problems that have not been fully solved. This paper surveys the relevant literature, focusing on studies that estimate aggregate production functions or growth regressions, and extracts some tentative conclusions. On the whole, my reading of the evidence is that there are sufficient indications that public infrastructure investment contributes significantly to productivity growth, at least for countries where a saturation point has not been reached. The returns to such investment are probably quite high in early stages, when infrastructures are scarce and basic networks have not been completed, but fall sharply thereafter. Hence, appropriate infrastructure provision is probably a key input for development policy, even if it does not hold the key to rapid productivity growth in advanced countries where transportation and communications needs are already adequately served.
    Keywords: infrastructures, public capital, productivity
    JEL: H54 O47
    Date: 2010–06
  11. By: Susan Houseman (W.E. Upjohn Institute); Christopher Kurz (Federal Reserve Board); Paul Lengermann (Federal Reserve Board); Benjamin Mandel (Federal Reserve Board)
    Abstract: The rapid growth of offshoring has sparked a contentious debate over its impact on the U.S. manufacturing sector, which has recorded steep employment declines yet strong output growth—a fact reconciled by the notable gains in manufacturing productivity. We maintain, however, that the dramatic acceleration of imports from developing countries has imparted a significant bias to the official statistics. In particular, the price declines associated with the shift to low-cost foreign suppliers generally are not captured in input cost and import price indexes. To assess the implications of offshoring bias for manufacturing productivity and value added, we implement the bias correction developed by Diewert and Nakamura (2009) to the input price index in a growth accounting framework, using a variety of assumptions about the magnitude of the discounts from offshoring. We find that from 1997 to 2007 average annual multifactor productivity growth in manufacturing was overstated by 0.1 to 0.2 percentage point and real value added growth by 0.2 to 0.5 percentage point. Furthermore, although the bias from offshoring represents a relatively small share of real value added growth in the computer and electronic products industry, it may have accounted for a fifth to a half of the growth in real value added in the rest of manufacturing.
    Keywords: offshoring, manufacturing, price measurement, productivity, output growth
    JEL: O41 O47 F14 L60
    Date: 2010–06
  12. By: Sandrine Kablan
    Abstract: This study assesses the determinants of banking system efficiency in sub-Saharan Africa (SSA) and asks what, besides the degree of efficiency, explains the low level of financial development in the region. It uses stochastic frontier analysis to measure efficiency and a generalized method of moments system to explain financial development. SSA banks are found to be generally cost-efficient, but nonperforming loans undermine efficiency, which suggests that improvement in the regulatory and credit environments should improve efficiency. The political and the economic environment have held back financial development in SSA.
    Keywords: Banking systems , Banks , Cross country analysis , Development , Economic models , Financial management , Sub-Saharan Africa ,
    Date: 2010–05–17
  13. By: Yogi Rahmayanti (Osaka School of International Public Policy, Osaka University); Theara Horn (Graduate School of Economics, Osaka University)
    Abstract: Government efficiency plays a significant role in the relationship between government expenditure and economic growth. Based on panel data from 63 developing countries 1990 to 2003, we calculate efficiency scores using Data Envelopment Analysis, incorporate them into a simple model of growth with government expenditure. We find that there is a critical level of efficiency required for government expenditure to have positive effect on growth. Further, above a critical level of efficiency, greater efficiency lowers the optimal size of government expenditure required to maximize growth.
    Keywords: Fiscal Policy, Government Expenditure, Public Sector Efficiency, Growth
    JEL: H50 E6 O4
    Date: 2010–07
  14. By: Davis, Kristin; Nkonya, Ephraim; Kato, Edward; Mekonnen, Daniel Ayalew; Odendo, Martins; Miiro, Richard; Nkuba, Jackson
    Abstract: Farmer field schools (FFSs) are a popular education and extension approach worldwide. Such schools use experiential learning and a group approach to facilitate farmers in making decisions, solving problems, and learning new techniques. However, there is limited or conflicting evidence as to their effect on productivity and poverty, especially in East Africa. This study is unique in that it uses a longitudinal impact evaluation (difference in difference approach) with quasi-experimental methods (propensity score matching and covariate matching) together with qualitative approaches to provide rigorous evidence to policymakers and other stakeholders on an FFS project in Kenya, Tanzania, and Uganda. The study provides evidence on participation in FFSs and on the effects of FFSs on various outcomes. The study found that younger farmers who belong to other groups, such as savings and credit groups, tended to participate in field schools. Females made up 50 percent of FFS membership. Reasons for not joining an FFS included lack of time and information. FFSs were shown to be especially beneficial to women, people with low literacy levels, and farmers with medium-size land holdings. FFS participants had significant differences in outcomes with respect to value of crops produced per acre, livestock value gain per capita, and agricultural income per capita. FFSs had a greater impact on crop productivity for those in the middle land area (land poverty) tercile. Participation in FFSs increased income by 61 percent when pooling the three countries. FFSs improved income and productivity overall, but differences were seen at the country level. Participation in FFSs led to increased production, productivity, and income in nearly all cases: Kenya, Tanzania, and at the project level (all three countries combined). The most significant change was seen in Kenya for crops (80 percent increase) and in Tanzania for agricultural income (more than 100 percent increase). A lack of significant increases in Uganda was likely due to Uganda’s National Agricultural Advisory Services. When disaggregating by gender, however, female-headed households benefited significantly more than male-headed households in Uganda.
    Keywords: farmer field schools, agricultural productivity, adoption, extension services,
    Date: 2010
  15. By: Apata, T.G; Ogunyinka, A.I; Sanusi, R.A; Ogunwande, S
    Abstract: This paper presents an empirical analysis of the effects of global warming on Nigerian agriculture and estimation of the determinants of adaptation to climate change. Data used for this study are from both secondary and primary sources. The set of secondary sources of data helped to examine the coverage of the three scenarios (1971-1980; 1981-1990 and 1991-2000). The primary data set consists of 1500 respondentsâ but only 1250 cases were useful. This study analyzed determinants of farm-level climate adaptation measures using a Multinomial choice and stochastic-simulation model to investigate the effects of rapid climatic change on grain production and the human population in Nigeria. The model calculates the production, consumption and storage of grains under different climate scenarios over a 10-year scenery. In most scenarios, either an optimistic baseline annual increase of agricultural output of 1.85% or a more pessimistic appraisal of 0.75% was used. The rate of natural increase of the human population exclusive of excess hunger-related deaths was set at 1.65% per year. Results indicated that hunger-related deaths could double if grain productions do not keep pace with population growth in an unfavourable climatic environment. However, Climate change adaptations have significant impact on farm productivity.
    Keywords: Climate change, Adaptation, Economic consequences, Farm level productivity, Average Rainfall, Nigeria, Food Security and Poverty, D6, D91, E21, O13, Q01, Q2,
    Date: 2010–03–29
  16. By: Alexandre Repkine (Department of Economics, Korea University, Seoul, Republic of Korea)
    Abstract: Existing approaches to the meta-frontier estimation are largely based on the linear programming technique, which does not hinge on any statistical underpinnings. We suggest estimating meta-frontiers by constrained maximum likelihood subject to the constraints that specify the way in which the estimated meta-frontier overarches the individual group frontiers. We present a methodology that allows one to either estimate meta-frontiers using the conventional set of constraints that guarantees overarching at the observed combinations of production inputs, or to specify a range of inputs within which such overarching will hold. In either case the estimated meta-frontier coefficients allow for the statistical inference that is not straightforward in case of the linear programming estimation. We apply our methodology to the world¡¯s FAO agricultural data and find similar estimates of the meta-frontier parameters in case of the same set of constraints. On the contrary, the parameter estimates differ a lot between different sets of constraints.
    Keywords: technical efficiency, meta-frontiers, constrained maximum likelihood
    JEL: O40 O47
    Date: 2010
  17. By: Gaétan de Rassenfosse
    Abstract: This paper tackles one of the most persistent criticism of patent statistics. Because not all inventions are patented, the patent-to-R&D ratio reflects both a productivity effect (the number of inventions created per unit of research input) and a propensity effect (the proportion of inventions patented). We propose a solution to this identification problem. Our methodology uses information on the density of patent value and leads to results that are easy to interpret. It is applied to a novel data set of priority patent applications in which each patent is fractionally allocated to its inventors’ countries and to the technological areas to which it belongs. Interestingly, it is frequently observed that an industry may exhibit a low number of patents per unit of R&D in one country yet actually be more productive than the same industry in another country where the patentto-R&D ratio is higher.
    Keywords: identification strategy; patent family; patent value; research productivity; propensity to patent
    JEL: O30 O52
    Date: 2010–07
  18. By: Dewbre, Joshua
    Abstract: This paper uses data collected in an extensive survey of farm costs in the Dong Nai River Basin of Vietnam to estimate the parameters of production functions for rice, vegetables, and coffee. These estimates are then combined with price information to estimate marginal value products for irrigation, fertilizer, labor, and other farm inputs. Comparing marginal value products of the various inputs across crops and with factor prices suggests there may be potential for improving resource allocation and farm incomes. One novel contribution is the consideration of water and irrigation—a concern of considerable interest amidst rising water scarcity in the region. Most notably, the results indicate that fertilizer is the primary constraint to increased yields and farm income. Across all crops the marginal return to phosphorous, for example, ranges from 6,000–20,000 Vietnamese dong (VND) (US$1 = VND1, 800).Making similar comparisons with irrigation water suggests there is potential for improving resource allocation by diverting water from vegetables and coffee toward rice production. The marginal return to irrigation water for rice production is VND 2,500. For coffee and vegetables, marginal returns are negative. For vegetables, preliminary evidence suggests that all irrigation water is not created equal—groundwater and sprinkler irrigation systems have marginal physical products more than double that of traditional sources.
    Keywords: Dong Nai basin, farm input allocation, irrigation efficiency, translog production function, water allocation policy,
    Date: 2010

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