nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2012‒05‒29
twelve papers chosen by
Angelo Zago
University of Verona

  1. Trade liberalization and inter-industry productivity spillovers: an analysis of the 1989-1998 Brazilian trade liberalization episode By Paz, Lourenco
  2. European Cooperative R&D And Firm Performance By Luis Aguiar; Philippe Gagnepain
  3. Impact of the business environment on output and productivity in Africa By El-hadj Bah; Lei Fang
  4. Productivity and FDI of Taiwan Firms: A review from a nonparametric approach By WAKASUGI Ryuhei; NATSUHARA Takashi
  5. The Enigmas of TFP in China: A Meta-Analysis By Xu Tian; Xiaohua Yu
  6. Bayesian estimation of inefficiency heterogeneity in stochastic frontier models By Jorge E. Galán; Helena Veiga; Michael P. Wiper
  7. "Problems with Regional Production Functions and Estimates of Agglomeration Economies: A Caveat Emptor for Regional Scientists" By Jesus Felipe; John McCombie
  8. Agricultural Productivity Differences and Credit Market Imperfections By Nishida, Keigo
  10. Nonclassical Measurement Error in the Dependent Variable of a Nonlinear Model By Gutknecht, Daniel
  11. R&D Costs and Productivity in Biopharmaceuticals By Scherer, Frederic Michael
  12. Innovative procedures: the key factor for hospital performance By Laurent Gobillon; Carine Milcent

  1. By: Paz, Lourenco
    Abstract: The desire to increase manufacturing productivity has been a commonly cited goal of the trade liberalization episodes that have swept several developing countries since the 1980s. The literature has found evidence supporting such an increase in productivity. However, this paper finds that the methodology used in the literature ignores inter-industry productivity spillovers and suggests that this omission biases estimates of the impact of import tariff reduction on industry-level productivity. The findings from a case study of the Brazilian trade liberalization episode (1989-1998) indicate that the literature has overestimated the direct effect of trade liberalization by at least 25%, and that inter-industry productivity spillovers exist, are positive, and account for 70% of the increase in productivity that results from a reduction in import tariffs.
    Keywords: productivity; trade liberalization; Brazil; spillovers
    JEL: L6 F1 O3
    Date: 2012–02–15
  2. By: Luis Aguiar (Departamento de Economía - Universidad Carlos III de Madrid); Philippe Gagnepain (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris)
    Abstract: The goal of this paper is to assess the impact on the performance of firms that participate in Research Joint Ventures (RJVs) funded by the Fifth European Framework Programme for Research and Technological Development (EU-FP5). A special emphasis is made on the User-friendly Information Society (IST) programme, one of the most important thematic programmes of the EU-FP5. We use the funding available to the firms as an instrumental variable to account for self-selection and estimate the Local Average Treatment Effect (LATE) of participation by considering labor productivity and profit margin as performance measures. Our results show a large and positive impact of participation on the labor productivity of the firms, whereas the effect on profit margin is weaker. When taking into account the size of the RJV, we find that the positive impact on labor productivity comes mainly from participation in large projects and that participation in smaller RJVs has a negative effect on the profit margin.
    Date: 2011
  3. By: El-hadj Bah; Lei Fang
    Date: 2011
  4. By: WAKASUGI Ryuhei; NATSUHARA Takashi
    Abstract: This paper examines whether firms' productivity and the attributes of foreign direct investment (FDI) destinations affect both the choice of these destination as well as the accumulated number. The results of our examination, using firm-level data of Taiwan, present new evidence: (i) the productivity of firms conducting FDI in high-wage countries is higher than that in low-wage countries, but is not higher than the productivity of non-FDI firms; and (ii) the higher the productivity, the larger the number of FDI destinations regardless of the market attributes. These results provide the policy implication that government support for raising the productivity and lowering the cost of internationalization will accelerate the internationalization of Taiwan firms and eventually enhance economic growth in Taiwan.
    Date: 2012–05
  5. By: Xu Tian (Georg-August-University Göttingen); Xiaohua Yu (Georg-August-University Göttingen)
    Abstract: This paper presents a meta-analysis of 5308 observations of total factor productivity growth (TFPG) in China from 150 primary studies to provide some insightful explanations to the controversies about productivity growth in China in the current literature. The main findings include that (1) The mean TFPG of the aggregate economy at the national level in the current literature is only about 2% after 1978, which barely contributes to 20% economic growth; (2) There are three cycles for TFPG after 1978 and each circle lasts about ten years; (3) Sector-specific TFPGs are generally larger than aggregate economic TFPGs; (4) Regional disparities of TFPG are significant and specifically the TFPG in East China is higher than that in Central and West China; (5) TFPG after 1978 is in general greater than that before 1978; and (6) Peer-review process and paper languages are significantly correlated with TFPG results.
    Keywords: Economic growth; TFP; Meta-Analysis; China
    Date: 2012–05–16
  6. By: Jorge E. Galán; Helena Veiga; Michael P. Wiper
    Abstract: Estimation of the one sided error component in stochastic frontier models may erroneously attribute firm characteristics to inefficiency if heterogeneity is unaccounted for. However, it is not clear in general in which component of the error distribution the covariates should be included. In the classical context, some studies include covariates in the scale parameter of the inefficiency with the property of preserving the shape of its distribution. We extend this idea to Bayesian inference for stochastic frontier models capturing both observed and unobserved heterogeneity under half normal, truncated and exponential distributed inefficiencies. We use the WinBugs package to implement our approach throughout. Our findings using two real data sets, illustrate the relevant effects on shrinking and separating individual posterior efficiencies when heterogeneity affects the scale of the inefficiency. We also see that the inclusion of unobserved heterogeneity is still relevant when no observable covariates are available.
    Keywords: Stochastic Frontier Models, Heterogeneity, Bayesian Inference
    Date: 2012–05
  7. By: Jesus Felipe; John McCombie
    Abstract: Over the last 20 years or so, mainstream economists have become more interested in spatial economics and have introduced largely neoclassical economic concepts and tools to explain phenomena that were previously the preserve of economic geographers. One of these concepts is the aggregate production function, which is also central to much of regional growth theory. However, as Franklin Fisher, inter alios, has shown, the conditions necessary to aggregate microproduction functions into an aggregate production function are so stringent that in all probability the aggregate production function does not exist. This paper shows that the good statistical fits commonly found empirically are solely due to the use of value data and an underlying accounting identity. The result is that the estimates obtained cannot be regarded as providing evidence of the underlying technological structure of the spatial economy, including the aggregate elasticity of substitution, the degree of returns to scale, and the rate of technical progress.
    Keywords: Accounting Identity; Agglomeration Economies; Regional Aggregate Production Functions
    JEL: B50 O4 R11
    Date: 2012–05
  8. By: Nishida, Keigo
    Abstract: This paper presents a simple model to examine the implication of credit market imperfections when considering the massive variation of agricultural labor productivity across countries. The development of credit markets enables more agents to acquire skills to work in non-agricultural sectors. The expansion of the sectors decreases the labor supply to agriculture as well as increases the supply of modern intermediate inputs to agriculture. Agricultural producers accordingly substitute the relatively cheap intermediate inputs for labor to produce a given level of an agricultural good, and, thereby, output per worker in agriculture is improved. Poor countries with less-developed credit markets are, therefore, far less productive in agriculture than rich countries with well-developed credit markets.
    Keywords: productivity; credit market imperfection; agriculture; skill acquisition; human capital investment; occupational choice
    JEL: O1 O4
    Date: 2012–05–22
  9. By: Eva Valeri (University of Trieste); Amanda Stathopoulos (University of Trieste); Edoardo Marcucci (University of Roma Tre)
    Abstract: In the last years Energy Efficiency (EE) has become an important issue in the public policy makers’ agenda due to ambitious objectives of the European Commission to reduce energy consumption by 20% in 2020. Many countries have adopted state-level EE programs targeted to include Energy Saving (ES) policy mixes in different sectors including transportation that is among the most energy intensive ones. The aims of this paper are to: i) report briefly the macro-areas of state-level transport EE policies related to the transport sector, ii) verify the level of implementation of these policies among some European countries, iii) highlight, for each country considered, the EE measures adopted up to 2007 and compare the results obtained, iv) evaluate the implementation of EE transport successful measures adopted by each respective National Energy Agency (NEAs), and finally v) compare the main results deriving from EE policy implementation. In particular, in this last objective we adapted the good practice policy mix framework for car passenger transport proposed by the AID-EE Project at the information obtained from countries’ National Energy Programmes (NEPs) updated to 2007.
    Keywords: Transport Sector, Energy Sector, Energy Efficiency, Energy Saving, Energy Policy mix
    Date: 2012
  10. By: Gutknecht, Daniel (Department of Economics, University of Warwick)
    Abstract: This paper studies nonclassical measurement error in the continuous dependent variable of a semiparametric, non-separable transformation model. The latter is a popular choice in practice nesting various nonlinear duration and censored regression models. The main complication arises because the (additive) measurement error is allowed to be correlated with a (continuous) component of the regressors as well as with the true, unobserved dependent variable itself. This problem has not yet been studied in the literature, but it is argued that it is relevant for various empirical setups with mismeasured, continuous survey data like earnings or durations. A framework to identify and consistently estimate (up to scale) the parameter vector of the transformation model is developed. The estimator links a two-step control function approach of Imbens and Newey (2009) with a rank estimator similar to Khan (2001) and is shown to have desirable asymptotic properties. Moreover, it is proven that `m out of n' bootstrap can be used to obtain a consistent approximation of the asymptotic variance. The estimator's nite sample performance is studied in a Monte Carlo Simulation. To illustrate the empirical usefulness of the procedure, an earnings equation model is estimated using annual data from the Health and Retirement Study (HRS) and its results are compared to the ones of other estimators. Some evidence for a bias in the coe cients of years of education and age is found, emphasizing the importance to adjust for potential measurement error bias in empirical work. JEL classification: C14 ; C34
    Keywords: Nonclassical Measurement Error ; Dependent Variable; Control Function; Rank Estimator
    Date: 2012
  11. By: Scherer, Frederic Michael
    Abstract: This article characterizes the activities required to launch a new pharmaceutical molecule into the market, summarizes studies that have attempted to pinpoint the research and development costs incurred per approved new molecule, and analyzes the various critiques levied against published R&D cost estimates. It finds that by any reckoning, R&D costs per approved molecule have risen sharply over time, most likely at a rate of approximately 7 percent per year after stripping out the effects of general economic inflation.
    Date: 2011
  12. By: Laurent Gobillon (INED - Institut National d'Etudes Démographiques Paris - INED, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA, CEPR - Center for Economic Policy Research - CEPR, CREST - Centre de Recherche en Économie et Statistique - INSEE - École Nationale de la Statistique et de l'Administration Économique); Carine Milcent (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA)
    Abstract: The role of innovative procedures in the mortality differences between university, non-teaching public and for-profit hospitals is investigated using a French exhaustive administrative dataset on patients admitted for heart attack. Mortality is roughly similar in the three types of hospitals after controlling for case-mix. For-profit hospitals treat the at-risk oldest patients more often with innovative procedures. Therefore, additionnally controlling for innovative procedures makes them having the highest mortality rate. Non-teaching public hospitals end up having the lowest mortality rate.
    Keywords: Hospital performance ; Innovative procedures ; Stratified duration model
    Date: 2011–12

This nep-eff issue is ©2012 by Angelo Zago. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.