New Economics Papers
on Efficiency and Productivity
Issue of 2011‒01‒16
fourteen papers chosen by

  1. Role of Agricultural Research and Extension in Enhancing Agricultural Productivity in Punjab, Pakistan By Nasir nadeem, Dr.; khalid Mushtaq, Dr.
  2. Efficiency of Hospitals in the Czech Republic By Jana Procházková; Lenka Šťastná
  3. Does Management Matter? Evidence from India By Nicholas Bloom; Benn Eifert; Aprajit Mahajan; David McKenzie; John Roberts
  4. Knowledge sourcing and firm performance in an industrializing economy: The case of Taiwan (1992-2003) By Chang, Chia-Lin; Robin, Stéphane
  5. De-Specialization, Dutch Disease and Sectoral Productivity Differences By Karlygash Kuralbayeva; Radoslaw Stefanski
  6. Local Maximum Likelihood Techniques with Categorical Data By Byeong U. Park; L ?opold Simar; Valentin Zelenyuk
  7. Frontier Techniques: Contrasting the Performance of (Single-) Truncated Order Regression Methods and Replicated Moments By Ana Paula Martins
  8. Uncertainty and technical efficiency in Finnish agriculture: a state-contingent approach By Celine Nauges; Chris O'Donnell; John Quiggin
  10. Evaluating the Efficiency of Vietnamese Banking System: An Application Using Data Envelopment Analysis By Ngo, Dang Thanh
  11. Production Under Uncertainty: A Simulation Study By Sriram Shankar; Chris O'Donnell; John Quiggin
  12. An empirical analysis on the efficiency of the microfinance investment market By Inoue, Takeshi; Hamori, Shigeyuki
  13. Eco-innovation and economic performance in industrial clusters: evidence from Italy By Sara Tessitore; Tiberio Daddi; Fabio Iraldo
  14. The Demand for and the Supply of Fuel Efficiency in Models of Industrial Organisation By Johannes van Biesebroeck

  1. By: Nasir nadeem, Dr.; khalid Mushtaq, Dr.
    Abstract: In this study long run relationship between agricultural research and TFP (total factor productivity) is estimated by using Cointegration technique for 1970-2005. The results of the long run relationship between TFP and agricultural research indicate that agricultural research has a significant and positive impact on TFP. The estimated coefficient of research is 0.571 and it is significant at 1 percent level of significance. Granger-causality tests show a bidirectional relationship between research and productivity. The estimate of marginal internal rate of return (MIRR) to research is found to be 73 percent, indicating that Punjab agricultural research system remained productive.
    Keywords: Productivity; TFP; Cointegration; MIRR; Granger Causality.
    JEL: Q16 O30 O13
    Date: 2010
  2. By: Jana Procházková (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic); Lenka Šťastná (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic)
    Abstract: The paper estimates cost efficiency of 99 general hospitals in the Czech Republic during 2001-2008 using Stochastic Frontier Analysis. We estimate a baseline model and also a model accounting for various inefficiency determinants. Group-specific inefficiency is present even having taken care of a number of characteristics. We found that inefficiency increases with teaching status, more than 20,000 treated patients a year, not-for-profit status and a larger share of the elderly in the municipality. Inefficiency decreases with less than 10,000 patients treated a year, larger population, and more hospitals in the region.
    Keywords: Efficiency, hospitals, stochastic frontier analysis
    JEL: D24 I11
    Date: 2011–01
  3. By: Nicholas Bloom; Benn Eifert; Aprajit Mahajan; David McKenzie; John Roberts
    Abstract: A long-standing question in social science is to what extent differences in management cause differences in firm performance. To investigate this we ran a management field experiment on large Indian textile firms. We provided free consulting on modern management practices to a randomly chosen set of treatment plants and compared their performance to the control plants. We find that adopting these management practices had three main effects. First, it raised average productivity by 11% through improved quality and efficiency and reduced inventory. Second, it increased decentralization of decision making, as better information flow enabled owners to delegate more decisions to middle managers. Third, it increased the use of computers, necessitated by the data collection and analysis involved in modern management. Since these practices were profitable this raises the question of why firms had not adopted these before. Our results suggest that informational barriers were a primary factor in explaining this lack of adoption. Modern management is a technology that diffuses slowly between firms, with many Indian firms initially unaware of its existence or impact. Since competition was limited by constraints on firm entry and growth, badly managed firms were not rapidly driven from the market.
    JEL: L2 M2 O14 O32 O33
    Date: 2011–01
  4. By: Chang, Chia-Lin; Robin, Stéphane
    Abstract: We examine the impact of R&D and technology imports on firm performance in Taiwan’s manufacturing industry in a policy context of industrial upgrading. To do so, we estimate a Translog production function on two panels (covering 1992-1995 and 1997-2003), using stochastic frontier models. We find that the effects of both knowledge inputs become significant in a larger number of industries in the second panel. These results suggest that the policies encouraging innovation implemented from 1991 onwards paid off in the second half of the 1990s, with innovation driving firm sales. In traditional industries, the effect of innovation can be interpreted as an effort to catch up with the global technology frontier. In the electronics and high-technology industries, it rather testifies of the emergence of a new domain of specialization for Taiwan – which was largely enabled by the aforementioned innovation policies.
    Keywords: Manufacturing Industries; Newly Industrialized Countries; Technology Imports - Stochastic Frontier Estimation.
    JEL: L25 O33 L60
    Date: 2010–12–01
  5. By: Karlygash Kuralbayeva; Radoslaw Stefanski
    Abstract: We use macro cross-country data and micro US country level data to show that resource rich regions have significantly higher productivity in manufacturing, but slightly lower productivity in non-manufacturing than resource poor regions. We suggest a process of de-specialization to explain these facts. In a standard Dutch disease story, endowments of natural resources induce labor to move from the (traded) manufacturing sector to the (non-traded) non-manufacturing sector. A self selection of workers takes place. Only those most skilled in manufacturing sector work will remain in manufacturing. Workers that move to the non-manufacturing sector however, will be less skilled at non-manufacturing sector work than those who were already employed there. Resource induced structural transformation thus results in higher productivity in manufacturing and lower productivity in non-manufacturing. Since the manufacturing sector is in general small, the impact of shifting labour will be more pronounced in that sector than in non-manufacturing. We construct a two sector, general equilibrium, open economy Roy (1951) model of self-selection - in the spirit of Lagakos and Waugh (2009). A calibrated version of the model can explain all the observed asymmetric sectoral productivity difference between resource rich and resource poor regions.
    Keywords: Dutch disease; resource rich; resource poor; structural transformation
    JEL: O11 O41 O13 F1 F4 Q4
    Date: 2010
  6. By: Byeong U. Park; L ?opold Simar; Valentin Zelenyuk (CEPA - School of Economics, The University of Queensland)
    Abstract: In the wake of the recent global financial crisis central banks and regulators are concerned about redirection of bailout funds into dividends. Yet, we do not know much about the extent banks follow dividend policies and funding decisions optimal to generating shareholders? wealth because banks have been mostly absent from an otherwise expansive literature on dividend policy. A relative, multi-period analysis of the troubled Japanese regional banks for the period 1998-2007 identifies inefficiencies in the levels of dividends, retained earnings, external funding and share performance. The study unfolds further by investigating associations between inefficiencies and non-performing loans, followed by a comparison of efficient versus inefficient banks across good and bad economic times. The methodology captures linkages among yearly financial decisions over multiple periods, thus summarizing long-term performance. The new approach can guide continuous benchmarking of bank financial performance, as well as help policy-makers monitoring potential misappropriation of bailout funds during financial crises. The findings indicate a potential to adjust levels of debt and equity funding, and substantial room for improvement in share performance. Associations between non-performing loans and technical inefficiencies are generally statistically significant.
    JEL: C13 C14 C2
    Date: 2010–12
  7. By: Ana Paula Martins
    Abstract: This research contrasts three econometric alternatives for stochastic efficiency frontier analysis: order – inter-quantile – and inverse order regression under the assumption of truncated error term distribution, and replicated moment estimation. The demonstration departs from a simple linear regression form of the effective frontier; truncated (at zero) errors are then added to it for simulation purposes. For order regression, experiments with the standard normal, uniform, exponential, Cauchy and logistic error terms are provided. For complex error structures we rely on normal distributions only. The three alternatives would perform satisfactorily for simple error disturbances, especially if they are normal. With more than one residual added to the dependent variable, the weight of the unrestricted range one can blur the conclusions regarding observation efficiency.
    Keywords: Stochastic Frontier Model, Generalized Method of Order Statistics, Minimum Distance Method of Order Statistics, Inverse Order Regression, Replicated Moments, Linear Models.
    JEL: C24 C10
    Date: 2010–08–10
  8. By: Celine Nauges (School of Economics, University of Queensland); Chris O'Donnell (School of Economics, University of Queensland); John Quiggin (School of Economics, University of Queensland)
    Abstract: In this article, we present one of the first real-world empirical applications of state-contingent production theory. Our state-contingent behavioral model allows us to analyze production under both inefficiency and uncertainty without regard to the nature of producer risk preferences. Using farm data for Finland, we estimate a flexible production model that permits substitutability between state-contingent outputs. We test empirically, and reject, an assumption that has been implicit in almost all efficiency studies conducted in the last three decades, namely that the production technology is output-cubical, i.e., that outputs are not substitutable between states of nature.
    Keywords: state-contingent; production; uncertainty
    JEL: Q10 Q24 Q25
    Date: 2010–12
  9. By: Usman OWOLABI A (Department of Management Science, Ladoke Akintola University of Technology, Ogbomoso, Nigeria); AKINLO A. E (Department of Economics, Obafemi Awolowo University, Ile-Ife, Nigeria.)
    Abstract: Recapitalization process that has recently become an imperative process in the Nigerian Financial industry has implications for the survival of insurance sector, especially on their service delivery efficiency. This study therefore seeks to investigate the problem of inefficiency in the Nigerian Insurance market from the perspective of their cost structures. The study takes advantage of secondary data of financial reports of thirty randomly selected insurance firms which span over a period of ten years and applied transcendental logarithm model to evaluate their performance from the cost structures strategy. The results indicate that only large scale firms enjoy cost saving advantages. Twenty percent firms sampled belong to this category. The result suggests that premium income would contribute to insurance firm’s performance, only when a sound investment decisions are made.
    Keywords: Transcedental Logarithm, Cost Structures, Insurance firms and Efficiency
    JEL: G22
    Date: 2010–08
  10. By: Ngo, Dang Thanh
    Abstract: Over the last twenty years in Vietnam, the financial system in general and the banking system in particular had been transferred from a monopoly system into a diversified system which allows all participants to compete fairly and effectively. Within these past years, the banking system in Vietnam did gradually developed in number of banking institutions, size of the banking sector in the economy, amount of credits for the economy, and amount of other banking services as well. Along with the development of the banking system in number, size, asset value, deposit, credit and debit account, ATM/POS, interest rates, etc. which attracted more and more customers using the banking’ services; the efficiency of the banking system also has been increasing. So far, there is still a lack of research on the efficiency of the banking sector in Vietnam over the decades. Several researches were conducted, however, due to the data limitation, these researches were just small steps at the big front gate. This paper, which focuses on evaluating the efficiency of bigger sample size of Vietnamese commercial banks in the year of 2008, tends to make a contribution to this progress. The DEA approach allows this paper to evaluate the efficiency of 22 Vietnamese commercial banks in using their inputs in 2008 (these banks were ranked top in the banking industry in Vietnam – VNR500 in 2009). After analyzing, the research comes to a conclusion that although the efficiency of these banks is averagely high, however, there is still an opportunity to improve this indicator.
    Keywords: Data envelopment analysis; Vietnam; bank; efficiency
    JEL: C14 G21
    Date: 2010–05–10
  11. By: Sriram Shankar (School of Economics, University of Queensland); Chris O'Donnell (School of Economics, University of Queensland); John Quiggin (School of Economics, University of Queensland)
    Abstract: In this article we model production technology in a state-contingent framework. Our model analyzes production under uncertainty without being explicit about the nature of producer risk preferences. In our model producers’ risk preferences are captured by the risk-neutral probabilities they assign to the different states of nature. Using a state-general state-contingent specification of technology we show that rational producers who encounter the same stochastic technology can make significantly different production choices. Further, we develop an econometric methodology to estimate the risk-neutral probabilities and the parameters of stochastic technology when there are two states of nature and only one of which is observed. Finally, we simulate data based on our state-general state-contingent specification of technology. Biased estimates of the technology parameters are obtained when we apply conventional ordinary least squares (OLS) estimator on the simulated data.
    Keywords: CES, Cobb-Douglas, OLS, output-cubical, risk-neutral, state-allocable, state-contingent
    JEL: C15 C63 D21 D81 Q10
    Date: 2010–12
  12. By: Inoue, Takeshi; Hamori, Shigeyuki
    Abstract: This paper empirically analyzes the market efficiency of microfinance investment funds. For the empirical analysis, we use an index of the microfinance investment funds and apply two kinds of variance ratio tests to examine whether or not this index follows a random walk. We use the entire sample period from December 2003 to June 2010 as well as two sub-samples which divide the entire period before and after January 2007. The empirical evidence demonstrates that the index does not follow a random walk, suggesting that the market of the microfinance investment funds is not efficient. This result is not affected by changes in either empirical techniques or sample periods.
    Keywords: Efficient market hypothesis, Microfinance investment, Variance ratio test, Microfinance
    JEL: G14 G21
    Date: 2010–12
  13. By: Sara Tessitore (Lab. MaIn – Scuola Superiore Sant’Anna, Pisa); Tiberio Daddi (Lab. MaIn – Scuola Superiore Sant’Anna, Pisa); Fabio Iraldo (– Institute for Environmental and Energy Policy and Economics, Bocconi University, Milan, Italy)
    Abstract: The article aims to investigate the presence of a correlation between eco-innovation and economic performance of an industrial district. The case analyzed in this article takes its cue from a study on a sample of 54 Italian industrial districts entitled "Eco-Districts" that, based on a series of criteria, has compiled a list of the most eco-efficient industrial districts. After selecting two districts in the field, but analyzed in this study for their different levels of eco-innovation, the article assesses the economic performance of the last three years through the analysis of trends in four indicators. However, the results show that only in some cases there is a connection between eco innovation and economic performance.
    Keywords: industrial clusters, industrial districts, eco-innovation, economic performance
    Date: 2010–02–23
  14. By: Johannes van Biesebroeck
    Abstract: This report organizes and discusses empirical estimates of the effects of fuel prices and fuel emission standards on consumer and firm behaviour. I touch only briefly on model-free estimates. The focus is on results based on explicit models, taken mostly from the industrial organization literature. First, I review studies that identify the willingness to pay for fuel efficiency using static and dynamic models of vehicle demand. Next, I take explicitly into account that firms will adjust their product portfolios and the characteristics of the vehicles they offer. These decisions will have an impact on the choice set from which consumer demand is estimated and on the trade-off that consumers face between fuel efficiency and other desirable characteristics. Finally, I discuss models where firms choose to invest in innovations to achieve fuel efficiency gains without sacrificing characteristics.
    Date: 2010–01

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