New Economics Papers
on Efficiency and Productivity
Issue of 2010‒10‒30
ten papers chosen by

  1. Economic reforms and manufacturing productivity: Evidence from India By Saibal Ghosh
  2. Similarities and Differences between the Manufacturing and the Service Sectors: An empirical analysis of Japanese automobile related industries By KATO Atsuyuki
  3. Does history matter for the relationship between R&D, Innovation and Productivity? By Elena Huergo; Lourdes Moreno
  4. Analysis of the Determinants of Total Factor Productivity among Small-Holder Cassava Farmers in Ohafia L.G.A of Abia State. By Ukoha, O.O; Okoye, B.C; Emetu, J
  5. The Decline and Rise of Agricultural Productivity in Sub-Saharan Africa Since 1961 By Steven Block
  6. Trade Complexity and Productivity By Carlo Altomonte; Gábor Békés
  7. Productivity Trends of Unincorporated Enterprises in the Canadian Economy, 1987 to 2005 By Baldwin, John R.; Rispoli, Luke
  8. The productivity and export spillovers of the internationalisation behaviour of Belgian firms By Michel Dumont; Bruno Merlevede; Christophe Piette; Glenn Rayp
  9. Effects of Credit Constraints on Productivity and Rural Household Income in China By Fengxia Dong; Jing Lu; Allen Featherstone
  10. Understanding the effect of productivity changes on international relative prices: the role of news shocks By Deokwoo Nam; Jian Wang

  1. By: Saibal Ghosh
    Abstract: Using data on 2-digit industry for 1981-2004, the study examines the association between growth in total factor productivity and economic reforms. Accordingly, we first compute industry-level productivity growth using advanced econometric techniques and thereafter ascertain the time frame over which economic reforms impact productivity. The evidence suggests that productivity growth is not reliably higher after reforms than prior to reforms. In addition, the findings indicate that it is primarily the interest rate channel that is important in explaining changes in productivity. Among macroeconomic policies, trade reforms and industrial delicensing appear to be instrumental in explaining productivity changes.
    Keywords: Economic reforms; total factor productivity; Levinsohn Petrin; Indian manufacturing.
    JEL: D24 L60 O47
    Date: 2010–10–12
  2. By: KATO Atsuyuki
    Abstract: This paper examines the similarities and differences between the manufacturing and the service sectors in terms of market power and productivity dispersion, using data of Japanese automobile manufacturers and dealers. Applying a newly developed approach proposed by Martin (2010), we estimate the firm-specific productivity and mark-up under imperfect competition, and discuss features of them by industry. From those estimates, we find that both industries have similar relations between productivity and mark-up, and their transition probabilities are almost the same. On the other hand, the roles of industries in the production process or the conditions of market competition are different between those industries. In addition, the relations between business scale and productivity are conflicting. As a whole, the implicit assumption that the service industries are structurally different from manufacturing is controversial. However, ignoring the differences in the conditions of their market competition possibly gives significant bias to the policy implications.
    Date: 2010–10
  3. By: Elena Huergo; Lourdes Moreno
    Abstract: This paper analyzes the relationship between R&D expenditures, innovation and productivity growth, taking into account the possibility of persistence in firms’ behaviour. We study this relationship for a sample of Spanish manufacturing firms between 1990 and 2005, estimating a model with four equations: participation in technological activities, R&D intensity, the generation of innovations and the impact of these technological outputs on total factor productivity growth. Our results reflect the existence of true state dependence both in the decision of R&D investment and in the production of innovations. The omission of this persistence leads to an overestimation of the current impact of innovations on productivity growth. However, the presence of persistence in technological inputs and outputs entails current R&D activities having long–run effects on a firm’s productivity.
    Keywords: CDM model, productivity growth, persistence in R&D and innovation.
    JEL: D24 L6 O3
    Date: 2010–10–21
  4. By: Ukoha, O.O; Okoye, B.C; Emetu, J
    Abstract: The study analysed the determinants of total factor productivity by the use of OLS regression technique among small-holder cassava farmers in Ohafia Local Government Area of Abia State. The study data was collected through a multi-stage random sampling technique from 90 farmers in 2009. The coefficients for education and extension were negative and significantly related to total factor productivity (TFP) at 10%level of probability. The coefficients for age, fertilizer and access to credit were positive and significant at 1% level of probability. The coefficients for gender and household size were negative and significant at 1% level of probability. The results calls for policies aimed at provision of inputs especially fertilizer and credit targeted mostly on women farmers. Policies on increased education and extension contacts and birth control should be advocated for
    Keywords: Total Factor Productivity and Cassava
    JEL: D2 D29 D24
    Date: 2010–07–14
  5. By: Steven Block
    Abstract: Agricultural productivity growth in sub-Saharan Africa has been a qualified success. Total factor productivity growth has increased rapidly since the early 1980s. By the early 2000s, average annual TFP growth was roughly four times faster than it had been 25 years earlier. This period of accelerated growth, however, followed nearly 20 years of declining rates of TFP growth subsequent to independence in the early 1960s. Average agricultural TFP growth for sub-Saharan Africa was 0.14% per year during 1960 – 84, and increased to 1.24% per year from 1985 – 2002. The average over this period was approximately 0.6% per year, which accounts for 36% of the increase in total crop output over this period. These highly aggregated results conceal substantial regional and country-level variation. Expenditures on agricultural R&D, along with the reform of macroeconomic and sectoral policies shaping agricultural incentives, have played a substantial role in explaining both the decline and the rise in agricultural productivity. The case study of Ghana clearly reflects these broader findings.
    JEL: O13 O4 Q16
    Date: 2010–10
  6. By: Carlo Altomonte; Gábor Békés
    Abstract: We exploit a panel dataset of Hungarian firms merged with country and product-level trade data for the period 1992-2003 to investigate the relation between firms’ trading activities (importing, exporting or both) and productivity. From our transaction data a number of proxies are derived, measuring at the firm level some characteristics of the traded bundles associated to various technological and relationship-specic dimensions of the trade activity, which we generally refer to as ‘trade complexity’. We find that our indicators of complexity are jointly correlated to the ex-ante productivity of trading firms, accounting for an additional third of the overall productivity premium. However, the elasticity of productivity to a change in the trade complexity indicators varies with different indicators of complexity and with the trade status of the firm. Policy conclusions are drawn from these findings.
    Date: 2010–10–25
  7. By: Baldwin, John R.; Rispoli, Luke
    Abstract: This study uses new GDP estimates for the unincorporated sector in order to examine labour productivity in the unincorporated sector and to compare it to that in the corporate sector over the period 1987 to 2005. The level of nominal GDP per hour worked is significantly lower for unincorporated enterprises ($23.20 in 2005) than it is for corporations ($43.40 in 2005). In 2005, GDP per hour worked in the unincorporated sector was just 53% of GDP per hour worked in the corporate sector.
    Keywords: Economic accounts, Productivity accounts
    Date: 2010–10–18
  8. By: Michel Dumont (Federal Planning Bureau; University of Antwerp (UA)); Bruno Merlevede (UGent; HUBrussel); Christophe Piette (National Bank of Belgium, Research Department); Glenn Rayp (UGent, Sherppa)
    Abstract: This paper analyses to what extent the decision to start exporting may be subject to spillovers of the internationalisation behaviour of other (foreign and domestic) firms. We distinguish between two possible channels: effects on productivity and effects on the perceived level of sunk costs of exporting. For both channels, we consider geographical and activity or industry-based linkages between firms. For a sample Belgian firms we find evidence of significant spillovers on productivity as well as productivity-independent spillovers on the decision to start exporting. Spillovers seem more substantial in the geographical dimension than in terms of competitor, client or supplier links, except for the impact of multinationals on the productivity of domestic firms.
    Keywords: Export, FDI, spillovers, sunk cost, region
    JEL: F2
    Date: 2010–10
  9. By: Fengxia Dong (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Jing Lu; Allen Featherstone
    Abstract: Agricultural production is strongly conditioned by the fact that inputs are transformed into outputs with considerable time lags, causing the rural household to balance its budget during the season when there are high expenditures for input purchases and consumption and few revenues. With limited access to credit, the budget balance within the year can become a constraint to agricultural production. As is the case in many developing countries, Chinese rural households have been suffering from a lack of access to capital. While China is one of the biggest countries in terms of rural areas and agricultural production, few studies have focused on the impact of credit on agriculture in China. Using survey data, this study aims to examine how credit constraints currently affect agricultural productivity and rural household income in China. The study findings suggest that under credit constraints, production inputs, along with farmers’ capabilities and education, cannot be fully employed. By removing credit constraints, agricultural productivity and rural household income can be improved.
    Keywords: credit constraint, household income, productivity, rural China.
    Date: 2010–10
  10. By: Deokwoo Nam; Jian Wang
    Abstract: The terms of trade and the real exchange rate of the US appreciate when the US labor productivity increases relative to the rest of the world. This finding is at odds with predictions from standard international macroeconomic models. In this paper, we find that incorporating news shocks to total factor productivity (TFP) in an otherwise standard dynamic stochastic general equilibrium (DSGE) model with variable capital utilization can help the model replicate the above empirical finding. Labor productivity increases in our model after a positive news shock to TFP because of an increase in capital utilization. Under some plausible calibrations, the wealth effect of good news about future productivity can increase domestic demand strongly and induce an increase in home prices relative to foreign prices.
    Keywords: Business cycles - Econometric models ; International finance ; International trade - Econometric models ; Labor productivity
    Date: 2010

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.