nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2011‒10‒01
thirteen papers chosen by
Angelo Zago
University of Verona

  1. Internal and External R&D and Productivity – Evidence from Swedish Firm-Level Data By Bergman, Karin
  2. When, Where and How to Perform Efficiency Estimation By Badunenko, Oleg; Henderson, Daniel J.; Kumbhakar, Subal C.
  3. Industry Switching in Developing Countries By Carol Newman; John Rand; Finn Tarp
  4. Productivity Effects of Privately and Publicly Funded R&D By Bergman, Karin
  5. "Access to Markets and Farm Efficiency: A Study of Rice Farms in the Bicol Region, Philippines" By Sanjaya DeSilva
  6. Regional environmental efficiency and economic growth: NUTS2 evidence from Germany, France and the UK By Halkos, George; Tzeremes, Nickolaos
  7. Productivity Gains from R&D Investment: Are High-Tech Sectors Still Ahead? By Ortega-Argilés, Raquel; Piva, Mariacristina; Vivarelli, Marco
  8. Nature Versus Nurture in the Origins of Highly Productive Businesses: An Exploratory Analysis of U.S. Manufacturing Establishments By J. David Brown; John Earle
  9. Firm Heterogeneity and Development: A Meta Analysis of FDI Productivity Spill-overs By Mebratie, A.D.; Bergeijk, P.A.G. van
  10. Analysing Risk Management in Banks: Evidence of Bank Efficiency and Macroeconomic Impact By Awojobi, Omotola; Amel, Roya; Norouzi, Safoura
  11. Sectoral Productivity, Structural Change and Convergence By Alison Stegman
  12. The Effects of Training on Own and Co-Worker Productivity: Evidence from a Field Experiment By de Grip, Andries; Sauermann, Jan
  13. Politicians “on board”! Do political connections affect banking activities in Italy? By Carretta, Alessandro; Farina, Vincenzo; Gon, Abhishek; Parisi, Antonio

  1. By: Bergman, Karin (Department of Economics, Lund University)
    Abstract: This paper uses a panel of Swedish manufacturing firms to examine the effects of internal and external R&D on total factor productivity over the period 1991-2004. The findings give some support to the notion of complementarity between internal and external R&D, especially in industries with high R&D intensities, and suggest that the employees’ level of education is important for the firm’s capabilities to absorb external R&D. However, external R&D is generally found to have a negative effect on productivity and internal R&D is only significant when not including interaction terms between internal R&D and external R&D or human capital.
    Keywords: Internal R&D; external R&D; productivity; Sweden
    JEL: D24 L24 O32
    Date: 2011–09–20
  2. By: Badunenko, Oleg (University of Cologne); Henderson, Daniel J. (Binghamton University, New York); Kumbhakar, Subal C. (Binghamton University, New York)
    Abstract: In this paper we compare two flexible estimators of technical efficiency in a cross-sectional setting: the nonparametric kernel SFA estimator of Fan, Li and Weersink (1996) to the nonparametric bias corrected DEA estimator of Kneip, Simar and Wilson (2008). We assess the finite sample performance of each estimator via Monte Carlo simulations and empirical examples. We find that the reliability of efficiency scores critically hinges upon the ratio of the variation in efficiency to the variation in noise. These results should be a valuable resource to both academic researchers and practitioners.
    Keywords: bootstrap, nonparametric kernel, technical efficiency
    JEL: C14
    Date: 2011–09
  3. By: Carol Newman; John Rand; Finn Tarp
    Abstract: Firm turnover (i.e. firm entry and exit) is a well-recognized source of sectorlevel productivity growth across developing and developed countries. In contrast, the role and importance of firms switching activities from one sector to another is little understood. Firm switchers are likely to be unique both from newly established entrants and exiting firms that close down. We build an empirical model that examines switching behaviour based on data from Vietnamese manufacturing firms during the period 2001.08. Our diagnostic shows that switching firms have different characteristics and behaviour as compared to entry and exit firms. They tend, inter alia, to be labour-intensive and seek out competitive opportunities in labour-intensive sectors in response to changes in the market environment. We also show that resource reallocations resulting from switching form an important component of productivity growth.
    Keywords: firm dynamics, sector switching, efficiency, Vietnam
    Date: 2011
  4. By: Bergman, Karin (Department of Economics, Lund University)
    Abstract: This paper examines the productivity effects of privately and publicly funded R&D, both performed in the private sector. In doing so, it ascertains whether there are differences in the direct effects on an industry’s total factor productivity growth, and whether the spillover effects of R&D performed in other industries within a country differ in terms of the two sources of funding. Using a panel of industries from 13 OECD countries, it is found that privately funded R&D has a positive productivity effect, but with diminishing returns. Publicly funded R&D shows signs of increasing returns to scale, but the total effect is negative for most industries in the sample. The results concerning spillover effects are less robust, but there is some evidence of positive spillover effects from privately funded R&D, whereas spillovers from publicly funded R&D have an insignificant or a negative effect on an industry’s productivity growth.
    Keywords: Privately funded R&D; publicly funded R&D; productivity
    JEL: D24 L60 O32
    Date: 2011–09–21
  5. By: Sanjaya DeSilva
    Abstract: This paper presents an empirical investigation of the relationship between the spread, spatially and temporally, of market institutions and improvements in the productivity and efficiency of farmers. The data used in this study were collected over two decades in a sample of rice farms in the Bicol Region of the Philippines. Our estimates reveal a significant inverse relationship between distance from the market and farm productivity and efficiency in 1983. While there are substantial improvements in yields, unit costs, and efficiency in the two decades that followed, the gains are larger in the more remote and sparsely populated villages. This finding suggests that the relationship between remoteness and farm outcomes has weakened over time. We also find that the development of markets in the peripheral villages and the improved connectivity between the peripheral villages and market centers are facilitated by population growth, infrastructural investments (specifically, irrigation and roads), and the availability of agricultural extension programs.
    Keywords: Farm Efficiency; Agricultural Markets; Institutional Conditions; Philippines
    JEL: O12 O13 Q12
    Date: 2011–09
  6. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper by applying nonparametric techniques measures spatial environmental heterogeneities of 98 regions from Germany, France and the UK. Specifically environmental performance indexes are constructed for the 98 regions (NUTS 2 level) identifying their ability to produce higher growth rates and reduce pollution (in the form of municipal waste) generated from regional economic activity. By applying conditional stochastic kernels and local constant estimators it investigates the regional economic activity – environmental quality relationship. The results indicate several spatial environmental heterogeneities among the examined regions. It appears that regions with higher GDP per capita levels tend to have higher environmental performance.
    Keywords: Regional environmental efficiency; directional distance function; conditional stochastic kernel; nonparametric regression
    JEL: Q50 O13 C60
    Date: 2011–09
  7. By: Ortega-Argilés, Raquel (IN+ Center for Innovation); Piva, Mariacristina (Università Cattolica del Sacro Cuore); Vivarelli, Marco (Università Cattolica del Sacro Cuore)
    Abstract: The purpose of this study is to investigate the relationship between a firm's R&D expenditures considered as an investment in knowledge, and its productivity, looking at sectoral peculiarities which may emerge; to this end, we use a large unique longitudinal database consisting of 1,809 US and European manufacturing and service firms over the period 1990-2008, for a total of 16,079 observations. Our main findings can be summarised as follows: knowledge stock has a significant positive impact on a firm's productivity, with an overall elasticity of about 0.10; this general result is largely consistent with findings presented in previous literature in terms of the sign, the significance and the estimated magnitude of the relevant coefficient. More interestingly, the coefficient turns out to be significantly larger in the service and high-tech sectors than in the non-high-tech manufacturing sectors. These outcomes suggest that firms in high-tech sectors are still ahead in terms of the impact on productivity of their R&D investments; moreover, a shift in favour of the service sectors seems to emerge.
    Keywords: R&D, productivity, knowledge stock, panel data
    JEL: O33 L25
    Date: 2011–09
  8. By: J. David Brown; John Earle
    Abstract: This paper investigates the origins of productivity leaders, those that operate close to and help push out the production frontier. Do such businesses emerge as top performers from the very beginning of their lives, for example as the consequence of an outstanding founding idea, technology, or location? Or, at the other extreme, do they appear initially as completely average (or even underperformers) that exhibit gradual improvement as they learn and develop with age? To answer this question we draw upon five decades of U.S. Census of Manufacturing (CM) establishment-level data, tracing the productivity leaders of the most recent CM (2007) back over their observed life spans. We also examine possible industry-level correlates of variation in the extent of nature versus nurture that are suggested by theories of industry dynamics and economic growth.
    Date: 2011–09
  9. By: Mebratie, A.D.; Bergeijk, P.A.G. van
    Abstract: abstract:In order to assess the relationship between economic development and firm heterogeneity, this paper studies productivity levels in the context of FDI. We illustrate that developing and emerging countries show a lot of variation in the extent of heterogeneity of their populations of firms. Heterogeneity is a bit stronger at per capita GDP levels below $10.000, but also remains substantial at higher levels of developmentWe take stock of the rich literature on FDI-spill-overs analysing econometric studies on FDI spill-over effects that were published over the period 1983-2008 and deal with national studies in 30 developing countries and emerging markets. One important finding is that these studies tend to ignore two sources of heterogeneity: exports and – especially – R&D. We use a meta-analysis to correct for differences in research design (including regional effects, sample size and level of aggregation) and investigate the spill-over effects of foreign firms on domestic firms.Focusing on the effect of firm heterogeneity on productivity, we investigate several sources of heterogeneity including firm size (production share), internationalization (both exports and foreign ownership) and labour quality. We observe positive, and significant effects for heterogeneity in terms of labour quality, size and export as 44% –66% of the coefficients are significant and positive and less than 9% of the coefficients are negative and significant. This robustness contrasts with contradictory findings for foreign ownership where 63% of the coefficients are insignificant or negative.At another level this study identifies research design factors that influence the reported findings on FDI spill-over analysis.
    Keywords: productivity;FDI;development;spill-over;firm heterogeneity
    Date: 2011–09–02
  10. By: Awojobi, Omotola; Amel, Roya; Norouzi, Safoura
    Abstract: The recent Global Economic meltdown triggered by the subprime mortgage crisis of United States in 2007 and its adverse effect on financial markets and participants in the financial industry worldwide have resulted in a capital management crisis in most financial institutions especially banks. This study is a case for the Nigerian banking industry, focusing on factors affecting risk management efficiency in banks. For empirical investigation, we employed Panel regression analysis taking a stratum of time series data and cross-sectional variants of macro and bank-specific factors for period covering 2003 to 2009. Result for panel regression indicates that risk management efficiency in Nigerian banks is not just affected by bank-specific factors but also by macroeconomic variables. This describes the pro-cyclicality of bank performance in the Nigerian banking sector. As it stands, the sufficiency of Basel principles for risk management is doubtful because asset quality varies with business cycles.
    Keywords: Risk management; Nigerian banks; capital adequacy; Basel; cyclicality
    JEL: E31 G31 G21
    Date: 2011–04–06
  11. By: Alison Stegman
    Abstract: The concept of convergence, defined either narrowly, through productivity or income per capita, or broadly, across a range of economic variables, has become fundamental to the way we assess, analyse and project economic growth in developing economies. To the extent that economic growth projections are designed to reflect empirical behaviour, there is a need to identify relationships between and within key projection variables. To date the empirical analysis of convergence has been controversial. There is a strong argument that economic growth should be projection at a detailed sectoral level (see McKibbin et al (2009)). In practice, data limitations mean that industry level relationships are difficult to uncover and macroeconomic aggregate behaviours are often imposed on disaggregated data. The analysis in this paper attempts to uncover the key cross country trends in sectoral level productivity data. Whilst productivity convergence is evident in some sectors, generally service sectors, it is not evident in others. In part, aggregate convergence trends across developed economies appear to be driven by structural change. We generalise this result and argue that a combination of convergence and structural development assumptions could improve the empirical relevance of economic growth projection models.
    Date: 2011–09
  12. By: de Grip, Andries (ROA, Maastricht University); Sauermann, Jan (ROA, Maastricht University)
    Abstract: This paper analyses the effects of work-related training on worker productivity. To identify the causal effects from training, we combine a field experiment that randomly assigns workers to treatment and control groups with panel data on individual worker performance before and after training. We find that participation in the training programme leads to a 10 percent increase in performance. Moreover, we provide experimental evidence for externalities from treated workers on their untreated teammates: An increase of 10 percentage points in the share of treated peers leads to a performance increase of 0.51 percent. We provide evidence that the estimated effects are causal and not the result of employee selection into and out of training. Furthermore, we find that the performance increase is not due to lower quality provided by the worker.
    Keywords: training, field experiment, peer effects, productivity
    JEL: J24 M53 C93
    Date: 2011–09
  13. By: Carretta, Alessandro; Farina, Vincenzo; Gon, Abhishek; Parisi, Antonio
    Abstract: This paper analyzes the effects of political presence in the boards of directors of cooperative banks. We refer our analysis to all politicians (almost 160.000) belonging to a political body in Italy. Overall, our dataset contains 1.858 board members referring to 127 cooperative banks. Results show that politically connected banks, in which politicians have executive roles in the board of directors, display higher net interest revenues, lower quality of the loans portfolio and lower efficiency relative to a control group of non-connected counterparts. Therefore, in the current debate on the reform of the statutes of the Italian cooperative banks, we argue that the problem is not for politicians to be in the boards but for them to hold executive positions.
    Keywords: Cooperative Banks; Politics; Corporate Governance
    JEL: G34 G21
    Date: 2011–06–30

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