nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2012‒10‒20
eleven papers chosen by
Angelo Zago
University of Verona

  1. Households' living situation and the efficient provision of primary education in Burkina Faso By Élisé Wendlassida Miningou; Valérie Vierstraete
  2. Access to credit and the determinants of technical inefficiency among specialized small farmers in Chile By Saldias, Rodrigo; von Cramon-Taubadel, Stephan
  3. X-Efficiency of Innovation Processes: Concept and Evaluation based on Data Envelopment Analysis By Herimalala, Rahobisoa; Gaussens, Olivier
  4. Import Competition, Domestic Regulation and Firm-Level Productivity Growth in the OECD By Sarra Ben Yahmed; Sean Dougherty
  5. WTO Accession and Performance of Chinese Manufacturing Firms By Brandt, Loren; Van Biesebroeck, Johannes; Wang, Luhang; Zhang, Yifan
  6. Trade and Product Market Policies in Upstream Sectors and Productivity in Downstream Sectors: Firm-Level Evidence from China By Maria Bas; Orsetta Causa
  7. What is the Scope for Increased Fertilizer Use in Kenya? By Sheahan, Megan; Black, Roy; Jayne, Thomas S.
  8. (In)Formal and (Un)Productive: The Productivity Costs of Excessive Informality in Mexico By Matias Busso; Maria Victoria Fazio; Santiago Levy Algazi
  9. Restarting the Growth Engine in Finland By Henrik Braconier
  10. The growth effects of EU cohesion policy: a meta-analysis By Benedicta Marzinotto
  11. Green Paradox and Directed Technical Change: The Effects of Subsidies to Clean R&D By Daubanes, Julien; Grimaud, André; Rougé, Luc

  1. By: Élisé Wendlassida Miningou (Department of Economics, Université de Sherbrooke); Valérie Vierstraete (Department of Economics, Université de Sherbrooke)
    Abstract: Primary education plays a central role in the Burkinabe school system. Several projects have been launched that contribute to expanding the resources available for basic education in Burkina Faso. However, education systems in the different administrative regions of Burkina Faso may not all be equally capable of employing the resources they receive to generate significant results. This study uses the data envelopment analysis (DEA) method to assess the efficiency with which basic education is provided throughout the 45 provinces of Burkina Faso. Overall, our results reveal that resources are not used optimally for the provision of basic education in the provinces of Burkina Faso. Moreover, in most of the provinces studied, returns to scale in basic education are decreasing. In order to explain inefficiency scores, we also use the Simar and Wilson (2007) procedure. We find that households' living situation can explain efficiency in primary education provision.
    Keywords: Data Envelopment Analysis, Efficiency, Primary education, Burkina Faso, Bootstrap procedures
    Date: 2012–09
  2. By: Saldias, Rodrigo; von Cramon-Taubadel, Stephan
    Abstract: The influence on technical efficiency of access to credit and public support policies is studied for two groups of specialized small farmers in Chile. Using 2004 data, translog stochastic frontier production functions for 109 livestock and 342 crop producers are estimated. Mean technical efficiency is 89% and 78% for crop and livestock producers, respectively. Technical efficiency increases with decreasing use of inputs, dependence on on-farm income, farmer education, family size and the age of the family head. Extension services do not appear to help farms become more efficient, and even reduce efficiency among specialised crop pro-ducers. The volume of credit increases efficiency in crop production and reduces it in live-stock production. Correspondingly, credit constrained farmers are less efficient in crop pro-duction and more efficient in livestock. These results may reflect the fact that investments in livestock production can involve considerable adjustment costs in the short run. For livestock producers, credit volume and credit constraints are found to be endogenous to technical effi-ciency. A possible explanation is the organisation of public support for small livestock pro-ducers in Chile, which provides lenders with information about individual livestock produc-ers. This might enable lenders to target loans on the basis of efficiency. Correcting for this endogeneity does not lead to qualitatively different results, but does influence point estimates of parameters in the production function and inefficiency models. This highlights the impor-tance of testing for endogeneity in the variables used to model inefficiency effects. --
    Date: 2012
  3. By: Herimalala, Rahobisoa; Gaussens, Olivier
    Abstract: This paper investigates X-(in)efficiency of innovation processes in Small and Medium-sized Enterprises (SMEs). We have adopted the following approach: (a) we provide both a concept of X-(in)efficiency and a model of innovation processes for each SME; (b) from this model we evaluate both the dimensions of the innovation processes and the X-(in)efficiency of these processes using a variant of the Data Envelopment Analysis (DEA) model; (c) finally, we characterize X-inefficiency by using techniques of exploratory analysis derived from an empirical analysis. Our approach has been applied to regional SMEs in Normandy (France) with a representative random sample of 80 innovative businesses. The results show the existence of X- inefficiency in the innovation processes of SMEs in 71% of cases. This X-inefficiency arises primarily from the difficulties that entrepreneurs face in implementing the interacting rules and standards of exploitation and exploration activities.
    Keywords: Data Envelopment Analysis; Multiple Projections; X-Efficiency; Innovation Process
    JEL: D0 C43 Q55 O32 C67
    Date: 2012–10
  4. By: Sarra Ben Yahmed; Sean Dougherty
    Abstract: This paper examines how import penetration affects firms' productivity growth taking into account the heterogeneity in firms' distance to the efficiency frontier and country differences in product market regulation. Using firm-level data for a large number of OECD countries, the analysis reveals non-linear effects of both sectoral import penetration and de jure product market regulation measures depending on firms' positions along the global distribution of productivity levels. The heterogeneous effects of international competition and domestic product market regulation on firm-level productivity growth are consistent with a neo-Schumpeterian view of trade and regulation. Close to the technology frontier, import competition has a strongly positive effect on firm-level productivity growth, with stringent domestic regulation reducing this effect substantially. However, far from the frontier, neither import competition nor its interaction with domestic regulation has a statistically significant effect on firm-level productivity growth. The results suggest that insufficient attention has been made in the trade literature to within-firm productivity growth.<P>Concurrence des importations, réglementation interne et croissance de la productivité niveau de l'entreprise dans les pays de l'OCDE<BR>Ce document explore les effets des importations sur la croissance de la productivité des entreprises, tout en tenant compte des différences de positionnement des entreprises par rapport à leur frontière technologique et des différences de réglementation des marchés des biens entre les pays. En utilisant des données de firmes pour un grand nombre de pays de l’OCDE, l’analyse fait apparaître des effets non linéaires des importations ainsi que des dispositions légales concernant les marchés des biens sur la croissance de la productivité des entreprises. Ce résultat est conforme à une conception néo-Schumpétérienne des effets des échanges et de la réglementation sur la productivité. Pour les entreprises proches de la frontière technologique, la concurrence étrangère a un effet fortement positif sur la croissance de la productivité, tandis qu’une réglementation interne stricte réduit sensiblement cet effet. En revanche, pour les entreprises loin de la frontière technologique, ni la concurrence étrangère ni son interaction avec la réglementation nationale n’ont d’effet statistiquement significatif sur la croissance de la productivité. Les résultats obtenus montrent que les analyses désagrégées, au niveau de la firme, sont un terrain prometteur pour la littérature qui a été jusque là davantage centrée sur les réallocations et la croissance au niveau sectoriel.
    Keywords: international trade, product market regulation, import competition, Firm productivity growth, behind-the-border regulatory barriers, échanges internationaux, Croissance de la productivité des entreprises, réglementation nationale des marchés des biens, concurrence étrangère
    JEL: F1 K2 L2 L5 O1
    Date: 2012–09–03
  5. By: Brandt, Loren; Van Biesebroeck, Johannes; Wang, Luhang; Zhang, Yifan
    Abstract: China’s policy-makers argued that WTO accession and the accompanying trade liberalization would have a beneficial impact on the domestic economy. China’s import tariffs differed tremendously across industry in the earlier years, but converged to an almost uniform low level after WTO entry. We exploit sectoral variation in the extent of tariff reduction to identify the impact of increased import competition on firm performance and its contribution to the significant productivity growth over the 1995–2007 period. We find evidence of strong downward pressure on prices and mark-ups, but limited evidence that imports took away market share from domestic firms. Furthermore, much of the effects on sectoral productivity come from changes at the extensive margin. Sectors that liberalized most tend to attract especially productive entrants, private firms in particular, which can be rationalized by an increase in the minimum productivity threshold needed to survive in these sectors.
    Keywords: China; Productivity; Tariff; Trade liberalization
    JEL: F13 F14
    Date: 2012–10
  6. By: Maria Bas; Orsetta Causa
    Abstract: This paper explores the productivity impact of trade, product market and financial market policies over the last decade in China – a fast growing country where, despite significant reform action, regulatory stance remains still far from OECD standards. The paper makes a critical distinction between downstream and upstream industries, focusing on the indirect effects of regulation in upstream industries on firm performance in downstream manufacturing industries. This framework allows investigating the link between these policies and productivity growth depending on how far incumbents are relative to the technological frontier. The analysis is novel in several respects. Drawing on new OECD policy indicators of sector-level product market regulation and firm level data, econometric estimates deliver new evidence on the potential gains from product and financial market reforms in China, two policy areas that had not been studied in previous empirical literature. Firm-level microeconomic data further allow shedding light on the differential effects of policies within industries, while also highlighting the potential channels through which productivity is affected by reform. The key conclusion that can be derived from the empirical analysis is that further product, trade and financial market reforms would bring substantial gains in China and could therefore speed up the convergence process. Taken at face value, the empirical estimates would imply that aligning product, trade and financial market regulation to the average level observed in OECD countries would bring aggregate manufacturing productivity gains of respectively 9%, 4% and 6.5% after five years. Trade and product market reforms are found to deliver stronger gains for firms that are closer to the industry-level technological frontier, while the reverse holds for financial market reforms.<P>L'impact des réglementations commerciales et du marché des produits dans les secteurs en amont sur la productivité en Chine : une analyse sur données de firmes<BR>Cet article explore l’impact des réformes structurelles dans les domaines du commerce international, du marché des produits et des marchés financiers sur la productivité Chinoise au cours des dix dernières, la Chine pouvant être considéré comme un pays en forte croissance dans lequel, malgré la mise en ouvre de réformes importantes, la politique réglementaire reste bien loin des standards de l’OCDE. Cet articule fait une distinction cruciale entre les secteurs en amont et les secteurs en aval, et se concentre sur les effets indirects de la régulation en amont sur la productivité en aval. Ce cadre permet d’étudier le lien entre ces politiques et la croissance de la productivité en fonction de la distance qui sépare les firmes de la frontière technologique. L’analyse est nouvelle à plusieurs égards. S’appuyant sur de nouveaux indicateurs de l’OCDE sur la réglementation du marché des produits et sur une base de données au niveau de la firme, l’analyse délivre des résultats nouveaux sur les gains potentiels en Chine de réformes sur les marchés de produits et financiers, deux domaines inexplorés dans la littérature précédente. Les données au niveau de la firme permettent de mettre en lumière l’effet différentiel des politiques au sein de chaque secteur, et donc par là même les mécanismes potentiels via lesquels les réformes affectent la productivité. La conclusion principale est que davantage de réformes dans les domaines précités pourraient apporter des gains substantiels en Chine, ce qui pourrait donc accélérer le processus de convergence. Les résultats empiriques impliqueraient, pris tels à la lettre, qu’un alignement des politiques réglementaires dans les domaines du marché des produits, du commerce international et des marchés financiers sur le niveau moyen observé dans les pays de l’OCDE apporterait des gains agrégés de productivité de l’ordre de 9%, 4%, et 6.5% respectivement au bout de cinq ans. Les réformes commerciales et du marché des produits délivrent des gains plus importants pour les firmes prés de la frontière technologique tandis que le résultat inverse est trouvé pour les réformes des marchés financiers.
    Keywords: productivity, financial liberalisation, trade liberalisation, China, firm level data, product market reform, productivité, libéralisation financière, Chine, données de firmes, réformes du marché des produits, libéralisation commerciale
    JEL: D24 F13 L8 O1 O5
    Date: 2012–09–20
  7. By: Sheahan, Megan; Black, Roy; Jayne, Thomas S.
    Abstract: Despite upward trends in fertilizer application rates on maize fields over the last twenty years, there remains a perception in Kenya that fertilizer use is not expanding quickly enough and that application rates are not high enough to reverse the country’s growing national food deficit. In 2007, this manifested in the creation of a comprehensive multi-million dollar fertilizer and improved seed subsidy and training program, the National Accelerated Agricultural Inputs Access Program (NAAIAP), with the objective of raising food production and farm productivity. However, little nationwide and longer term evidence exists to determine whether higher fertilizer application rates are profitable for farmers and whether they would have an incentive to continue using it on commercial terms after graduating from the subsidy program.
    Keywords: Kenya, Fertilizer, Food Security, Agricultural and Food Policy, Consumer/Household Economics, Food Security and Poverty, International Development, Production Economics, Productivity Analysis,
    Date: 2012–07
  8. By: Matias Busso; Maria Victoria Fazio; Santiago Levy Algazi
    Abstract: The laws that regulate relations between firms and workers in Mexico distinguish sharply between salaried and non-salaried workers, and they are at the root of the existence of informality. This paper provides a clear definition of informality, distinguishing it from illegality. Using Mexico’s Economic Census, the paper shows that the majority of firms are informal but legal, that there are more small formal firms than large ones, and that some large firms are informal. It also shows that informality and illegality increased in the period 1998-2008. Using a simple model of monopolistic competition to measure the productivity losses due to distortions that misallocate resources, the paper finds that one peso of capital and labor allocated to formal and legal firms is worth 28 percent more than if allocated to illegal and informal firms, and 50 percent more than if allocated to legal and informal firms. The paper concludes arguing that the distortions in the labor market created by informality reduce total factor productivity.
    JEL: D24 L25 O47
    Date: 2012–08
  9. By: Henrik Braconier
    Abstract: Impressive productivity performance during the last decades has weakened since 2007, reflecting the 2008-09 recession but also a poor performance in important sectors, like the information and communication technology sector. Reforms to raise long term productivity growth need to be pursued. Current project-based R&D-support and business subsidies seem inefficient and should be scaled back and remaining support should focus on addressing externalities in terms of the creation of high productive jobs and R&D spillovers. A R&D tax credit could provide higher flexibility, equity and efficiency than current targeted support. Capital taxation should be streamlined to improve incentives for entrepreneurship and growth. The performance of the higher education system could be improved through allocating more R&D funding and teaching resources based on quality rather than block grants. Productivity performance could be enhanced by exposing sectors like health provision, network industries and retailing to more competition through lowering government dominance in provision and loosening planning restrictions. This Working Paper relates to the 2012 OECD Economic Survey of Finland (<P>Relancer le moteur de la croissance en Finlande<BR>Les remarquables performances en matière de productivité des dernières décennies ont fléchi depuis 2007, du fait de la récession de 2008-09 mais aussi des médiocres résultats obtenus dans des secteurs essentiels, comme celui des technologiques de l’information et des communications. Les réformes visant à renforcer la croissance de la productivité à long terme doivent se poursuivre. Sous leur forme actuelle, le soutien à la R-D sur la base de projets et les subventions aux entreprises paraissent inefficients et devraient être revus à la baisse, et les autres mesures de soutien devraient essentiellement se concentrer sur les externalités du point de vue de la création d’emplois hautement productifs et des retombées de la R-D. Un crédit d’impôt au titre de la R-D pourrait offrir davantage de flexibilité, d’équité et d’efficience que le soutien ciblé actuellement mis en oeuvre. La taxation du capital devrait être rationalisée de manière à renforcer les incitations à l’entreprenariat et à la croissance. Les performances du système d’enseignement supérieur pourraient être améliorées en allouant à la R-D des ressources de financement et d’enseignement sur des critères qualitatifs plutôt que sous la forme de subventions globales. Les performances en matière de productivité pourraient être améliorées en ouvrant davantage à la concurrence des secteurs tels que les soins de santé, les industries de réseau et le commerce de détail en réduisant la place prépondérante du secteur public dans leur fourniture et en assouplissant les restrictions en matière d’aménagement du territoire. Ce Document de travail se rapporte à l'Etude économique de l'OCDE de Finlande 2012 (
    Keywords: growth, productivity, competition, Finland, ICT, entrepreneurship, R&D, structural change, retailing, productivité, croissance, concurrence, Finlande, TIC, vente au détail, entrepreneuriat, R&D, le changement structurel
    JEL: H2 I23 J6 L63 O3 O4
    Date: 2012–09–03
  10. By: Benedicta Marzinotto
    Abstract: We run a standard income convergence analysis for the last decade and confirm an already established finding in the growth economics literature. EU countries are converging. Regions in Europe are also converging. But, within countries, regional disparities are on the rise. At the same time, there is probably no reason for EU Cohesion Policy to be concerned with what happens inside countries. Ultimately, our data shows that national governments redistribute well across regions, whether they are fiscally centralised or decentralised. It is difficult to establish if Structural and Cohesion Funds play any role in recent growth convergence patterns in Europe. Generally, macroeconomic simulations produce better results than empirical tests. It is thus possible that Structural Funds do not fully realise their potential either because they are not efficiently allocated or are badly managed or are used for the wrong investments, or a combination of all three. The approach to assess the effectiveness of EU funds should be consistent with the rationale behind the post-1988 EU Cohesion Policy. Standard income convergence analysis is certainly not sufficient and should be accompanied by an assessment of the changes in the efficiency of the capital stock in the recipient countries or regions as well as by a more qualitative assessment. EU funds for competitiveness and employment should be allocated by looking at each regionâ??s capital efficiency to maximise growth generating effects or on a pure competitive.
    Date: 2012–10
  11. By: Daubanes, Julien; Grimaud, André; Rougé, Luc
    Abstract: The "green paradox" literature points out that environmental policies which are anticipated to become gradually more stringent over time may induce a more rapid extraction of fossil fuels, thus having a detrimental effect to the environment. The manifestation of such phenomena has been extensively studied in the case of taxes directly applied to the extraction of a polluting non-renewable resource and of subsidies applied to its non-polluting substitutes. This paper examines the effects of subsidies to "clean" R&D activities, aimed to improve the productivity of non-polluting substitutes. We borrow standard assumptions from the directed-technical-change literature to take a full account of the private incentives to perform R&D and of the patterns of complementarity/substitutability between dirty resource and clean non-resource sectors. We show that a gradual increase in relative subsidies to clean R&D activities does not have the adverse green paradox effect, which contradicts an earlier made conjecture. Instead, the presence of several R&D sectors implies arbitrages which give rise to other quite paradoxical results. However substitutable or complementary sectors are, and whatever the induced technological bias is, clean-R&D-support policies always enhance the long-run productivity of the resource and thus result in a less rapid extraction.
    Keywords: Non-renewable resources; Directed technical change; Environmental policy; Green paradox; R&D subsidies
    JEL: O32 O41 Q32
    Date: 2012–08

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