New Economics Papers
on Efficiency and Productivity
Issue of 2010‒09‒11
fifteen papers chosen by

  1. Capital Use Intensity and Productivity Biases By Andersen, Matt A.; Alston, Julian M.; Pardey, Philip G.
  2. On the determinants of banking efficiency in four new European Union Member States: the impact of structural reforms By Mamatzakis, Emmanuel; Koutsomanoli-Filippaki, Anastasia; Staikuras, Christos
  3. Panel Data Evidence on Productivity Spillovers from Foreign Direct Investment: Firm-Level Measures of Backward and Forward Linkages By Pavel Vacek
  4. Productivity Gains From Exporting: Do Export Destinations Matter? By Pavel Vacek
  5. The impact of airport competition on technical efficiency: A Stochastic Frontier Analysis applied to Italian airports By Malighetti, Paolo; Martini, Gianmaria; Scotti, Davide; Volta, Nicola
  6. Revisiting Import-Substituting Industrialisation in Post-War Brazil By Colistete, Renato P.
  7. The productivity of trust By Christian Bjørnskov; Pierre-Guillaum Meon
  8. Impacts of Restructurings on Manufacturing Productive Efficiency: Evidence from China By Gao, Song
  9. Trade, Resource Reallocation and Industry Heterogeneity By Blyde, Juan
  10. Agglomeration and interregional network effects on European R&D productivity By Attila Varga; Dimitrios Pontikakis; George Chorafakis
  11. Privatization, Soft Budget Constraint, and Social Burdens: A Random-Effects Stochastic Frontier Analysis on Chinese Manufacturing Technical Efficiency By Gao, Song
  12. Credit Growth, Bank Soundness and Financial Fragility: Evidence from Indian Banking Sector By Ghosh, Saibal
  13. Application of DEA to Voting for the Baseball Hall of Fame By Thomas Miceli; Brian Volz
  14. International Trade and its Effects on Economic Growth in China By Sun, Peng; Heshmati, Almas
  15. Related Lending and Bank Performance: Evidence from Indonesia By Hamada, Miki; Konishi, Masaru

  1. By: Andersen, Matt A.; Alston, Julian M.; Pardey, Philip G.
    Abstract: This is a substantially revised version of âCapital Use Intensity and Productivity Biases.â Andersen, Matt A.; Alston, Julian M.; Pardey, Philip G., St. Paul, MN: University of Minnesota, Department of Applied Economics; University of Minnesota, International Science and Technology Practice and Policy (InSTePP), 2007. (Staff paper P07-06; InSTePP paper 07-02)
    Keywords: U.S. agriculture, pro-cyclical productivity, capital utilization, primal productivity bias, Productivity Analysis, D24, C51, Q1, O4, O47,
    Date: 2010–08
  2. By: Mamatzakis, Emmanuel; Koutsomanoli-Filippaki, Anastasia; Staikuras, Christos
    Abstract: We employ the stochastic frontier methodology and estimate alternative profit efficiency in the banking industry of four new European Union Member States, namely the Czech Republic, Hungary, Poland and the Slovak Republic, over the period 1999-2003. Our results show that structural reforms in the banking industry improve performance in terms of higher efficiency, whereas the institutional development of the non-bank financial sector hinders banks’ profit efficiency.
    Keywords: structural reforms; alternative profit inefficiency; new EU countries
    JEL: L25 D24 G21
    Date: 2010–08–19
  3. By: Pavel Vacek (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: I examine whether foreign direct investment increases the productivity of manufacturing firms. I test the proposition that local firms benefit from supplying multinational firms (spillovers through backward linkages) and by purchasing inputs from multinationals (spillovers through forward linkages). The existing literature on productivity spillovers has relied on industry-level proxies for spillovers. I identify spillovers directly at the firm level. I have conducted field work in the Czech manufacturing sector and built a unique data set that enabled me to construct firm-level measures of backward and forward linkages. My results provide strong support for the existence of productivity spillovers through backward linkages.
    Keywords: FDI, spillovers, forward–backward linkages
    JEL: F23
    Date: 2010–08
  4. By: Pavel Vacek (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: In this paper, I have examined whether exporters benefit by exporting more, and also whether the productivity benefits from exporting more are heterogeneous across export destinations. I have conducted my own data collection field work and built a unique firm-level panel database of Czech manufacturing firms that includes data on the destinations of exports. I have found that firms do benefit from exporting more. However, my results also show that it is necessary to take into account export markets' heterogeneity. I have found that it is only exporting more to developed countries that brings productivity gains.
    Keywords: exporting, productivity, spillovers
    JEL: F14
    Date: 2010–08
  5. By: Malighetti, Paolo; Martini, Gianmaria; Scotti, Davide; Volta, Nicola
    Abstract: We investigate how the intensity of competition among airports affects their technical efficiency by computing airports’ markets on the basis of a potential demand approach. We find that the intensity of competition has a negative impact on airports’ efficiency in Italy during the 2005–2008 period. This implies that airports belonging to a local air transportation system where competition is strong exploit their inputs less intensively than do airports with local monopoly power. Furthermore, we find that public airports are more efficient than private and mixed ones. Since public airports take into account the positive externalities created by air transportation in the local economy, they are more willing to subsidize airlines in developing the airports’ connections. Hence, policy makers should provide incentives to implement airports’ specialization in local systems where competition is strong. Moreover, when regulating airport charges, they should take into account the impact of the above externalities.
    Keywords: Airport efficiency; stochastic distance function; airport competition
    JEL: L93 L11 L59
    Date: 2010–05
  6. By: Colistete, Renato P.
    Abstract: This article reassesses the classic period of Import-Substituting Industrialisation (ISI) in Brazil between 1945 and 1979. New data presented here show that Brazilian industry achieved significant labour productivity growth during the post-war years and became more technologically sophisticated, when measured by manufacturing exports and evidence of specific industries and firms. We also found that Brazil’s labour productivity growth lagged behind what was achieved in other industrialising and developed countries from the mid-1970s. Technological advances were slow and uneven, and most firms relatively backward. Overall these results suggest that a highly heterogeneous structure became a major feature of Brazilian industrialisation, rather than widespread inefficiency and technological stagnation as argued by the dominant interpretation of ISI in Latin America.
    Keywords: Import-Substituting Industrialisation; Productivity; Technology; Brazil; Latin America
    JEL: O1 N1 N6 O54 O4 O3
    Date: 2010–08
  7. By: Christian Bjørnskov; Pierre-Guillaum Meon
    Abstract: This paper returns to one of the early questions of the literature on social trust, whether trust affects total factor productivity (TFP). Using both development and growth accounting, we find strong evidence of a causal effect of trust on the level and growth of TFP. Using a three-stage least-squares procedure, we moreover observe that the effect of trust on TFP runs entirely through property-rights institutions and not political institutions. Those findings resist a series of robustness checks.
    Keywords: Total factor productivity; Social trust
    JEL: Z13
    Date: 2010–08
  8. By: Gao, Song
    Abstract: This paper studies the effects of privatization and non-ownership-change reforms on firms’ productivity in China. As one of the most prominent empirical challenges in China privatization studies, endogeneity problems are addressed with a first-difference instrumental variable GMM estimation. We find that privatization does not improve firms’ productivity immediately. Instead, its effects become significantly positive in the year after conversion. In addition, partial privatization fails to lead to improved efficiency whereas insider privatization boosts firms’ productivity shortly after the first year of privatization but the effects quickly fade after two years of privatization. Lastly, all non-ownership-change reforms, except leasing, are proved to be ineffective even when issues like social burdens, worker redundancy, management incentives and soft-budget constraint are tackled before the restructuring.
    Keywords: privatization; soft budget constraint; transition economies; Chinese economy
    JEL: L25 P31 C33
    Date: 2010–06
  9. By: Blyde, Juan
    Abstract: Recent trade models with heterogeneous firms (Bernard et al., 2003 and Melitz, 2003) show how lower trade costs can spur aggregate productivity by forcing lower productivity firms out of the market, cutting off the lower tail of the productivity distribution. In this paper we find significant heterogeneity regarding this impact across different industries. In particular, we find that the exit of inefficient plants due to stronger import competition is very prominent in light industries, that is, in industries in which only a limited amount of capital is needed and where most plants are of small-scale. In contrast, we find no significant effects of import competition on the exit of plants in heavy industries. The result has important policy implications regarding the role of trade reform in boosting aggregate productivity, particularly in industries with high levels of distortions.
    Keywords: Trade costs; productivity; resource reallocation
    JEL: F13 F14 L1
    Date: 2010–09–02
  10. By: Attila Varga (Department of Economics and Regional Studies, University of Pécs); Dimitrios Pontikakis (Institute for Prospective Technological Studies, Joint Research Centre, European Commission Seville, Spain); George Chorafakis (Research Directorate-General, European Commission Brussels, Belgium)
    Abstract: This paper explores the effects of intra-regional agglomeration and interregional networking on the productivity of R&D across EU regions. The paper is based on the spatial econometric modelling framework presented in Varga (2000), and further develops a methodology for estimating the dynamic effects of agglomeration and interregional networks on R&D productivity in regional knowledge creation (measured by patent applications and publications) at the level of EU regions. This empirical modelling framework is applied to classify EU regions into different tiers according to the strengths of their agglomeration effects. These effects are then compared to the network effects of interregional connectedness as reflected in regional participation in the EU Framework Programme for Research. The estimated model is used then for an assessment of the impacts of EU Framework Programme expenditures on technological development and for carrying out policy impact simulations.
    Keywords: Agglomeration, network effects, R&D productivity
    JEL: O18 O33 R11
    Date: 2010–06
  11. By: Gao, Song
    Abstract: Traditional panel stochastic frontier studies on privatization of Chinese State-owned firms face a major challenge, namely, the endogeneity problem. The endogeneity problem is present because decision-making process of privatization in China is very likely influenced by some unobserved characteristics of a firm. In particular, better-performing SOEs are more likely to be chosen for privatization because the local governments may have incentives to attract private investors or to retain momentum for future reform. To deal with this challenge, this paper proposes a two-step stochastic frontier model. The first step addresses the endogeneity issue by estimating the probability of privatization with a random effects probit model. The second step estimation investigates the causes of Chinese manufacturing’s inefficiency with a random-effects stochastic frontier model. The estimation results suggest that privatization, hardening budget constraint and reducing firms’ social obligations have significantly contributed to the improvements of firms’ efficiency. However, no evidence is found that more autonomy for managers and lower debt asset ratio may help improve firms’ efficiency.
    Keywords: Panel data; random effects; technical efficiency; stochastic frontier; privatization; soft-budget constraint; managerial incentives; social burdens
    JEL: D2 O53 C3 P31
    Date: 2010–03
  12. By: Ghosh, Saibal
    Abstract: Using data on Indian banks for 1996-2008, the paper examines the interconnect among credit growth, bank soundness and financial fragility. The analysis appears to indicate that higher credit growth amplifies bank fragility. Besides, the results point to the fact that sounder banks increase loan supply. Coming to bank ownership, the evidence testifies that credit growth has been rapid in state-owned and de novo private banks. In terms of policy implications, the analysis appears to suggest the need for giving priority to risk-based supervision as a way to contain the potential risks associated with rapid credit growth
    Keywords: Banking; Credit growth; Z-score; Non-performing loans; India
    JEL: G21
    Date: 2010–03
  13. By: Thomas Miceli (University of Connecticut); Brian Volz (Assumption College)
    Abstract: This paper applies Data Envelopment Analysis (DEA) to voting for the Baseball Hall of Fame. The approach interprets a player’s career statistics as inputs, and the percentage of votes he received for the HOF as the output. A constructed frontier based on past voting defines the maximum number of votes that a player should receive based on his statistical profile. Our results suggest that about a third of current members of the HOF (excluding Negro League players, managers, umpires, and executives) should be replaced by more deserving players. Our conclusions, however, do not account for those aspects of a player’s career (both positive and negative) not captured by statistics.
    Keywords: Baseball hall of fame; data envelopment analysis; production theory
    JEL: C44 D20 L83
    Date: 2010–08
  14. By: Sun, Peng (affiliation not available); Heshmati, Almas (Korea University)
    Abstract: International trade, as a major factor of openness, has made an increasingly significant contribution to economic growth. Chinese international trade has experienced rapid expansion together with its dramatic economic growth which has made the country to target the world as its market. This research discusses the role of international trade in China's economic growth. It starts with a review of conceptions as well as the evolution of China's international trade regime and the policy that China has taken in favor of trade sectors. In addition, China's international trade performance is analyzed extensively. This research then evaluates the effects of international trade on China's economic growth through examining improvement in productivity. Both econometric and non-parametric approaches are applied based on a 6-year balanced panel data of 31 provinces of China from 2002 to 2007. For the econometric approach, a stochastic frontier production function is estimated and province specific determinants of inefficiency in trade identified. For the non-parametric approach, the Divisia index of each province/region is calculated to be used as the benchmark. The study demonstrates that increasing participation in the global trade helps China reap the static and dynamic benefits, stimulating rapid national economic growth. Both international trade volume and trade structure towards high-tech exports result in positive effects on China's regional productivity. The eastern region of China has been developing most rapidly while the central and western provinces have been lagging behind in terms of both economic growth and participation in international trade. Policy implications are drawn from the empirical results accordingly.
    Keywords: international trade, economic growth, China, panel data, stochastic frontier
    JEL: C23 D24 F10 O24 R58
    Date: 2010–08
  15. By: Hamada, Miki; Konishi, Masaru
    Abstract: After the Asian financial crisis of 1997, it was confirmed that banks lend to their related parties in many countries. The question examined in this article is whether related lending functions to alleviate the problems of asymmetric information or transfers profits from depositors and minority shareholders to related parties. The effects of related lending on the profitability and risk of banks in Indonesia are examined using panel data from 1994 to 2007 comprising a total of 74 Indonesian banks. The effects on return on asset (ROA) varied at different periods. Before and right after the crisis, a higher credit allocation to related parties increased ROA. In middle of the crisis, it turned to negative; and this has also been the case in the most recent period as the Indonesian economy has normalized. Effects of related lending on bank risk measured by the Z-score and non-performing loan is not clear. After undergoing bank restructuring, related lending has decreased and the profit structure of banks has changed.
    Keywords: Banks, Loans, Industrial management
    JEL: G21 G38 O1 O16
    Date: 2010–03

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