New Economics Papers
on Efficiency and Productivity
Issue of 2011‒09‒05
24 papers chosen by

  1. Farmer Participation in Supermarket Channels, Production Technology, and Efficiency: The Case of Vegetables in Kenya By Rao, Elizaphan J.O.; Brummer, Bernhard; Qaim, Matin
  2. Efficiency and Its Impact on the Performance of European Commercial Banks By Mohsen Afsharian; Anna Kryvko; Peter Reichling
  3. A Detailed Analysis of the Productivity Performance of the Canadian Primary Agriculture Sector By Ricardo de Avillez
  4. A Detailed Analysis of the Productivity Performance of the Canadian Food Manufacturing Subsector By Chris Ross
  5. Creative Destruction and Productivity – entrepreneurship by type, sector and sequence By Andersson, Martin; Braunerhjelm, Pontus; Thulin, Per
  6. Are occupations paid what they are worth? An econometric study of occupational wage inequality and productivity By Stephan K. S. Kampelmann; François Rycx
  7. Financial Efficiency and the Ownership of Czech Firms By Evzen Kocenda; Jan Hanousek; Michal Masika
  8. Spatial Density and Productivity – an analysis on one-by-one kilometer squares By Andersson, Martin; Klaesson, Johan; P Larsson, Johan
  9. The Link between Innovation and Productivity in Estonia’s Service Sectors By Priit Vahter; Jaan Masso
  10. Revisiting Productivity Differences and Firm Turnover: Evidence from product-based TFP measures in the Japanese manufacturing industries By KAWAKAMI Atsushi; MIYAGAWA Tsutomu; TAKIZAWA Miho
  11. Revisiting the Role of Education for Agricultural Productivity By Malte Reimers; Stephan Klasen
  12. Explaining Spatial Convergence of China’s Industrial Productivity By Paul Deng; Gary Jefferson
  13. Foreign Ownership and Firm Performance in German Services: First Evidence based on Official Statistics By John P. Weche Geluebcke
  14. Separating Environmental Efficiency into Production and Abatement Efficiency – A Nonparametric Model with Application to U.S. Power Plants By Hampf, Benjamin
  15. Measuring Economic Journals' Citation Efficiency: A Data Envelopment Analysis Approach By George Emm. Halkos; Nickolaos G. Tzeremes
  16. Estimating Lost Output from Allocative Inefficiency, with an Application to Chile and Firing Costs By Amil Petrin; Jagadeesh Sivadasan
  17. Does It Pay to Be Productive? The Case of Age Groups By Cataldi, Alessandra; Kampelmann, Stephan; Rycx, Francois
  18. Economic and institutional efficiency of the National Agricultural Advisory Servicesâ Programme: The case of Iganga District, By Okoboi, Godfrey; Muwanika, Fred; Nyende, Majidu; Mugisha, Xavier
  19. Firm Productivity and Investment Climate in Developing Countries: How Does Middle East and North Africa Manufacturing Perform? By Marie-Ange VEGANZONES; Patrick PLANE; Tidiane KINDA
  20. Firm Investment & Credit Constraints in India, 1997 – 2006: A stochastic frontier approach By Sumon Bhaumik; Pranab Kumar Das; Subal C. Kumbhakar
  21. Institutions, Governance and Technology catch-up in North Africa By Imed Drine
  22. Geographic concentration and firm survival By De Silva, Dakshina G.; McComb, Robert P.
  23. Application of convergence theories and new economic geography in Portugal. An alternative analysis By Martinho, Vítor João Pereira Domingues
  24. Do Institutions Matter for FDI Spillovers? The Implications of China’s “Special Characteristics” By Luosha Du; Ann Harrison; Gary Jefferson

  1. By: Rao, Elizaphan J.O.; Brummer, Bernhard; Qaim, Matin
    Abstract: Supermarkets are gaining ground in the agri-food systems of many developing countries. While recent research has analyzed income effects in the small farm sector, impacts on productivity and efficiency have hardly been studied. We use a meta-frontier approach and combine this with propensity score matching to estimate treatment effects among vegetable farmers in Kenya. Participation in supermarket channels increases farm productivity in terms of meta-technology ratios by 45%. We also find positive and significant impacts on technical efficiency and scale efficiency. Supermarket expansion therefore presents opportunities for agricultural growth in the small farm sector, which is crucial for poverty reduction in Africa.
    Keywords: Supermarkets, technical efficiency, scale efficiency, meta-frontier, meta-technology ratio, sample selection, Kenya, International Development, Marketing, Production Economics, Productivity Analysis, D24, L23, O12, Q12, Q16,
    Date: 2011–08
  2. By: Mohsen Afsharian (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Anna Kryvko (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Peter Reichling (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)
    Abstract: The paper empirically analyzes the impact of the degree of efficiency on key performance fig-ures of publicly traded European banks in the period from 2005 to 2009. Efficiency is meas-ured by constructing non-parametric frontiers using the technique of data envelopment analysis on the cost, revenue, and profit sides. Decomposition of overall efficiency provides a detailed insight into effective risk and performance drivers in the banking industry. The results of our paper suggest that an increase in pure technical efficiency is related to more volatile assets, which is reflected in lower market values. Allocative and scale efficiency, however, boost capi-tal market performance.
    Keywords: Data Envelopment Analysis (DEA), Efficiency, European Banks, Bank Performance
    JEL: C33 C61 D24 G21
    Date: 2011–08
  3. By: Ricardo de Avillez
    Abstract: In contrast to the significant slowdown in aggregate productivity growth in Canada since 2000, the labour productivity performance of the primary agriculture sector has been strong. The objective of this study is to shed light on the factors behind the sector's success. This report provides an overview of the productivity performance of the Canadian agriculture sector over the 1961-2007 period, discussing both long-term trends and recent developments. Labour productivity and MFP estimates for the period are analyzed, as well as land and intermediate input productivity. The main drivers of productivity growth in the sector are identified and examined. Finally, policy suggestions are discussed.
    Keywords: primary agriculture, labour productivity, multi-factor productivity, land productivity, intermediate input productivity
    JEL: O47 D24 J24 L79 L66 Q18
    Date: 2011–08
  4. By: Chris Ross
    Abstract: This report analyzes labour productivity, multifactor productivity and input trends in Canadian food manufacturing since 1961, with a focus on the entire time period and developments since 2000. It is found that the subsector experienced labour productivity growth stronger than the business sector over both the long and short term, but has outperformed manufacturing only in the more recent period. Labour productivity growth is decomposed into capital intensity and multifactor productivity growth, which are found to have contributed to growth almost equally, and labour composition growth accounted for less than 15 per cent over the 1961-2007 period. Underlying drivers of growth are identified and trends in technology, capacity utilization, human capital, economies of scale, machinery and equipment, international trade, and regulation are explored. Policy implications for fostering labour productivity growth based on the drivers are outlined. Finally, a conclusion summarizes the key findings of the paper.
    Keywords: labour productivity, multifactor productivity, input trends, food manufacturing, capital intensity, multifactor productivity growth, labour composition
    JEL: O47 D24 J24 L66 Q18
    Date: 2011–08
  5. By: Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Braunerhjelm, Pontus (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Thulin, Per (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Schumpeter claimed the entrepreneur to be instrumental for creative destruction and industrial dynamics. Entrepreneurial entry serves to transform and revitalize industries, thereby enhancing their competiveness. This paper investigates if entry of new firms influences productivity amongst incumbent firms, and the extent to which altered productivity can be attributed sector and time specific effects. Implementing a unique dataset we estimate a firm-level production function in which the productivity of incumbent firms is modeled as a function of firm attributes and regional entrepreneurship activity. The analysis finds support for positive productivity effects of entrepreneurship on incumbent firms, albeit the effect varies over time, what we refer to as a delayed entry effect. An immediate negative influence on productivity is followed by a positive effect several years after the initial entry. Moreover, the productivity of incumbent firms in services sectors appears to be more responsive to regional entrepreneurship, as compared to the productivity of manufacturing firms.
    Keywords: entrepreneurship; entry; business turbulence; incumbent firms; productivity; region; business dynamics
    JEL: D20 L10 L26 O31 R11
    Date: 2011–08–25
  6. By: Stephan K. S. Kampelmann; François Rycx
    Abstract: Labour economists typically assume that pay differences between occupations can be explained with variations in productivity. The empirical evidence on the validity of this assumption is surprisingly thin and subject to various potential biases. The authors use matched employer-employee panel data from Belgium for the years 1999-2006 to examine occupational productivity-wage gaps. They find that occupations play distinct roles for remuneration and productivity: while the estimations indicate a significant upward-sloping occupational wage-profile, the hypothesis of a flat productivity-profile cannot be rejected. The corresponding pattern of over- and underpayment stands up to a series of robustness tests.
    Keywords: Labour productivity; wages; occupations; production function; matched employer-employee data
    JEL: J24 J31 J44
    Date: 2011–08
  7. By: Evzen Kocenda; Jan Hanousek; Michal Masika
    Abstract: In this paper we analyze the evolution of firm financial efficiency in the Czech Republic. Using a large panel of more than 400,000 Czech firm/years we study whether firms fully utilize their resources, how firm financial efficiency evolves over time, and how firm financial efficiency is determined by ownership structure. We employ a panel version of a stochastic production frontier model for the period 1996–2007 with time-invariant efficiency. We differentiate among various degrees of ownership concentration and their domestic or foreign origin. In a two-stage set-up we estimate the degree of firm inefficiency and then we estimate the effect of ownership structure on the distance from the efficiency frontier. Our results support the hypothesis that concentration and foreign ownership are positively related to financial efficiency.
    Keywords: financial efficiency; ownership structure; firms; panel data; stochastic frontier
    JEL: C33 D24 G32 L60 L80 M21
    Date: 2011–05–01
  8. By: Andersson, Martin (CIRCLE, Lund University and BTH); Klaesson, Johan (CENSE, Jönköping International Business School); P Larsson, Johan (CENSE, Jönköping International Business School)
    Abstract: This paper reassesses the relationship between density and productivity by using detailed geo-coded data on wages and employment in Sweden. The contribution is empirical and builds on an analysis of spatial units of exactly the same size in terms of geographic surface. The data divide Sweden into areas of one square kilometer, and describe each area in terms of wages, worker characteristics and industry structure. Since the geographic areas are of constant size, the sheer number of employees in an area is an ‘exact’ measure of employment density. We find a significant relationship between density and productivity across squares. The estimated elasticity is in the 9-10 percent interval, and is insensitive to whether we employ a standard OLS estimator or a panel fixed effects estimator. Neighbor characteristics also matter in ways consistent with the idea of positive agglomeration externalities, where a location in a square with high density neighbors reflects proximity to (or a location in) a larger agglomeration. Moreover, the estimated relationship between productivity and density is insensitive to the chosen spatial scale.
    Keywords: density; productivity; spatial dependence; geo-coded data; external scale economies; agglomeration externalities; Sweden; Modifiable Areal Unit Problem (MAUP)
    JEL: C21 R11 R12
    Date: 2011–08–25
  9. By: Priit Vahter; Jaan Masso
    Abstract: The emerging literature on the characteristics of innovation processes in the service sector has paid relatively little attention to the links between innovation and productivity. In this paper we investigate how the innovation-productivity relationship differs across various subbranches of the service sector. For the analysis we use the CDM structural model consisting of equations for innovation expenditures, innovation output, productivity and exports. We use data from the community innovation surveys for Estonia. We show that innovation is associated with increased productivity in the service sector. The results indicate surprisingly that the effect of innovation on productivity is stronger in the less knowledge-intensive service sectors, despite the lower frequency of innovative activities and the results of earlier literature. Non-technological innovation only plays a positive role in some specifications, despite its expected importance especially among the service firms. An additional positive channel of the effects of innovation on productivity may function through increased exports.
    Keywords: innovation, services, productivity
    JEL: O31 O33 L80
    Date: 2011–03–01
  10. By: KAWAKAMI Atsushi; MIYAGAWA Tsutomu; TAKIZAWA Miho
    Abstract: Following Foster, Haltiwanger, and Syverson (2008), we construct physical output based TFP (TFPQ) measures using data from the Census of Manufactures. We find that productivity differences among business establishments using TFPQ are larger than those using the traditional revenue-based TFP measures (TFPR). The negative correlation between physical output and output prices implies that establishments are facing a downward demand curve and the traditional measures of TFP are affected by idiosyncratic demand shocks. Probit estimations regarding exit behavior show that the combined effects of physical productivity improvement and higher prices through the increase in demand result in a lower probability of exit. Breaking down aggregate productivity growth using TFPQ, we find that the contribution of the net entry effects the largest factor to productivity improvement, in contrast to previous Japanese studies. Our results provide a more positive foundation for "creative destruction" policies than previous studies suggest.
    Date: 2011–08
  11. By: Malte Reimers (Georg-August-University Göttingen); Stephan Klasen (Georg-August-University Göttingen)
    Abstract: While the majority of micro studies finds that rural education increases agricultural productivity, various recent cross-country regressions analysing the determinants of agricultural productivity were only able to detect insignificant or even surprising negative effects of schooling. In this paper, we argue and show that this failure to find a positive impact of education in the international context is rather a data problem related to the use of enrolment and literacy indicators. Using a panel of 95 developing and middle-income countries from 1961 to 2002 together with the newest version of the Barro-Lee educational attainment dataset, we show that education indeed has a highly significant, positive effect on agricultural productivity which is robust to changes in the control variables and in the econometric methods applied. Distinguishing between different levels of education further reveals that only primary and secondary schooling have significant positive impacts while tertiary education remains insignificant. Finally, the effect of education is estimated separately for countries with different income levels. Results indicate that the coefficient of the education variable remains insignificant for countries from the poorest three income quintiles, while it is positive and highly significant for the richest two quintiles. This finding can be interpreted as support for the prominent argument claiming that education leads to higher agricultural productivity only in the presence of rapid technical change where education will help farmers to adjust more readily to the new opportunities.
    Keywords: Agricultural productivity; agricultural production function; cross‐country regression; education; human capital
    JEL: I20 O13 O15 O47 Q10
    Date: 2011–08–26
  12. By: Paul Deng (Department of Economics, Copenhagen Business School); Gary Jefferson (Department of Economics, Brandeis University)
    Abstract: This paper investigates the conditions that may auger a reversal of China’s increasingly unequal levels of regional industrial productivity during China’s first two decades of economic reform. Using international and Chinese firm and industry data over the period 1995-2004, we estimate a productivity growth-technology gap reaction function. We find that as China’s coastal industry has closed the technology gap with the international frontier relative to interior regions, labor productivity growth in the coastal region has begun to slow in relation to the interior. This may serve as an early indicator of China’s initial movement toward reversing the widespread income inequality.
    Keywords: Inequality, Economic Growth, Productivity Convergence, Regional Disparity, Sustainability, China, International Comparison of Productivity (ICOP)
    JEL: O4 O18 O30 R11
    Date: 2011–08
  13. By: John P. Weche Geluebcke (Institute of Economics, Leuphana University Lueneburg, Germany)
    Abstract: This study provides first comprehensive analyses of foreign-controlled enterprises in the German service sector based on new micro data from official statistics. Various performance measures were examined by comparing unconditional and conditional means and quantile regression techniques were applied. Results reveal persistently superior performance for foreign-controlled affiliates when compared to German-owned affiliates. In contrast, the relationship for profitability is exactly the opposite. Labor productivity becomes insignificant when the comparison group consists of domestically-owned affiliates with a high degree of internationalization. A breakdown by country of origin shows that European affiliates pay lower wages and export less compared to other foreign affiliates and that there is no productivity advantage in favor of US firms like in manufacturing.
    Keywords: foreign ownership, firm performance, inward FDI, service sector, multinational enterprise
    JEL: F15 F21 F23
    Date: 2011–08
  14. By: Hampf, Benjamin
    Abstract: In this paper we present a new approach to evaluate the environmental efficiency of decision making units. We propose a model that describes a two-stage process consisting of a production and an end-of-pipe abatement stage with the environmental efficiency being determined by the efficiency of both stages. Taking the dependencies between the two stages into account, we show how nonparametric methods can be used to measure environmental efficiency and to decompose it into production and abatement efficiency. For an empirical illustration we apply our model to an analysis of U.S. power plants.
    Keywords: nonparametric efficiency analysis, pollution abatement, network DEA, materials balance condition, fosil-fueled power plants
    Date: 2011–08
  15. By: George Emm. Halkos; Nickolaos G. Tzeremes
    Abstract: This paper by using Data Envelopment Analysis (DEA) and statistical inference evaluates the citation performance of 229 economic journals. The paper categorizes the journals into four main categories (A to D) based on their efficiency levels. The results are then compared to the 27 “core economic journals” as introduced by Dimond (1989). The results reveal that after more than twenty years Diamonds’ list of “core economic journals” is still valid. Finally, for the first time the paper uses data from four well-known databases (SSCI, Scopus, RePEc, Econlit) and two quality ranking reports (Kiel Institute internals ranking and ABS quality ranking report) in a DEA setting and in order to derive the ranking of 229 economic journals. The ten economic journals with the highest citation performance are Journal of Political Economy, Econometrica, Quarterly Journal of Economics, Journal of Financial Economics, Journal of Economic Literature, American Economic Review, Review of Economic Studies, Journal of Econometrics, Journal of Finance, Brookings Papers on Economic Activity.
    Keywords: Ranking journals; Data Envelopment Analysis; Indexing techniques; Nonparametric analysis.
    JEL: C02 C14 C61 C67
    Date: 2011–08–13
  16. By: Amil Petrin; Jagadeesh Sivadasan
    Abstract: We propose a new measure of allocative efficiency based on unrealized increases in aggregate productivity growth. We show that the difference in the value of the marginal product of an input and its marginal cost at any plant - the plant-input "gap" - is exactly equal to the change in aggregate output that would occur if that plant changed that input's use by one unit. The mean absolute gap across plants for any input can then be interpreted as an approximation to the gain to society that would occur if every plant had a one-unit change in that input in the efficient direction, holding everything else constant. We show how to estimate this average gap using plant-level data for 1982-1994 from Chilean manufacturing, a sector largely viewed as being one of South America's least distorted. We find the gaps for blue and white collar labor are quite large in absolute value and imply that a one-unit move in the correct direction for blue collar would increase aggregate value added by almost 0.5%. We also find that the gaps for blue and white collar workers are increasing over time while the gaps for materials and electricity are not. The timing of the two separate increases in firing costs and the sharpest increases in the labor gaps is suggestive that the increases in average within-firm labor gaps may be related to the increases in severance pay.
    JEL: D24 J65 O47 O54
    Date: 2011–08
  17. By: Cataldi, Alessandra (Sapienza University of Rome); Kampelmann, Stephan (University of Lille 1); Rycx, Francois (Free University of Brussels)
    Abstract: Using longitudinal matched employer-employee data for the period 1999-2006, we investigate the relationship between age, wage and productivity in the Belgian private sector. More precisely, we examine how changes in the proportions of young (16-29 years), middle-aged (30-49 years) and older (more than 49 years) workers affect the productivity of firms and test for the presence of productivity-wage gaps. Results (robust to various potential econometric issues, including unobserved firm heterogeneity, endogeneity and state dependence) suggest that workers older than 49 are significantly less productive than prime age and young workers. In contrast, the productivity of middle-age workers is not found to be significantly different compared to young workers. Findings further indicate that average hourly wages within firms increase significantly and monotonically with age. Overall, this leads to the conclusion that young workers are paid below their marginal productivity while older workers appear to be "overpaid" and lends empirical support to theories of deferred compensation over the life-cycle (Lazear, 1979).
    Keywords: wages, productivity, aging, matched panel data
    JEL: J14 J24 J31
    Date: 2011–08
  18. By: Okoboi, Godfrey; Muwanika, Fred; Nyende, Majidu; Mugisha, Xavier
    Abstract: This paper examines the technical and institutional efficiency of the National Agricultural Advisory Services (NAADS) programme implementation in Iganga district. The Cost Effective Analysis (CEA) and stochastic frontier analysis methods were used to examine technical efficiency while expenditure tracking and FGD methods were applied to assess institutional efficiency. The analysis demonstrates that NAADS interventions have not had a significant impact on the output, productivity and income of the farmers in Iganga district. Moreover, NAADS programme faces implementation weaknesses such as nepotism that affects the selection of beneficiaries as well as enterprises, to the extent that some farmers are apathetic about the success or failure of NAADS Programme. Other observed weaknesses in NAADS implementation include late disbursement of funds, very low counterpart funding by the local government and the farmers, and poor monitoring and evaluation (M&E) of the programme. Based on the results, we suggest a major review of the implementation process of NAADS programme in general and Iganga district NAADS in particular.
    Keywords: NAADS, Expenditure tracking, EPRC, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Community/Rural/Urban Development, Crop Production/Industries, Farm Management, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Land Economics/Use, Livestock Production/Industries,
    Date: 2011–06
  19. By: Marie-Ange VEGANZONES (Centre d'Etudes et de Recherches sur le Développement International); Patrick PLANE (Centre d'Etudes et de Recherches sur le Développement International); Tidiane KINDA (Fonds Monétaire International)
    Abstract: Firm productive performances in five Middle East and North African (MENA) economies and eight manufacturing industries are compared to those in 17 other developing countries. Although the broad picture hides some heterogeneity, enterprises in MENA often performed inadequately compared to MENA status of middle-income economies, with the exception of Morocco and, to some extent, Saudi Arabia. Firm competitiveness is a more constant constraint, with a unit labor cost higher than in most competitor countries, as well as investment climate (IC) deficiencies. The empirical analysis also points out how IC matters for firm productivity through the quality of infrastructure, the experience and education of the labor force, the cost and access to financing, and different dimensions of the government-business relationship. These findings bear important policy implications by showing which dimensions of the IC, in which industry, could help manufacturing in MENA to be more competitive in the globalization context.
    Keywords: Manufacturing firms, productivity, investment climate, developing countries, Middle East and North Africa (MENA)
    JEL: O57 O14 D24
    Date: 2011
  20. By: Sumon Bhaumik; Pranab Kumar Das; Subal C. Kumbhakar
    Abstract: We use the stochastic frontier approach to estimate the impact of firm characteristics on investment decisions of Indian firms during the 1997-2006 period. The use of the stochastic frontier approach allows us to define the (unobserved) optimum investment that is consistent with a firm‟s characteristics such as the Tobin‟s q during each firm-year, and then estimate the deviation from this unobserved optimum in the form of an (investment) efficiency score that varies between zero and one. This deviation is interpreted as the degree of credit constraint, and we are also able to estimate the impact of firm characteristics such as leverage and business group affiliation on the degree of credit constraint via their marginal effects. Our results suggest that the degree of credit constraint of an average firm increased over time during the sample period, despite significant reforms of the Indian banking sector by the turn of the century. We also find that the degree of credit constraint decreases with cash flow and assets, which is consistent with the available literature. Further, there is a threshold effect of leverage, and the degree of credit constraint is greater for highly leveraged firms. Finally, we find that the beneficial impact of business group affiliation on the degree of credit constraint decreases over time, and is eliminated by the end of the sample period.
    Keywords: Investment, Credit rationing, Imperfect information, Stochastic frontier analysis
    JEL: C23 C24 D82 D92 G31 G32
    Date: 2011–01–01
  21. By: Imed Drine
    Abstract: This paper aims to analyse the effects of institution quality on technology catch-up in five North African countries (Algeria, Egypt, Morocco, Sudan and Tunisia) compared to 3 groups of developing and emerging countries (Sub Saharan Africa, Asia, and Latin America) over the period 1970-2005. The study adopts a two-stage methodology. In the first step we estimate the technology gap using the matafrontier approach. In second step we test the relationship between the technology gap and the quality of governance. The empirical results show that institutions (corruption, law and rules and investment climate) are very important in closing the technology gap and speeding up the technology catch-up. Other determinants of the technology gap are also identified: foreign direct investment, human capital and trade.
    Keywords: metafrontier, technology gap, catching-up, efficiency, stochastic frontier, governance, North Africa
    JEL: C33 O47 O57 K49 O1
    Date: 2011–05–01
  22. By: De Silva, Dakshina G.; McComb, Robert P.
    Abstract: If localization economies are present, firms within denser industry concentrations should exhibit higher levels of performance than more isolated firms. Nevertheless, research in industrial organization that has focused on the influences on firm survival has largely ignored the potential effects from agglomeration. Recent studies in urban and regional economics suggests that agglomeration effects may be very localized. Analyses of industry concentration at the MSA or county-level may fail to detect important elements of intra-industry firm interaction that occur at the sub-MSA level. Using a highly detailed dataset on firm locations and characteristics for Texas, this paper analyses agglomeration effects on firm survival over geographic areas as small as a single mile radius. We find that greater firm density within very close proximity (within 1 mile) of firms in the same industry increases mortality rates while greater concentration over larger distances reduces mortality rates.
    Keywords: Firm Survival; Agglomeration; Localization; and Knowledge Externalities
    JEL: O18 R12
    Date: 2011–08–19
  23. By: Martinho, Vítor João Pereira Domingues
    Abstract: The aim of this paper is to present a further contribution to the analysis of absolute convergence, associated with the neoclassical theory, of the sectoral productivity at regional level. Presenting some empirical evidence of absolute convergence of productivity for each of the economic sectors in each of the regions of mainland Portugal (NUTS II) in the period 1986 to 1994. This work aims, also, to study the Portuguese regional agglomeration process (NUTs II), using the linear form the New Economic Geography models that emphasize the importance of spatial factors (distance, costs of transport and communication) in explaining of the concentration of economic activity in certain locations.
    Keywords: convergence; agglomeration; Portuguese regions; linear models panel data
    JEL: C23 R12 O14
    Date: 2011
  24. By: Luosha Du (University of California, Berkeley); Ann Harrison (World Bank); Gary Jefferson (Department of Economics, Brandeis University)
    Abstract: We investigate how institutions affect productivity spillovers from foreign direct investment (FDI) to China’s domestic industrial enterprises during 1998-2007. We examine three institutional features that comprise aspects of China’s “special characteristics”: (1) the different sources of FDI, where FDI is nearly evenly divided between mostly Organization for Economic Co-operation and Development (OECD) countries and the region known as “Greater China”, consisting of Hong Kong, Taiwan, and Macau; (2) China’s heterogeneous ownership structure, involving state- (SOEs) and non-state owned (non-SOEs) enterprises, firms with foreign equity participation, and non-SOE, domestic firms; and (3) industrial promotion via tariffs or through tax holidays to foreign direct investment. We also explore how productivity spillovers from FDI changed with China’s entry into the WTO in late 2001. We find robust positive and significant spillovers to domestic firms via backward linkages (the contacts between foreign buyers and local suppliers). Our results suggest varied success with industrial promotion policies. Final goods tariffs as well as input tariffs are negatively associated with firm-level productivity. However, we find that productivity spillovers were higher from foreign firms that paid less than the statutory corporate tax rate.
    Date: 2011–04

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