New Economics Papers
on Efficiency and Productivity
Issue of 2012‒01‒18
thirteen papers chosen by

  1. Technical productivity analysis for cement industry at firm level By Binaykumar Ray; B. Sudhakara Reddy
  2. Productivity Gains from Services Liberalization in Europe By Jan Bena; Peter Ondko; Evangelia Vourvachaki
  3. Impact of services liberalization on productivity of manufacturing firms: evidence from Ukrainian firm-level data By Oleksandr Shepotylo; Volodymyr Vakhitov
  4. Value of invention, prolific inventor productivity and mobility: evidence from five countries, 1975-2002 By William Latham; Christian Le Bas; Dmitry Volodin
  5. Productivity: An International Comparison By Jari Hyvärinen
  6. Challenging small-scale farming, a non-parametric analysis of the (inverse) relationship between farm productivity and farm size in Burundi By M. VERSCHELDE; M. D’HAESE; G. RAYP; E. VANDAMME
  7. Corporate governance, opaque bank activities, and risk/return efficiency: Pre- and post-crisis evidence from Turkey By O. DE JONGHE; M. DISLI; K. SCHOORS
  8. To what extent do infrastructure and financial sectors reforms interplay? Evidence from panel data on the power sector in developing countries By Ba, Lika; Gasmi, Farid
  9. Testing for convergence from the micro-level By Giorgio Fazio; Davide Piacentino
  10. New Methods for the Analysis of Links between International Firm Activities and Firm Performance: A Practitioner’s Guide By Joachim Wagner
  11. Rural Reforms, Agricultural Productivity, and the Biological Standard of Living in South Korea, 1941-1974 By Robert Rudolf
  12. The Costs of Disposal and Recycling. An Application to Italian Municipal Solid Waste Services By Graziano Abrate; Fabrizio Erbetta; Giovanni Fraquelli; Davide Vannoni
  13. Europe’s Growth Emergency By Zsolt Darvas; Jean Pisani-Ferry

  1. By: Binaykumar Ray (Indira Gandhi Institute of Development Research); B. Sudhakara Reddy (Indira Gandhi Institute of Development Research)
    Abstract: This paper analyses the energy use in the manufacture of cement in India during 1992-2005. Cement manufacturing requires large amounts of various energy inputs. The most common types of energy carriers used are coal, electricity, natural gas and fuel oil. Over the years, the fuel use shift is less, but use of natural gas has decreased and that of electricity has increased. Using panel data, stochastic frontier production function method has been used to evaluate the efficiency of individual firms and industries across the years. The results show a significant decrease in energy as well as carbon intensities because of differences in production techniques.
    Keywords: Cement industry, Energy demand, Firm, Technical efficiency
    JEL: Q4 L94 L95 L98
    Date: 2012–01
  2. By: Jan Bena; Peter Ondko; Evangelia Vourvachaki
    Abstract: As part of the Single Market Program the European Commission commanded the liberalization and regulatory harmonization of utilities, transport and telecommunication services. This paper investigates whether and how this process affected the productivity of European network firms. Exploiting the variation in the timing and degree of liberalization efforts across countries and industries, we find that liberalization increased firm-level productivity but had no reallocation impact. Based on our estimates, the average firm-level productivity gain from liberalization amounts to 38 percent of the average total within-firm productivity gain in network industries. The results underscore the growth-promoting role of liberalization efforts.
    Keywords: productivity; liberalization; allocative efficiency; services; firm-level data;
    JEL: D24 K23 L11 L51
    Date: 2011–12
  3. By: Oleksandr Shepotylo (Kyiv School of Economics, Kyiv Economic Institute); Volodymyr Vakhitov (Kyiv School of Economics, Kyiv Economic Institute)
    Abstract: This paper brings new evidence on the impact of services liberalization on performance of manufacturing firms. Using a unique database of Ukrainian firms in 2001-2007, we utilize an external push for liberalization in services sector as a source of exogenous variation to identify the impact of services liberalization on total factor productivity (TFP) of manufacturing firms. Results indicate that a standard deviation increase in services liberalization is associated with a 9 percent increase in TFP. Allowing services liberalization to dynamically influence TFP through the investment channel leads to even higher effect. The effect is robust to different estimation methods and to different sub-samples of the data. In particular, it is more pronounced for domestic and small firms.
    Keywords: services liberalization, productivity, trade
    JEL: F14 G28 L80
    Date: 2011–12
  4. By: William Latham (Department of Economics, University of Delaware - University of Delaware); Christian Le Bas (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon); Dmitry Volodin (Department of Economics, University of Delaware - University of Delaware)
    Abstract: The aim of this paper is to provide new insights into (1) the determinants of the value of inventions and (2) the role that mobility plays in the behavior of prolific inventors, whom we identify based on the number of patents exceeding a threshold of productivity. We examine mobility in two dimensions: from firm to firm (inter-firm) and from one technical field to another. We exploit data on patents filed by inventors from five countries (France, the UK, Germany, the US and Japan) in the US Patent and Trademark office during the period from 1975 to 2002. From our regressions we obtain a rich set of results. In particular we show that: (1) as predicted by evolutionary theory, inventor productivity is a positive determinant of invention value, (2) inter-firm mobility is a consistently positive determinant of productivity and (3) technological mobility is a negative determinant. The last implies that the more specialized an inventor is, the higher his productivity is.
    Keywords: prolific inventor; mobility; productivity; value of invention
    Date: 2011–12–22
  5. By: Jari Hyvärinen
    Abstract: This study conducts an international comparison of productivity and profitability. First, the level and growth of productivity are compared in OECD countries for the period from 1975 to 2009. According to this comparison, productivity growth has been faster in the key Finnish sectors com-pared with Finland’s competitors. One of the main engines of growth since 1995 has been the ICT revolution. Second, the profitability of industries is calculated for 2007. Profitability is divided into productivity, prices and labour compensation. The results show that profitability in Finnish manu-facturing is competitive because of the high productivity level in 2007. However, the measurement of profitability and the quality of price components require further research.
    JEL: J24 J31 O47
    Date: 2012–01–09
    Abstract: We use a nonparametric approach to investigate the relationship between farm produc- tivity and farming scale. A Kernel regression is used on data of mixed cropping systems to study the determinants of production including different factors that have been identifieed in literature as missing variables in the testing of the inverse relationship such as soil quality, location and household heterogeneity. Household data on farm activities and crop produc- tion was gathered among 640 households in 2007 in two Northern provinces of Burundi. Five production models were specified each with different control variables. Returns to scale are found to depend on the farm scale. Our results qualify to a large extent the finding of an inverse relationship between farm size and productivity, though without fully explaining it. Other factors that affect significantly positive production include the soil quality and produc- tion orientation towards banana or cash crop production. Production seems to be negatively affected by field fragmentation.
    Date: 2011–10
    Abstract: Does better corporate governance unambiguously improve the risk/return efficiency of banks? Or does either a re-orientation of banks' revenue mix towards more opaque products, an economic downturn, or tighter supervision create off-setting or reinforcing effects? The authors relate bank efficiency to shortfalls from a stochastic risk/return frontier. They analyze how internal governance mechanisms (CEO duality, board experience, political connections, and education profile) and external governance mechanisms (discipline exerted by shareholders, depositors, or skilled employees) determine efficiency in a sample of Turkish banks. The 2000 financial crisis was a wakeup call for bank efficiency and corporate governance. As a result, better corporate governance mechanisms have been able to improve risk/return efficiency when the economic, regulatory, and supervisory environments are more stable and bank products are more complex.
    Keywords: corporate governance, bank risk, noninterest income, crisis, frontier
    Date: 2011–07
  8. By: Ba, Lika (Ecole des Hautes Etudes en Sciences Sociales, Paris); Gasmi, Farid (Toulouse School of Economics (Arqade & Idei))
    Abstract: The main goal of this study is to demonstrate the existence of a significant empirical link between infrastructure and financial sectors reforms the effects of which are reflected in infrastructure sectors performance. This paper reports on the findings of an exploration of this issue for the case of the power sector in developing countries. We estimate the impact of the four main components of the power sector reform in these countries, namely, the creation of an independent regulatory agency, the unbundling of generation, transmission, and distribution, the introduction of competition and the implementation of privatization programs in the generation and distribution segments, on some of this sector’s performance outcomes, and attempt to assess the contribution of the domestic financial systems’ reforms to these outcomes. In a dataset on 42 developing countries covering the 1990-2005 period, we find that private participation in generation and distribution has significantly improved power supply as reflected in higher electricity generation per capita and technical and labor efficiency in the distribution segment. The unbundling of generation, transmission, and distribution has contributed to improving productive efficiency through a better use of the labor factor in the distribution segment. We find that the creation of a separate regulatory agency has boosted the generation segment in terms of both capacity and sales and has generated better incentives for a more efficient use of labor input in the distribution segment. We also find that regulatory experience has significantly contributed to improving access to electricity. The results suggest that while the power sector, in particular, its generation segment, has significantly benefited from the introduction of independent regulation, the beneficial effects of (good) regulatory practices have been exacerbated by the modernization of the financial systems. More specifically, improved financial systems have eased access to capital for operators allowing them to upgrade their networks and decrease power losses in distribution. The overall results obtained in this paper strongly recommend that along with reforming the power sector, policy makers in developing countries should implement the financial reforms that would deepen their domestic financial systems thus allowing them to recover the full benefits of these systems’ positive externalities on the performance of the sector.
    Keywords: Developing countries, electricity industry performance, privatization, regulation, unbundling, competition, financial sector development
    JEL: L2 L33 L94 L98 O16 C23
    Date: 2011–11
  9. By: Giorgio Fazio; Davide Piacentino
    Abstract: In the growth literature, researchers are typically concerned with macro convergence. However, to the extent that macro dynamics result from the underlying microeconomic relations, convergence should also be investigated at the micro-level. In this paper, we suggest an approach that allows exploiting large micro panels to test for convergence. Compared to the traditional convergence analysis, this approach allows obtaining, at the same time, β and σ like convergence parameters for both the micro and the macro level of interest. We provide a practical example that analyzes productivity convergence in Italy across firms and provinces using a large sample of Italian firms.
    Keywords: Convergence, Multilevel Models, Italian firms
    JEL: C33 D20 O47
    Date: 2011–05
  10. By: Joachim Wagner (Institute of Economics, Leuphana University of Lüneburg, Germany)
    Abstract: This paper is a non-technical introduction to the use of three micro-econometric tools that have only recently been applied in empirical investigations of the links between international firm activities and firm performance. It shows why it is important to use these methods, how to use them in practice and which new insights are found in empirical applications. Topics include the role of extremely different firms (or outliers) in the computation of performance premia of internationally active firms; different performance premia over the distribution of the performance variable when unobserved heterogeneity matters; and the analysis of causal effects of different intensities of international firm activity on firm performance.
    Keywords: Robust fixed effects estimation, fixed-effects quantile regression, generalized propensity score, international firm activity, firm performance
    JEL: F14 C21 C23
    Date: 2012–01
  11. By: Robert Rudolf (Georg-August-University Göttingen)
    Abstract: This paper analyzes effects of the Republic of Korea’s two major rural reforms in 1950 and 1962/63 on agricultural productivity and individual well-being. The 1950 Land Reform resulted in a large-scale redistribution of land while ‘green revolution’-type reforms in 1962/63 pushed forward the application of modern agricultural technologies and improved rural infrastructure. This study’s findings indicate that both reforms had significant positive impacts on agricultural productivity. Using the link between final height outcomes and early childhood nutrition further allows an assessment of the effects of the interventions on the biological standard of living using adult height outcomes. Korean mean adult height grew by a remarkable 8.1 to 12 cm for women and 7 to 9.6 cm for men born between 1920 and 1987. Two thirds of this growth took place after the 1950 reform, and about 40 to 50 percent after the 1962/63 reforms. Structural break analyses of height trends reveal significant upward shifts in trend around the years of the reforms. While Korea can be considered a case of successful land reform, the years between the two major reforms can be considered Korea’s lost decade.
    Keywords: Land Reform; Rural Technological Reforms; Agricultural Productivity; Biological Standard of Living; Equity-Efficiency
    JEL: Q15 N35 O13
    Date: 2012–01–10
  12. By: Graziano Abrate; Fabrizio Erbetta; Giovanni Fraquelli; Davide Vannoni
    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
  13. By: Zsolt Darvas; Jean Pisani-Ferry
    Abstract: Highlights 1) The European Union growth agenda has become even more pressing because growth is needed to support public and private sector deleveraging, reduce the fragility of the banking sector, counter the falling behind of southern European countries and prove that Europe is still a worthwhile place to invest. 2) The crisis has had a similar impact on most European countries and the US: a persistent drop in output level and a growth slowdown. This contrasts sharply with the experience of the emerging countries of Asia and Latin America. 3) Productivity improvement was immediate in the US, but Europe hoarded labour and productivity improvements were in general delayed. Southern European countries have hardly adjusted so far. 4) There is a negative feedback loop between the crisis and growth, and without effective solutions to deal with the crisis, growth is unlikely to resume. National and EU-level policies should aim to foster reforms and adjustment and should not risk medium-term objectives under the pressure of events. A more hands-on approach, including industrial policies, should be considered.
    Keywords: economic growth, deleveraging, productivity, convergence, economic adjustment, structural reform scoreboard, composition of fiscal adjustments, growth policy under constraints
    JEL: E60 F43 O40
    Date: 2011–10

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