New Economics Papers
on Efficiency and Productivity
Issue of 2011‒08‒02
eleven papers chosen by

  1. Measuring Islamic banks efficiency: the case of world Islamic banking sectors By Ahmad, Nor Hayati Bt; Noor, Mohamad Akbar Noor Mohamad; Sufian, Fadzlan
  2. orderalpha: Nonparametric order-α efficiency analysis for Stata By Harald Tauchmann
  3. Competition policy and productivity growth: An empirical assessment By Buccirossi, Paolo; Ciari, Lorenzo; Duso, Tomaso; Spagnolo, Giancarlo; Vitale, Cristiana
  4. A Metafrontier Analysis of Technical Efficiency of Selected European Agricultures By Barnes, Andrew; Revoredo-Giha, Cesar
  5. Assessment of industrial performance and the relationship between skill, technology and input-output indicators in Sudan By Nour, Samia
  6. Simulating the impact of climate change and adaptation strategies on farm productivity and income: A bioeconomic analysis By Fofana, Ismael
  7. Do Domestic Firms Benefit from Foreign Presence and Competition in Irish Services Sectors? By Haller, Stefanie
  8. Managerial ownership and urban water utilities efficiency in Uganda By Mbuvi, Dorcas; Tarsim, Achraf
  9. Agricultural management for climate change adaptation, greenhouse gas mitigation, and agricultural productivity: Insights from Kenya By Bryan, Elizabeth; Ringler, Claudia; Okoba, Barrack; Koo, Jawoo; Herrero, Mario; Silvestri, Silvia
  10. The Productivity Advantage and Global Scope of U.S. Multinational Firms By Raymond Mattaloni Jr.
  11. Heterogeneous treatment effects of integrated soil fertility management on crop productivity: Evidence from Nigeria By Kato, Edward; Nkonya, Ephraim; Place, Frank M.

  1. By: Ahmad, Nor Hayati Bt; Noor, Mohamad Akbar Noor Mohamad; Sufian, Fadzlan
    Abstract: The paper investigates the efficiency of the Islamic banking sectors in the world covering 25 countries during the period of 2003-2009. The efficiency estimates of individual banks are evaluated using the non-parametric Data Envelopment Analysis (DEA) method. The empirical findings suggest that during the period of study, pure technical efficiency outweighs scale efficiency in World Islamic banking countries. We find that banks from the high income countries were the leaders by dominating the most efficiency frontier during the period of study.
    Keywords: Islamic Banks: Data Envelopment Analysis (DEA): Performance Evaluation.
    JEL: G28 G21
    Date: 2010–10
  2. By: Harald Tauchmann (RWI)
    Abstract: Despite its frequent use in applied work, nonparametric approaches to efficiency analysis, namely data envelopment analysis (DEA) and free disposal hull (FDH), have bad reputations among econometricians. This is mainly due to DEA and FDH representing deterministic approaches that are highly sensitive to outliers and measurement errors. However, recently, so-called partial frontier approaches—namely order-m (Cazals, Florens, and Simar, 2002, Journal of Econometrics 106:1–25) and order-a (Aragon, Dauia, and Thomas-Agnan, 2005, Economic Theory 21: 358– 389)—have been developed; they generalize FDH by allowing for super- efficient observations to be located beyond the estimated production- possibility frontier. Although these methods are purely nonparametric too, sensitivity to outliers is substantially reduced by partial frontier approaches enveloping just a subsample of observations. I present the new Stata command orderalpha that implements order-a efficiency analysis in Stata. The command allows for several options, such as statistical inference based on subsampling bootstrap. In addition, I present the accompanying Stata command oaoutlier, which is an explorative tool that employs orderalpha for detecting potential outliers in data meant for subsequent efficiency analysis using DEA.
    Date: 2011–07–23
  3. By: Buccirossi, Paolo; Ciari, Lorenzo; Duso, Tomaso; Spagnolo, Giancarlo; Vitale, Cristiana
    Abstract: This paper empirically investigates the effectiveness of competition policy by estimating its impact on Total Factor Productivity (TFP) growth for 22 industries in 12 OECD countries over the period 1995-2005. We find a robust positive and significant effect of competition policy as measured by newly created indexes. We provide several arguments and results based on instrumental variables estimators and non-linearities to support the claim that the established link can be interpreted in a causal way. At a disaggregated level, the effect on TFP growth is particularly strong for specific aspects of competition policy related to its institutional set up and antitrust activities (rather than merger control). The effect is strengthened by good legal systems, suggesting complementarities between competition policy and the efficiency of law enforcement institutions. --
    Keywords: Competition Policy,Productivity Growth,TFP,Institutions,Deterrence,OECD
    JEL: L4 K21 O4 C23
    Date: 2011
  4. By: Barnes, Andrew; Revoredo-Giha, Cesar
    Abstract: Technical efficiency refers to the situation where it is impossible for a firm to produce, with the given know-how, (1) a larger output from the same inputs or (2) the same output with less of one or more inputs without increasing the amount of other inputs. In practice, the interest is on the relative position in terms of efficiency of a particular firm with respect to others. Therefore, technical efficiency is characterised by the relationship between observed production and some ideal or potential production (Greene, 1993). Although the beginning of the efficiency work can be traced to the 1950s (Farrell, 1957), there have been a growing interest on its use in benchmarking performance, predominantly as a means of identifying best practice and improving the efficiency of resource use within the agricultural industry (e.g., Defra 2004, SAC 2009). This paper deals with the estimation of technical efficiency for the agricultural sectors in several European countries and moreover, it aims to compare the efficiency amongst them using a metafrontier analysis. The use of this type of analysis is justified because a frontier, which represents the best available technology within a particular region/country cannot be strictly compared across other regions/countries, unless they operate under the same production set. The metafrontier analysis has been developed in a number of studies (Battese and Rao, 2002; Nkamleu et al., 2006; Chen and Song, 2006; OâDonnell et al., 2008.) The metafrontier analysis in this paper, which uses data from the Farm Accountancy data Network (FADN), was focused on four farm types: two specialised farming types (i.e., specialist cereals, oilseed and protein crops and specialist dairying) and two more mixed farming sets (i.e., general field cropping and mixed farms), and was applied to a total of 11 countries namely Belgium, Denmark, France, Germany, Hungary, Ireland, Italy, Netherlands, Poland, Spain and the UK. For most of the countries the information was available from 1995 until 2007, excepting Hungary and Poland, for which it was available only since 2004. Also note that not all the farm types were available for all the countries. The structure of the paper is as follows: it starts presenting an overview of the metafrontier analysis used to compare technical efficiency amongst the European countries. It is followed by the empirical work, which comprises a description of the data used, the estimation and discussion of the results. Finally we present conclusions.
    Keywords: Research and Development/Tech Change/Emerging Technologies,
    Date: 2010–11
  5. By: Nour, Samia (UNU-MERIT, Maastricht University, and Khartoum University)
    Abstract: This paper examines the industrial performance indicators and the relationships between skill indicators; between skill, upskilling, technology and input-output indicators in Sudan. Our findings are consistent with the stylized facts in the new growth literature, concerning the correlation between skill indicators: education, experience and wages and also concerning the positive complementary relationships between technology, skill and upskilling. Different from the Sudanese literature, a novel element in our analysis is that we use a new primary data from the firm survey (2010) and we provide a new contribution and fill the gap in the Sudanese literature by examining the industrial performance indicators defined by three different sets of economic and productivity indicators, activity indicators and profitability indicators in Sudan. One advantage and interesting element in our analysis in this paper is that we confirm three hypotheses on the relationships between skill indicators; between skill, upskilling, technology and input-output indicators and industrial performance indicators using new primary data from the firm survey (2010) in Sudan. We verify our first hypothesis that irrespective of the observed differences across the industrial firms, the low skill levels - due to high share of unskilled workers - lead to skills mismatch and most probably contribute to decline of labour productivity and industrial performance indicators. We confirm our second hypothesis that an increase in skill levels and firm size lead to improved relationships between actual and required education and experience; between actual education, experience and wages; and between skill, upskilling and technology (ICT) and also improved industrial performance indicators. We also support our third hypothesis concerning the inconclusive relationships between new technology (the use of ICT) and input-output indicators at the micro/firm level. Finally, we provide a new contribution to the Sudanese literature, since we explain that the performance of the industrial firms is most probably immensely undermined by the shortage of skilled workers and also by the lack of entrepreneur perspective. We recommend further efforts to be made to improve adequate availability of skilled workers and commitment to entrepreneur perspective for improvement of labour productivity, industrial performance and therefore, economic growth and development in Sudan.
    Keywords: Industrial performance, skill, technology, input-output, firm size, industry, Sudan
    JEL: J24 L10 L20 L25 L60 O12 O15 O30
    Date: 2011
  6. By: Fofana, Ismael
    Abstract: This study applied at the farm level in Tunisia aims at understanding the effects of climate change on agricultural productivity and income in Africa. Possible future climates are presented through different climate scenarios. The latter combines three levels of increasing temperature (1°centigrade (C), 2°C, and 3°C) with two levels of decreasing precipitation (10 and 20 percent) and a doubling of carbon dioxide concentration in the atmosphere (350 to 700 parts per million). The farming system of production is replicated through a bioeconomic model; that is, one that couples a cropping system model and an economic model run sequentially. The study reveals that land productivity and farm income decline under climate change. Depending on the changes in precipitation, farm productivity falls by 15 to 20 percent and farm income 5 to 20 percent when the temperature increases moderately (1°C). As the climate warms up (2°C and 3°C), farm productivity and income are severely affected, by 35 to 55 percent and 45 to 70 percent, respectively. When simple adaptation strategies based on new management techniques for hard wheat are tested - more irrigation and fertilization - compensations for the negative effects of climate change are found to be worthwhile only for a 1°C increase in temperature. However, the success of adaptation strategies highly depends on the availability of more water and lower additional cost to mobilize them at the farm level.
    Keywords: adaptation strategies, Bioeconomic modeling, Agriculture, Climate change, farm income, productivity,
    Date: 2011
  7. By: Haller, Stefanie
    Abstract: This paper examines whether local firms benefit from the presence of foreign-owned firms in three Irish market-services sectors between 2001 and 2007. I investigate whether domestic firms differ in their ability to benefit from foreign presence using three different measures of absorptive capacity and also whether the foreign subsidiaries differ in their ability to generate spillovers. To account for the difficulty of productivity measurement in services, turnover-based, value-added-based and input-based productivity measures are employed. I find weak evidence of positive spillovers to domestic non-importers in the transport, storage and communication sector. In wholesale and retail trade, foreign presence is associated with lower capital-labour ratios and higher part-time-to-full-time employee ratios among domestic firms. In contrast, import competition is associated with higher productivity of the domestic firms in the transport, storage and communication and the business activities sector.
    Keywords: competition/Absorptive capacity/Productivity/transport
    Date: 2011–07
  8. By: Mbuvi, Dorcas (UNU-MERIT, Maastricht University); Tarsim, Achraf (University of Liège)
    Abstract: This paper assesses the impact of the early 1980s neoliberalistic reform strategies in urban water distribution in developing countries. It examines in particular, the technical efficiency of two heterogeneous urban water utility-groups in Uganda. Performance is considered in light of the key urban water sector objectives that are to universally increase qualitative water coverage and enhance utility revenue. Using a two-staged bias-corrected metafrontier based on the data envelopment analysis estimators, the public-private (than the public-public) owned utilities are found less efficient. Efficiency differences between both groups are further linked to utilities scale of operation and market capture capabilities among other factors. The paper urges policy makers to strengthen public sector capabilities as a development policy solution for inclusive quality water services access among other basic public utility services in Uganda, Africa and the developing countries in general.
    Keywords: Efficiency, managerial ownership, non-parametric, Uganda, urban water supply, water supply, water resource management, water utilities
    JEL: C14 H41 L95 Q25
    Date: 2011
  9. By: Bryan, Elizabeth; Ringler, Claudia; Okoba, Barrack; Koo, Jawoo; Herrero, Mario; Silvestri, Silvia
    Abstract: Changes in the agriculture sector are essential to mitigate and adapt to climate change, ensure food security for the growing population, and improve the livelihoods of poor smallholder producers. What agricultural strategies are needed to meet these challenges? To what extent are there synergies among these strategies? This paper examines these issues for smallholder producers in Kenya. Several practices emerge as triple wins in terms of climate adaptation, GHG mitigation, and productivity and profitability. In particular, integrated soil fertility management and improved livestock feeding are shown to provide multiple benefits across the agroecological zones examined. In addition, irrigation and soil and water conservation are also shown to be essential in the arid zone. The results suggest that agricultural investments targeted towards triple-win strategies will have the greatest payoff in terms of increased resilience of farm and pastoralist households to climate change, rural development, and climate change mitigation for generations to come.
    Keywords: Adaptation, agricultural land management, Climate change, livestock feeding, mitigation, Resilience, synergies,
    Date: 2011
  10. By: Raymond Mattaloni Jr. (Bureau of Economic Analysis)
    Abstract: This paper examines whether the productivity of U.S. business es- tablishments is related to the extent to which their parent rms are globally engaged{from being an exporter to being a edgling multi- national that has taken a few cautious forays into foreign markets to being a seasoned multinational with extensive foreign operations.
    JEL: E60 F14 D24 F23
    Date: 2011–04
  11. By: Kato, Edward; Nkonya, Ephraim; Place, Frank M.
    Abstract: This study compares the impacts of integrated soil fertility management (ISFM) on crop production with use of either mineral fertilizer or organic manure alone. We also investigate the conditions under which .ISFM technology has greater beneficial effects on yields and the factors constraining its uptake. To answer these questions, the study uses a cross-sectional, plot-level data set collected in Nigeria by the International Food Policy Research Institute and the World Bank in 2009. Using both quasi experimental matching estimators and multivariate regression approaches, it finds that overall ISFM has robustly significant positive effects on crop production. The study also finds that ISFM positively affects crop production on plots with customary tenure, sandy soils, and clay soils—conditions that are normally perceived to be less favorable for crop production. The results also show ISFM to be more effective on plots with mild erosion or no erosion. On the constraints, we find that households with limited livestock, equipment, labor, and land are less likely to use ISFM technology, and the extension services currently do not seem to be disseminating ISFM. This evidence provides strong support for efforts to promote ISFM in Nigeria and in other regions with comparable conditions, but adequate attention must be paid to the biophysical conditions of the plots and the household's access to labor endowments, livestock, equipment, and tenure conditions if this technology is to be scaled up and more widely used in Sub-Saharan Africa.
    Keywords: Crop production, Integrated soil fertility management, matching estimators,
    Date: 2011

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