New Economics Papers
on Efficiency and Productivity
Issue of 2011‒03‒19
thirteen papers chosen by

  1. Eco-efficiency Assessment of Olive Farms in Andalusia By José A. Gómez-Limón; Andrés J. Picazo-Tadeo; Ernest Reig-Martínez
  2. Weight Restrictions in DEA:Misplaced Emphasis? By R. Førsund, Finn
  3. The Economic Efficiency of Swedish Higher Education Institutions By Daghbashyan, Zara
  4. Social services, human capital, and technical efficiency of smallholders in Burkina Faso: By Wouterse, Fleur
  5. Economic and Marketing Efficiency Among Corn Ethanol Plants By Sesmero, Juan S.; Perrik, Richard K.; Fulginiti, Lilyan E.
  6. Globalisation, industrial diversification and productivity growth in large European R&D companies By Michele Cincera; Julien Ravet
  7. Intangible Investment and the Swedish Manufacturing and Service Sector Paradox By Edquist, Harald
  9. Environmental Performance, Innovation and Regional Spillovers By Massimiliano Mazzanti; Valeria Costantini; Anna Montini
  10. Price-Cost Margins and Shares of Fixed Factors By Konings, Jozef; Roeger, Werner; Zhao, Liqiu
  11. Productivity and per capita GDP growth: the role of the forgotten factors By Marattin, Luigi; Salotti, Simone
  12. Terminal units in DEA: Definition and Determination By Krivonozhko, Vladimir; R. Førsund, Finn; V. Lychev, Andrey
  13. The Effects of Public Listing on the Performance of Banks in China By Bin Liu

  1. By: José A. Gómez-Limón (Instituto Andaluz de Investigación y Formación Agraria y Pesquera. Departamento de Economía Agraria. Córdoba, Spain.); Andrés J. Picazo-Tadeo (Universidad de Valencia. Departamento de Economía Aplicada II. Valencia, Spain.); Ernest Reig-Martínez (Universidad de Valencia. Departamento de Economía Aplicada II. Instituto Valenciano de Investigaciones Económicas.)
    Abstract: Olive farming represents an important source of income and employment in the rural areas of Andalusia (Spain), which is the most important olive oil-producing region in the world. Unfortunately, it also exerts important environmental pressures with regard to soil erosion, use of polluting inputs, excessive water consumption and biodiversity reduction. This paper uses Data Envelopment Analysis (DEA) techniques and pressure distance functions to contribute an assessment at the farm level of the ecoefficiency of a sample of 292 Andalusian olive farmers. We distinguish between managerial eco-efficiency and program eco-efficiency; the latter being associated with the different natural conditions prevailing in the three main olive cultivation systems in the region, namely, traditional rain-fed mountain groves, traditional rain-fed plain groves and irrigated intensive groves. Our findings show that eco-inefficient management is a widespread practice across olive farmers, mainly explained by a generalised technical inefficiency. Furthermore, the most eco-efficient production system is the traditional plain growing system. Finally, we find that land productivity strongly influences managerial eco-efficiency in all three aforementioned cultivation systems.
    Keywords: Olive grove; Economic-ecological efficiency; Environmental pressures; Data Envelopment Analysis
    Date: 2011–03
  2. By: R. Førsund, Finn (Dept. of Economics, University of Oslo)
    Abstract: Measuring productive efficiency is an important research strand within fields of economics, management science and operations research. One definition of efficiency is the proportional scaling needed for observations of an inefficient unit to be projected onto an efficient production function and another definition is a ratio index of weighted outputs on weighted inputs. When linear programming is used to estimate efficiency the two definitions give identical results due to the fundamental duality of linear programming. Empirical applications of DEA using linear programming showed a prevalence of zero weights leading to questioning the consequence for the efficiency score estimate based on the ratio definition. Early literature on weight restrictions is exclusively based on the ratio efficiency. It was stated that variables with zero weights had no influence on the efficiency score, in spite of the alleged importance of the variables. This has been one motivation for introducing restrictions on weights. Another empirical result was that often there were too many efficient units. This problem could also be overcome by introducing weight restrictions. Weight restrictions were said to introduce values for inputs and outputs. The paper makes a critical examinations of these claims based on defining efficiency relative to a frontier production function.
    Keywords: Weight restrictions; DEA; efficiency; frontier production function; primal and dual linear programming problems
    JEL: C61 D20
    Date: 2011–02–17
  3. By: Daghbashyan, Zara (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: The paper investigates the economic efficiency of higher education institutions (HEI) in Sweden to determine the factors that cause efficiency differences. Stochastic frontier analysis is utilized to estimate the economic efficiency of 30 HEI using both pooled and panel data approaches. HEI specific factors such as size, load, staff and student characteristics as well as government allocations are suggested to be the potential determinants of economic efficiency. The results suggest that HEI are not identical in their economic efficiency; though the average efficiency is high, they do perform differently. This variation is explained by the joint influence of HEI specific factors; the quality of labor is found to be highly significant for the cost efficiency of Swedish HEI.
    Keywords: Cost efficiency; Stochastic Frontier Analysis; Universities
    JEL: C21 C24 I21
    Date: 2011–03–11
  4. By: Wouterse, Fleur
    Abstract: This study applies regression analysis as well as a non-parametric method to survey data from Burkina Faso to analyze the role of human capital in explaining technical efficiency in smallholder agricultural production. Exploiting the panel nature of the data and explicitly treating human capital inputs as endogenous, a two-stage estimation method is used for the analysis of determinants of data envelopment analysis (DEA) technical efficiency scores in a double-bootstrap procedure. Findings suggest that the impact of human capital on technical efficiency differs strongly by gender. Strong positive returns exist for education of females, whereas male education is associated with higher inefficiency. Body mass index of adult females also positively relates to technical efficiency. At the community level, presence of a clinic, connection to the electrical grid, presence of a secondary school, and year-round accessibility of the community are found to be vital for human capital formation.
    Keywords: Human capital, non-parametrics, public services, Smallholders,
    Date: 2011
  5. By: Sesmero, Juan S.; Perrik, Richard K.; Fulginiti, Lilyan E.
    Abstract: In the corn ethanol industry, the ability of plants to obtain favorable prices through marketing decisions is considered important for their overall economic performance. Based on a panel of surveyed of ethanol plants we extend data envelopment analysis (DEA) to decompose the economic efficiency of plants into conventional sources (technical and allocative efficiency) and a new component we call marketing efficiency. The latter measure allows us to evaluate plantsâ ability to contract favorable prices of corn and ethanol relative to spot market prices and its implications for their overall economic performance. Results show that plants are very efficient from a technical point of view. Dispersion in overall economic performance observed across units is mainly explained by differences in allocative and marketing sources. Our results are consistent with the view that plants with higher production volumes may perform better, in part, because they can secure more favorable prices through improved marketing performance. Plants also seem to achieve significant improvements in marketing performance through experience and learning-by-doing. These results are consistent with two facts; 1) economies of scale may not be the only reason behind the increase in the average size of plants in the ethanol industry and; 2) there might be incentives for horizontal consolidation across plants.
    Keywords: corn ethanol, data envelopment analysis, economic efficiency decomposition, marketing efficiency, mergers, Environmental Economics and Policy,
    Date: 2011
  6. By: Michele Cincera (Solvay Brussels School of Economics and Management, Université Libre de Bruxelles); Julien Ravet (Solvay Brussels School of Economics and Management, Université Libre de Bruxelles)
    Abstract: This paper aims to assess the impact of both geographic and industrial diversification of economic activities on the productivity performance of large European R&D Multinational Enterprises (MNEs). Based on the worldwide subsidiaries of these firms, we measure the performance of the firms according to their level of industrial diversification and globalisation that we proxy with the presence and importance of subsidiaries in the EU, North America and Asia-Pacific regions. The sample consists of large R&D firms that represent about 80% of total European R&D. In general, the results indicate a positive impact from globalisation on firms’ R&D productivity, especially in the US, while a negative impact for industrial diversification is found.
    Keywords: R&D; European MNEs; productivity; globalisation; industrial diversification
    JEL: O33
    Date: 2011–03
  7. By: Edquist, Harald (Research Institute of Industrial Economics (IFN))
    Abstract: Since the mid 1990s labor productivity growth in Sweden has been high compared to Japan, the US and the western EU-countries. While productivity growth has been rapid in manufacturing, it has been much slower in the service sector. Paradoxically, all employment growth since the mid 1990s has been created in business services. The two traditional explanations of this pattern are Baumol’s disease and outsourcing. This paper puts forward an additional explanation, based on the observation that manufacturing industries have invested heavily in intangible assets such as R&D and vocational training. In 2005–2006, intangible investment was 25 percent of value added in manufacturing, while the corresponding figure for the service sector was 11 percent. Moreover, calculations based on the growth accounting framework at the industry level in 2000–2006 show that intangible investment accounted for almost 30 percent of labor productivity growth in manufacturing. Thus, investments in intangibles that mostly are knowledge intensive services have contributed considerable to productivity growth in Swedish manufacturing since 1995.
    Keywords: Intangibles; Manufacturing; Productivity growth; Service sector; Sector analysis
    JEL: O14 O32 O33
    Date: 2011–02–11
  8. By: Lidia Mannarino; Valeria Pupo; Fernanda Ricotta (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: Using Total Factor Productivity (TFP) as a measure of corporate performance, this study compares the performance of owner management to that of firms run by professional managers over the period 2004-2006. We consider the influence of owner management for the sample as a whole and for subgroups of firms. The findings demonstrate that family run firms are less productive than firms run by professional managers, but the difference between the two is small. Our results support the idea that in Italy there is not a genuine process of manager selection both for family and no-family firms.
    Keywords: TFP, Family firms, Management
    JEL: D24 G34
    Date: 2011–03
  9. By: Massimiliano Mazzanti; Valeria Costantini; Anna Montini
    Abstract: The achievement of positive Environmental Performance (EP) at national level could strongly depend on differences in regional features, namely economic specialization, regulation stringency and innovation capabilities of both public institutions and the private business sector. We apply both shift-share and econometric analysis on a new NAMEA available for the 20 Italian Regions, in order to provide evidence of the role played by sector innovation, technological spillovers and regional policies in shaping the geographical distribution of EP. The Italian North-South divide regarding industrial development and productive specialisation patterns seems to affect regional EP. Nonetheless, such pattern presents some interesting differences, revealing a more heterogeneous distribution of emissions, which may reflect the role of other driving forces. In particular, agglomerative effects seem to prevail over purely internal factors - environmental efficiency of neighbouring regions strongly influence the internal EP. This means that together with the clustering of specific sectors into restricted areas as a standard result in regional economics, there is also some convergence in the adoption of cleaner or dirtier production process techniques. Finally, regional technological spillovers seem to play a more effective role in improving environmental efficiency than "sector internal innovation", revealing that accounting for spatial features is crucial to understand the key drivers of EP.
    Keywords: Environmental Performance; Technological Innovation; Regional Spillovers; regional NAMEA
    JEL: Q53 Q55 Q56 R15
    Date: 2011–01–05
  10. By: Konings, Jozef; Roeger, Werner; Zhao, Liqiu
    Abstract: Reduced form approaches to estimate markups typically exploit variation in observed input and output. However, these approaches ignore the presence of fixed input factors, which may result in an overestimation of the price-cost margins. We first propose a new methodology to simultaneously estimate price-cost margins and the shares of fixed inputs. We then use Belgian firm level data for manufacturing and service sectors to show that markups are lower when taking into account fixed input factors. We find that the average price-cost margin of manufacturing firms is 0.041, compared to 0.090 when we do not control for fixed costs of production. We also show that price-cost margins increase with the share of fixed costs in turnover. Our findings provide new insights about observed high price-cost margins in service industries. In particular, we show that once fixed costs are taken into account, price-cost margins in service industries are comparable to those in manufacturing.
    Keywords: fixed input costs; price-cost margins; Solow residual
    JEL: L11 L13 L60
    Date: 2011–03
  11. By: Marattin, Luigi; Salotti, Simone
    Abstract: Average hourly productivity has often been used to draw conclusions on long run per capita GDP growth, based on the assumption of full utilization of labour resources. In this paper, we argue that a failure to recognize the potentially significant wedges among the two variables – even in the long run - can be misleading. By applying both time series and panel cointegration techniques on data on 19 OECD countries, we fail to reject the hypothesis of absence of a long run common stochastic trend among the two variables in the period 1980-2005. Furthermore, we apply a simple decomposition of GDP growth into five variables, included some related to the supply-side and demographics, so to verify the single contributions to income growth and variance over our period of interest. We conclude that variables that have been so far absent in the growth literature have indeed a non-negligible role in explaining the dynamics of long run per capita GDP growth. In particular, these “forgotten factors” (that we identify with the employment and the activity rates and a demographic ratio) matter more in better performing economies, where we also highlight that productivity has been less important in determining GDP growth than in relatively bad performers.
    Keywords: Growth accounting; productivity; panel cointegration; demographics.
    JEL: O47 E01 O40
    Date: 2010–04
  12. By: Krivonozhko, Vladimir (Institute for Systems Analysis, Russian Academy of Sciences, Moscow); R. Førsund, Finn (Dept. of Economics, University of Oslo); V. Lychev, Andrey (Accounts Chamber of the Russian Federation, Moscow)
    Abstract: Applications of the DEA models show that inadequate results may arise in some cases, two of these inadequacies being: a) too many efficient units may appear in some DEA models; b) a DEA model may show an inefficient unit from the point of view of experts as an efficient one. The purpose of this paper is to identify units that may unduly become efficient. The concept of a terminal unit is introduced for such units. A method for improving the adequacy of DEA models based on terminal units is suggested, and an example shown based on a real-life data set for Russian banks.
    Keywords: Terminal units; DEA; Efficiency; Weight restrictions; Domination cones
    JEL: C44 C61 C67 D24
    Date: 2011–02–17
  13. By: Bin Liu (CCB International (Holdings) Limited and Hong Kong Institute for Monetary Research)
    Abstract: Chinese banks have been pushing further commercialization, corporate restructuring and public listing in recent years. The ten largest commercial banks in China have all been listed, among which nine went public in the past decade. This paper conducts an empirical investigation on how public listing affects the performance of Chinese banks. Particularly, we examine the pre-listing restructuring effect and the different effects of public listing locations such as Shanghai and Hong Kong, which have not received much attention in the literature. Our sample covers all the 16 listed banks in China and 17 other unlisted banks over the period of 1997-2008. Using a pooled cross-section regression, we compare three modified models built upon Berger et al. (2005) to consider the following three effects: 1) the static governance effect; 2) the selection effect and 3) the dynamic effect. We found that the public listing effect should be modeled as a dynamic process rather than a sudden structural change at a cut-off point, thus it is important to compare the banks' performance during the pre-listing restructuring period with the after-listing period. Moreover, the public listing in Hong Kong is found to have more positive and persistent effects on banks' performance in terms of both profitability and financial safety than the public listing in Mainland China. We also provide some tentative explanations for such different effects on banks' performance, and discuss the implications to both policy makers and market participants.
    Keywords: Public Listing, Cross Listing, Bank Performance, Chinese Banks
    Date: 2011–02

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