nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2010‒12‒18
thirteen papers chosen by
Angelo Zago
University of Verona

  1. Productivity growth and catch up in Europe: A new perspective on total factor productivity differences By Filippetti, Andrea; Payrache, Antonio
  2. Productivity Analysis in Global Manufacturing Production By Markus Eberhardt; Francis Teal
  3. How Do Different Motives for R&D Investment in Foreign Locations Affect Domestic Firm Performance? An Analysis Based on Swiss Panel Micro Data By Spyros Arvanitis; Heinz Hollenstein
  4. Impact of Financial Liberalisation and Deregulation on Banking Sector in Pakistan By Kalbe Abbas; Manzoor Hussain Malik
  5. Does importing more inputs raise exports? Firm level evidence from France By Bas, Maria; Strauss-Kahn, Vanessa
  6. The Deindustrialization of Istanbul By Dogruel, Fatma; Dogruel, A. Suut
  7. The Contribution of Human Capital to China’s Economic Growth By John Whalley; Xiliang Zhao
  8. Restoration of micro data of John Lossing Buck's survey and analysis of the inverse relationship between yield and farm size in rural China in the 1930's By Hoken, Hisatoshi
  9. Who leads research productivity change? Guidelines for R&D policy-makers By Jiménez, Fernando; Zabala-Iturriagagoitia, Jon Mikel; Zofío, José Luis
  10. Direct regulation is an efficient approach to industrial environmental improvement: empirical evidence and perceptions from chemical manufacturers in Ireland and Italy. By David Styles; Francesco Testa; Fabio Iraldo
  11. Insights into the Determinants of Innovation of Energy Efficiency By Marius Ley
  12. Do cooperative R&D subsidies stimulate regional innovation efficiency? Evidence from Germany By Tom Broekel
  13. Knowledge Production in European Union: Evidence from a National Level Panel Data By Pinto, Hugo

  1. By: Filippetti, Andrea; Payrache, Antonio
    Abstract: This paper investigates the relative contribution of capital deepening and total factor productivity (TFP) as drivers of labour productivity growth and catch up in Europe. Proxies for technological capabilities (technology gap) are introduced which allow to explain differences in TFP. Using a conditional Malmquist nonparametric approach, we find that capital deepening and TFP respectively account for around 53% and 47% of labour productivity growth respectively. Further, change in technological capabilities explains 71% of change in TFP, making a substantial contribution to catch up. Different patterns arise between industrialized and catching-up countries. Our results support the scope for innovation policy, technology diffusion and education policy to explain growth and convergence in labour productivity across Europe.
    Keywords: labour productivity growth; technological capabilities; EU policies; Malmquist TFP
    JEL: O47 E23 O33
    Date: 2010–12–07
  2. By: Markus Eberhardt; Francis Teal
    Abstract: Despite the widely recognised importance of the manufacturing industry for successful development few studies investigate this sector in cross-country analysis. We fill this gap in the literature by analysing manufacturing production across a large number of developing and developed economies. Our empirical framework allows for heterogeneous production technology and accounts for endogeneity as well as cross-section dependence in the panel. Our results imply that differences in production technology are of crucial importance for understanding cross-country differences in labour productivity and their underlying causes. In the light of these findings the interpretation of regression intercepts as TFP level estimates collapses and we introduce an alternative measure which is robust to parameter heterogeneity.
    Keywords: Cross-country analysis, parameter heterogeneity, productivity levels, panel time series econometrics, common factor model
    JEL: C23 O14 O47
    Date: 2010
  3. By: Spyros Arvanitis (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Heinz Hollenstein (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: The aim of this article is to investigate the differences between specific motives of R&D investment in foreign locations with respect to the factors influencing the likelihood of foreign R&D and to the impact of foreign presence on the parent firms’ innovativeness and productivity. An econometric analysis of Swiss firm panel data shows, firstly, that factors related to firm-specific knowledge-oriented advantages are more important for explaining the likelihood of foreign R&D activities than factors reflecting disadvantages related to home location. Secondly, knowledge-oriented motives of foreign R&D are positively correlated to innovation performance of domestic firms, whereas market-oriented and resource-oriented strategies correlate positively with productivity.
    Keywords: Research and development (R&D), Foreign R&D, Motives of foreign R&D, Home effects of foreign R&D, Firm performance
    JEL: O31 F23
    Date: 2010–05
  4. By: Kalbe Abbas; Manzoor Hussain Malik (Pakistan Institute of Development Economics)
    Abstract: The study analyses market perception about the performance of Pakistani commercial banks due to financial liberalisation and deregulation measures taken by the central bank over the last two decades. For this purpose, it uses Survey approach. To augment the results of Survey Based Approach, it employs Distribution Free Approach to measure relative cost inefficiencies of commercial banks. Out of 35 commercial banks, 15 banks have been chosen for analysis purpose. Key banking reforms remain helpful in correcting flaws in the banking sector of Pakistan. In particular, privatisation of banks, the deregulation and institutional strengthening measures and switching towards market-based monetary and credit management remain helpful in correcting the prevailing flaws. The cost inefficiency scores of banks also indicate that the efficiency of Pakistani banks have improved during 1990 to 2006. As regards group-wise efficiency estimates, foreign banks are found to be more efficient, followed by private banks, nationalised commercial banks, and privatised banks. The relative high cost inefficiency of privatised banks is most probably due to having remained under state owned structure during most of the period of the study. The financial liberalisation and the resultant competitive environment might be the key factors behind improvements in efficacy of banks.
    Keywords: Banking, Efficiency, Regulations, Financial Reforms
    JEL: E51 E58
    Date: 2010
  5. By: Bas, Maria; Strauss-Kahn, Vanessa
    Abstract: Following Melitz (2003)'s seminal paper, several theoretical and empirical studies have shown that only the subset of most productive firms export. While other studies provide evidence on a positive effect of an increase in imported inputs on firms' productivity, the link between imported intermediate inputs and export scope has not been made. This paper bridges the gap by studying the impact of imported inputs on the margins of exports. We use a unique firms' level database of imports at the product (HS6) level provided by French Customs for the 1995-2005 period. Access to new varieties of inputs may increase productivity, and thereby exports, through better complementarity of inputs, transfer of technology and/or decreased inputs price index. We test for these different mechanisms by distinguishing the origin of imports (developing vs. developed countries) and constructing an exact price index a la Broda and Weinstein (2006). We find a significant impact of higher diversification and increased number of imported inputs varieties on firm's TFP and export scope. Whereas the complementarity and transfer of technology mechanisms are supported by our results, the price effect seems very limited.
    Keywords: Firm heterogeneity; imported inputs; TFP; export scope; varieties; price index; firm-level data
    JEL: F10 F12
    Date: 2010–12
  6. By: Dogruel, Fatma; Dogruel, A. Suut
    Abstract: Istanbul and Adana are among the oldest and important industrial zones of Turkey. However, the shares of these two regions in the Turkish manufacturing sector substantially decreased after the year 1980. Initially, Adana was a center for the textile industry and the textile was the engine of the Turkish manufacturing sector. During 1980’s and 1990’s, textile industry gradually lost its dominance. Therefore, the change in the share of Adana can be explained by this phenomenon. On the other hand, manufacturing activities in Istanbul are highly diversified. The basic factor behind the decrease in the share of manufacturing sector of Istanbul is the deindustrialization policy implemented in this city during the last several decades. As a result of this policy some of the plants moved to neighborhoods of Istanbul. At the same time, constructions of new large scale plants were not allowed. In spite of the implementation of the deindustrialization policy, Istanbul still have largest share in the Turkish manufacturing sector. Considering the geographical proximity, in addition to direct effects on Istanbul, it is possible to expect that these policies may indirectly affect neighborhood regions. Employing the spatial statistical techniques, we analyze the growth of the manufacturing in Istanbul and its neighborhoods. The paper also focuses on the effects of the deindustrialization policy on the productivity and the firm size in Istanbul.
    Keywords: deindustrialization policy; productivity changes; firm size; shift-share analysis
    JEL: O18 R12 R38
    Date: 2010–09
  7. By: John Whalley; Xiliang Zhao
    Abstract: This paper develops a human capital measure in the sense of Schultz (1960) and then reevaluates the contribution of human capital to China’s economic growth. The results indicate that human capital plays a much more important role in China’s economic growth than available literature suggests, 38.1% of economic growth over 1978-2008, and even higher for 1999-2008. In addition, because human capital formation accelerated following the major educational expansion increases after 1999 (college enrollment in China increased nearly fivefold between 1997 and 2007) while growth rates of GDP are little changed over the period after 1999, total factor productivity increases fall if human capital is used in growth accounting as we suggest. TFP, by our calculations, contributes 16.92% of growth between 1978 and 2008, but this contribution is -7.03% between 1999 and 2008. Negative TFP growth along with the high contribution of physical and human capital to economic growth seem to suggest that there have been decreased in the efficiency of inputs usage in China or worsened misallocation of physical and human capital in recent years. These results underscore the importance of efficient use of human capital, as well as the volume of human capital creation, in China’s growth strategy.
    JEL: O0 O10 O4 O47
    Date: 2010–12
  8. By: Hoken, Hisatoshi
    Abstract: A large scale Chinese agricultural survey was conducted at the direction of John Lossing Buck from 1929 through 1933. At the end of the 1990’s, some parts of the original micro data of Buck’s survey were discovered at Nanjing Agricultural University. An international joint study was begun to restore micro data of Buck’s survey and construct parts of the micro database on both the crop yield survey and special expenditure survey. This paper includes a summary of the characteristics of farmlands and cropping patterns in crop yield micro data that covered 2,102 farmers in 20 counties of 9 provinces. In order to test the classical hypothesis of whether or not an inverse relationship between land productivity and cultivated area may be observed in developing countries, a Box-Cox transformation test was conducted for functional forms on five main crops of Buck’s crop yield survey. The result of the test shows that the relationship between land productivity and cultivated areas of wheat and barley is linear and somewhat negative; those of rice, rapeseed, and seed cotton appear to be slightly positive. It can be tentatively concluded that the relationship between cultivated area and land productivity are not the same among crops, and the difference of labor intensity and the level of commercialization of each crop may be strongly related to the existence or non-existence of inverse relationships.
    Keywords: China, Rural survey, Farm management, Farm survey, Crop yield
    JEL: N55 O12 Q12
    Date: 2010–08
  9. By: Jiménez, Fernando (INGENIO (CSIC-UPV)-Universidad Politécnica de Valencia, Valencia, Spain); Zabala-Iturriagagoitia, Jon Mikel (CIRCLE, Centre for Innovation, Research and Competence in the Learning Economy, Lund, Sweden); Zofío, José Luis (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)
    Abstract: We rely on efficiency and productivity analysis based on Malmquist indices to evaluate to what extent policy-makers have been able to promote the creation and consolidation of comprehensive research groups that contribute to the implementation of a successful innovation system. We suggest that this dynamic evaluation offers relevant information to current ex-post policy evaluation methods, helping decision makers to readapt and reorient policies and their associated means, most notably resource allocation (financial schemes), to better respond to the actual needs of promising research groups in their search for excellence (micro-level perspective), and to adapt future policy design to the achievement of medium-long term policy objectives (meso and macro level perspectives). We apply this methodology to the case of the Spanish R&D Food Technology Program finding that a large size and a comprehensive multi-dimensional research output are the key features of the leading groups exhibiting high efficiency and productivity levels. Identifying these groups as benchmark, we conclude that the financial grants allocated by the program, typically aimed at small-sized and partially oriented research group, have no succeeded in reorienting them in time so as to overcome their limitations.
    Keywords: Innovation Policy; Management; Malmquist Index.
    JEL: C43 D24 O47
    Date: 2010–11
  10. By: David Styles (Environmental Protection Agency, Richview Business Park, Clonskeagh Road, Dublin 14, Ireland/School of Natural Sciences, Trinity College Dublin, Dublin 2, Ireland); Francesco Testa (Sant’Anna School of Advanced Studies, Pisa, Italy /CESISP Center for the Development of Product Sustainability, Via all'Opera Pia 15, 16145 Genova, Italy); Fabio Iraldo (IEFE – Institute for Environmental and Energy Policy and Economics, Via Roentgen 1, 20136 Milano)
    Abstract: Industrial production is a major source of global pollution, and it is widely recognised that regulation is required to reduce this pollution for the benefit of society. However, there is considerable debate about the most effective approach to environmental regulation with respect to both environmental and competitive performance. This paper integrates complementary empirical evidence from two entirely separate projects with different approaches (scientific and econometric), from different countries (Ireland and Italy), in order to assess the effectiveness and efficiency of direct environmental regulation in practice. Quantitative pollution avoidance and compliance cost data from Ireland’s pharmaceutical-manufacturing sector were combined with questionnaire responses from 20 Irish pharmaceutical manufacturers and 25 Italian manufacturers of chemicals for building products. We conclude that direct command-and-control regulation is a highly effective approach, and that the efficiency of such regulation is often underestimated.
    Keywords: environmental regulation, environmental performance, competitiveness.
    Date: 2010–02–01
  11. By: Marius Ley (KOF Swiss Economic Institute, ETH Zurich, Switzerland)
    Abstract: Given the increasing interest in understanding (and supporting by means of public policy) innovative activity related to energy efficient technology (EET), I attempt to identify firm-level determinants of innovation and research in this field. A novel dataset of Swiss firms has been assembled by means of a survey in 2009, resulting in more than 2300 observations featuring various indicators of innovative activity and success. Applying standard econometric methodology, I find sizeable differences of the explaining factors of energy efficiency related innovation as compared to overall innovation. In particular, market environment related variables important for overall innovative activity seem to have little explanatory power for EET related innovation, raising the question whether such innovation sufficiently responds to current and potential future demand.
    Keywords: Innovation, Energy, Energy Efficiency
    JEL: O31 Q49
    Date: 2010–09
  12. By: Tom Broekel
    Abstract: The paper investigates the impact of R&D subsidies on regional innovation efficiency. Building on a rich panel data set covering 270 German labor market regions and four industries, it is particularly shown that subsidies for R&D cooperation are a suitable policy measure for stimulating the innovation efficiency of regions. The empirical findings moreover suggest that regions with low innovation capacities benefit from subsidized inter-regional cooperation involving partners with diverse industrial and sectoral backgrounds. Establishing inter-regional cooperation that give access to related knowledge and skills is more important for regions with large innovation capacities.
    Keywords: innovation policy, regional innovation efficiency, R&D subsidies, cooperation networks, knowledge networks
    JEL: O18 O38 R58 R12
    Date: 2010–12
  13. By: Pinto, Hugo
    Abstract: The knowledge production function framework is used to understand how territories transform specific inputs into knowledge outputs. This article focuses knowledge production function estimation at European Union with twenty five member-states using a data panel analysis between 1999 and 2003. The importance of different variables in knowledge production is tested. The econometric results give relevant insights for EU decision-makers and the creation of a more integrated European Research Area and innovation cooperation within Europe.
    Keywords: Knowledge Production Function; Panel Data; European Union
    JEL: C3 O3
    Date: 2010–12–07

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