New Economics Papers
on Efficiency and Productivity
Issue of 2011‒06‒18
eighteen papers chosen by

  1. Agricultural Productivity and Policies in Sub-Saharan Africa By Yu, Bingxin; Nin-Pratt, Alejandro
  2. The funding and efficiency of higher education in Croatia and Slovenia: a non-parametric comparison By Aristovnik, Aleksander; Obadić, Alka
  4. Productivity gains and spillovers from offshoring By Klaus-Bernhard Michel; François Rycx
  5. Does Importing more Inputs Raise Exports? Firm Level Evidence from France By Maria Bas; Vanessa Strauss-Kahn
  6. Production factor returns : the role of factor utilisation By Gilbert Cette; Nicolas L. Dromel; Rémy Lecat; Anne-Charlotte Paret
  7. A spatial approach to measure productivity spillovers of foreign affiliated firms in Turkish manufacturing industries By Karaçuka, Mehmet; Catik, A. Nazif
  9. Productivity and Local Workforce Composition By Maré, David. C; Fabling, Richard
  11. In brief: Hospital performance: the impact of good management By Nicholas Bloom; Stephen Dorgan; Rebecca Homkes; Dennis Layton; Raffaella Sadun; John Van Reenen
  12. Eco-efficiency and convergence in OECD countries By Mariam Camarero; Juana Castillo; Andrés J. Picazo-Tadeo; Cecilio Tamarit
  13. Beyond Additionality: Are Innovation Subsidies Counterproductive? By Catozzella, Alessandra; Vivarelli, Marco
  14. The Optimal Size of German Cities An Efficiency Analysis Perspective By Hitzschke, Stephan
  15. Productivity and the Internationalization of Firms – Cross-border Acquisitions versus Greenfield Investments By Matthias Keese
  17. The Costs of Disposal and Recycling. An Application to Italian Municipal Solid Waste Services By Graziano Abrate; Fabrizio Erbetta; Giovanni Fraquelli; Davide Vannoni
  18. Exports, imports and profitability: First evidence for manufacturing enterprises By Joachim Wagner

  1. By: Yu, Bingxin; Nin-Pratt, Alejandro
    Abstract: We analyze the evolution of Sub-Saharan Africaâs agricultural total factor productivity (TFP) over the past 45 years, looking for evidence of recent changes in growth patterns using an improved nonparametric Malmquist index. Our TFP estimates show a remarkable recovery in the performance of Sub-Saharan Africaâs agriculture between 1984 and 2006 after a long period of poor performance and decline. That recovery is the consequence of improved efficiency in production resulting from changes in the output structure and an adjustment in the use of inputs. Policy interventions, including fiscal, trade and sector specific policies, appear to have played an important role in improving agricultureâs performance. Despite the improved agricultural performance, SSA economies face serious challenges to sustain growth. Among these are the small contribution of technical change to TFP growth in the past, the large tax burden imposed by remaining distortions, and the challenge of population growth.
    Keywords: agriculture, efficiency, Malmquist index, total factor productivity, technical change, Sub-Saharan Africa, policy, Agricultural and Food Policy, International Development, Productivity Analysis,
    Date: 2011–06–01
  2. By: Aristovnik, Aleksander; Obadić, Alka
    Abstract: The paper applies a non-parametric approach, i.e. data envelopment analysis (DEA), to assess the relative technical efficiency of higher education across countries, with a particular focus on Croatia and Slovenia. When estimating the efficiency frontier we focus on measures of quantities outputs/outcomes. The results show that the relatively high public expenditure per student in Croatia could have resulted in a relatively better performance regarding the outputs/outcomes, i.e. a higher rate of higher education school enrolment, a greater rate of labor force with a higher education and a lower rate of the unemployed who have a tertiary education. On the other hand, regardless of the input-output/outcome mix, the higher education system in Slovenia is shown to have a much higher level of efficiency compared to both Croatia and many other comparable EU and OECD countries.
    Keywords: higher education; funding; efficiency; DEA; Croatia; Slovenia; EU; OECD
    JEL: A23 J52 I21 J24
    Date: 2011–01–10
  3. By: A. Ashrafi; A.B. Jaafar; L.S. Lee; M.R. Abu Bakar (Institute for Mathematical Research, Universiti Putra Malaysia (UPM))
    Abstract: As a non-parametric technique in Operations Research and Economics, Data Envelopment Analysis (DEA) evaluates the relative efficiency of peer production systems or decision making units (DMUs) that have multiple inputs and outputs. In recent years, a great number of DEA studies have focused on two-stage production systems in series, where all outputs from the first stage are intermediate products that make up the inputs to the second stage. There are, of course, other types of two-stage processes that the inputs of the system can be freely allocated among two stages. For this type of two-stage production system, the conventional two-stage DEA models have some limitations e.g. efficiency formulation and linearizing transformation. In this paper, we introduce a relational DEA model, considering series relationship among two stages, to measure the overall efficiency of two-stage production systems with shared inputs. The linearity of DEA models is preserved in our model. The proposed DEA model not only evaluates the efficiency of the whole process, but also it provides the efficiency for each of the two sub-processes. A numerical example of US commercial banks from literature is used to clarify the model.
    Keywords: Data envelopment analysis, Decision making unit, Two-stage, Shared input, Efficiency
    JEL: M0
    Date: 2011–03
  4. By: Klaus-Bernhard Michel; François Rycx
    Abstract: Offshoring is generally believed to be productivity-enhancing and this belief is underpinned by economic theory. This article contributes to the growing literature that tests empirically whether offshoring does indeed help to improve productivity. Estimating the impact of materials and business services offshoring on productivity growth with industry-level data for Belgium over the period 1995-2004, we examine this issue separately for manufacturing and market services. The results show that there is no productivity effect of materials offshoring, while business services offshoring leads to productivity gains in manufacturing. In addition, this is the first article to investigate the possibility of spillovers from offshoring. Productivity gains from offshoring in one industry may feed through to other industries that purchase its output for intermediate use if, due to offshoring, the user value exceeds the price of the output. There is only scarce evidence of positive spillovers from materials offshoring in manufacturing in the data, which suggests that most firms effectively manage to internalise all efficiency gains from offshoring.
    Keywords: offshoring; productivity; spillovers; manufacturing and services; gmm
    JEL: J00 O10
    Date: 2011–06
  5. By: Maria Bas; Vanessa Strauss-Kahn
    Abstract: Why would an increase in imported inputs rise exports? We argue that importing more varieties of intermediate inputs increases firm’s productivity and thereby makes the firm able to overcome the export fixed costs. Whereas the literature evidences the positive effect of an increase in imported inputs on firms’ productivity and shows that only the most productive firms export, 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 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 and transfer of technology. We test for these different mechanisms by distinguishing the origin of imports (developing vs. developed countries). We find a significant impact of higher diversification and increased number of imported inputs varieties on firm’s TFP and export scope. Both the complementarity and transfer of technology mechanisms seem to matter.
    Keywords: Firm heterogeneity; imported inputs; TFP; export scope; varieties; firm-level data
    JEL: F10 F12
    Date: 2011–06
  6. By: Gilbert Cette (Banque de France - Banque de France, DEFI - Centre de Recherche en Développement Economique et Finance Internationale - Université de la Méditerranée - Aix-Marseille II); Nicolas L. Dromel (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Rémy Lecat (Banque de France - Banque de France); Anne-Charlotte Paret (Banque de France - Banque de France, ENSAE - École Nationale de la Statistique et de l'Administration Économique - ENSAE ParisTech)
    Abstract: Short-term increasing returns to production factors are usually found in empirical studies. We argue they can be due to omitted variables, particularly the intensity of factor utilisation. Thanks to original French firm-level data (1992-2008), we show how increasing returns to scale disappear when working time, capacity utilisation rate and mainly capital operating time are introduced in the production function
    Keywords: Production function, productivity, factor returns.
    Date: 2011–05
  7. By: Karaçuka, Mehmet; Catik, A. Nazif
    Abstract: In this paper we aim to analyze the productivity spillovers of foreign affiliated and domestic firms in Turkish manufacturing industries. As a novelty inter-sectoral linkages are modeled through the use of spatial models. Our results indicate the existence of positive and significant productivity spillovers among the neighborhood firms. We also find that an increase in the share of foreign affiliated firms in a given industry has positive impact on the productivity level of vertically related industries. However, our results do not provide any clear evidence that domestic firms benefit from the foreign affiliated firms either operating in the same industry or in the neighborhood industries. The findings suggest that unlike the effects of foreign affiliated firms, research and development expenditures significantly contribute to the productivity levels of domestic firms. --
    Keywords: Productivity,foreign direct investment,research and development,spatial econometrics
    JEL: C31 J24 O14 O33
    Date: 2011
  8. By: Elsadig Musa Ahmed (Faculty of Business and Law, Multimedia University (MMU), Melaka, Malaysia)
    Abstract: This study attempts to fill the gap of extensive growth theory model by providing statistical analysis in a parametric form that removed the doubts in the results generated. Using this model, the factors affecting the output growth in the food industries were identified in this study to be the individual contributions of capital, labour, material as well as the combined contributions of the quality of these inputs, which were expressed as the total factor productivity (TFP) growth
    Keywords: Malaysian food industry, productivity performance, total factor productivity
    JEL: O12
    Date: 2011–03
  9. By: Maré, David. C (Motu Economic and Public Policy Research); Fabling, Richard (Reserve Bank of New Zealand)
    Abstract: This chapter examines the link between firm productivity and the population composition of the areas in which firms operate. We combine annual firm-level microdata on production, covering a large proportion of the New Zealand economy, with area-level workforce characteristics obtained from population censuses. Overall, the results support the existence of agglomeration effects that operate through labour markets. We find evidence of productive spillovers from operating in areas with high-skilled workers, and with high population density. A high-skilled local workforce benefits firms in high-skilled and high-research and development industries, and small firms. The benefits of local population density are strongest for firms in dense areas, and for small and new firms. Firms providing local services are more productive in areas with high shares of migrants and new entrants, consistent with local demand factors.
    Keywords: productivity, agglomeration, workforce composition
    JEL: R1 R3 D24
    Date: 2011–05
  10. By: Dr. Nader Alber (Faculty of Commerce- Ain Shams University, Egypt)
    Abstract: This paper aims at analyzing the profit efficiency of the Saudi banks, and testing how it could be affected by banking expansion. This has been conducted using a sample of 6 commercial banks (out of 11), and covering the period from 1998 to 2007. Profit efficiency has been measured, using the ratio of actual profitability to the best one, which a similar bank (in size) can realize
    Keywords: profit efficiency, banking expansion
    JEL: M0
    Date: 2011–03
  11. By: Nicholas Bloom; Stephen Dorgan; Rebecca Homkes; Dennis Layton; Raffaella Sadun; John Van Reenen
    Abstract: CEP research highlights the potential role of improving the quality of hospital management for raising productivity in the UK healthcare sector
    Keywords: health
    JEL: I10 I18
    Date: 2011–03
  12. By: Mariam Camarero (Dpto. Economía. Universidad Jaume I); Juana Castillo (Dpto. Economía Aplicada II. Universidad de Valencia); Andrés J. Picazo-Tadeo (Dpto. Economía Aplicada II. Universidad de Valencia); Cecilio Tamarit (Dpto. Economía Aplicada II. Universidad de Valencia)
    Abstract: This paper assesses the convergence in eco-efficiency of a group of 22 OECD countries over the period 1980-2005. In doing so, three air-pollutants representing the impact on the environment of economic activities are considered, namely, carbon dioxide (CO2), nitrogen oxides (NOX) and sulphur oxides (SOX); furthermore, eco-efficiency scores at both country and air-pollutant-specific levels are computed using Data Envelopment Analysis techniques. Then, convergence is evaluated using the recent approach by Phillips and Sul (2007), which allows testing for the existence of convergence groups. First, we find that, with the exception of NOX emissions, eco-efficiency has improved over the period, the greatest progress corresponding to CO2 emissions. Second, Switzerland is the most eco-efficient country, followed by some Scandinavian economies such as Sweden, Norway, Iceland and Denmark. In contrast, European Mediterranean countries such as Portugal, Spain and Greece, in addition to Hungary, Turkey, Canada or the US, are among the worst performers. Finally, we find that both the most eco-efficient countries and the worst-performing countries also tend to form clubs of convergence among them.
    Keywords: Eco-efficiency; Air pollutants; Convergence clubs; OECD
    JEL: C15 C22 C61 F15 Q56
    Date: 2011–06
  13. By: Catozzella, Alessandra (University of Pavia); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: Building on a standard policy evaluation literature mainly aimed at estimating the additional effect of subsidies on either firms' innovative expenditures or innovative outputs only, this paper tries to move one step further, combining the two (input and output) dimensions of innovation into a unique efficiency perspective. To this aim, the impact of public funding on the ratio between innovative sales and innovative expenditures (innovative productivity) is estimated using a sample of firm-level data drawn from the third Italian Community Innovation Survey (CIS). A bivariate endogenous switching model has been developed in order to free the analysis of any ex ante sources of sample selection and firm heterogeneity, at the same time getting rid of the two sources of endogeneity potentially affecting the results, i.e. the possible simultaneity between subsidy allocation and the qualitative composition of the innovative output, as well as the endogeneity of public support with respect to innovative performance. Results show that innovative productivity is negatively affected by the innovation subsidy; far from 'doing better' as a result of government intervention, supported firms appear to exhaust their advantage through merely increasing their innovative expenditures.
    Keywords: bivariate endogenous switching model, product innovation, policy evaluation, innovation subsidy
    JEL: O32 O38
    Date: 2011–05
  14. By: Hitzschke, Stephan
    Abstract: This work investigates the interrelation between production efficiency and population size of German cities. The productive efficiency in this context is the scale efficiency, which is a result of positive and negative agglomeration externalities. The investigation is performed in a two-stage process. First, the efficiency in terms of scale efficiency is measured using nonparametric methods. The second stage investigates the relation of scale efficiency and populations size. It turns out that the optimal city size in Germany is about 220,000 inhabitants, which is almost the mean size of all German cities involved. Although there are regional differences, optimal city size remains stable as the mean size.
    Keywords: Efficiency analysis, optimal city size, population size, German cities
    Date: 2011–06
  15. By: Matthias Keese
    Abstract: This paper extends the literature on the determinants of international activity at the firm level towards cross-border acquisitions and greenfield investments as different modes of FDI using a rich dataset of British firms. While multinational firms are characterized by higher productivity levels than exporters on average, the productivity ranking predicted by Helpman et al. (2004) does not hold within all types of industries and across all modes of foreign direct investment. In line with Nocke & Yeaple (2007) it matters whether multinational firms engage abroad via greenfield investments or cross-border acquisitions. Cross-border deals involve the most productive firms in sectors with a high share of intangible assets, but the least productive group of all internationally active firms in other industries.
    Keywords: Foreign entry; cross-border M&A; greenfield investment; productivity
    JEL: F23 G34 L23 D24
    Date: 2011–04
  16. By: Mercedes Beltrán-Esteve (Departamento de Economía Aplicada II. Universidad de Valencia); José A. Gómez-Limón (Departamento de Economía Agraria. Instituto Andaluz de Investigación y Formación Agraria y Pesquera. Córdoba); Andrés J. Picazo-Tadeo (Departamento de Economía Aplicada II. Universidad de Valencia)
    Abstract: This paper analyses the impact of the Agri-environmental Extensification Scheme for the Protection of Flora and Fauna (F&F Scheme) on the eco-efficiency of a sample of dryland farms in the Spanish region of Castile and Leon. We explore whether or not the production technology of the farms included in the F&F Scheme is more eco-efficient than the technology used by farms that are not included in the Scheme, employing Data Envelopment Analysis (DEA) and the program decomposition proposed by Charnes et al. (1981) to do so. The results obtained confirm the foregoing hypothesis, providing evidence that environmental pressures could be reduced if all farms adopted the F&F Scheme technology. Furthermore, shadow prices are used to assess the monetary value of the potential reduction in environmental pressures that farms could achieve by adopting the F&F Scheme. The results show that the average opportunity cost of the decrease in environmental pressures (€55.65/ha) is similar to the compensation received by farms included in the F&F Scheme. Nevertheless, bearing in mind the great diversity of farms, we recommend agricultural policymakers to use an auction system to award such environmental contracts.
    Keywords: Data Envelopment Analysis; economic-ecological efficiency; shadow prices; agri-environmental policy
    JEL: C61 D21 Q18 Q57
    Date: 2011–06
  17. By: Graziano Abrate (University of Eastern Piedmont); Fabrizio Erbetta (University of Eastern Piedmont); Giovanni Fraquelli (University of Eastern Piedmont); Davide Vannoni (Department of Economics and Public Finance "G. Prato", University of Torino)
    Abstract: The paper investigates the costs of waste disposal and recycling services by using a well-behaved Composite cost function model. Our estimates on a unique sample of more than 500 Italian municipalities highlight that the refuse collection technology exhibits constant returns to scale as well as scope economies between disposal and recycling. As far as the size of the municipality increases, scope economies rise up to 14%, but they are accompanied with overall diseconomies of scale. Our findings suggest that, on the one hand, joint management of disposal and recycling should be encouraged, and, on the other hand, that strategies aimed at increasing the share of waste sent for recycling would not imply a considerable increase in total costs.
    Keywords: Solid waste, recycling, cost functions
    JEL: D24 H42 L33 L99
    Date: 2011–06
  18. By: Joachim Wagner (Institute of Economics, Leuphana University of Lüneburg, Germany)
    Abstract: This paper documents for the first time the relationship between profitability and three types of international trade activities – exports, imports and two-way trade. It uses unique new representative data for manufacturing enterprises from Germany, one of the leading actors on the world market for goods, that merge information from surveys performed by the Statistical Offices and administrative data collected by the Tax Authorities. Descriptive statistics and regression analysis (with and without controlling for unobserved firm heterogeneity and the role of outliers) point to the absence of any statistically significant and economically large effects of trade activities on profits. This demonstrates that any productivity advantages of trading firms are eaten up by extra costs related to selling and buying on foreign markets.
    Keywords: exports, imports, profitability
    JEL: F14
    Date: 2011–06

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