New Economics Papers
on Efficiency and Productivity
Issue of 2013‒05‒19
thirteen papers chosen by

  1. The Analysis of Technical Efficiency and Productivity Growth In The Former Soviet Union Countries For Two Periods By Ertugrul Deliktas
  2. Exporting and Plant-Level Efficiency Gains: It’s in the Measure By Alvaro Garcia Marin; Nico Voigtländer
  4. Production Externalities in the Wood Furniture Industry in Central Java By Roos K. Andadari; Henri L.F. de Groot; Piet Rietveld
  5. Quantifying Productivity Gains from Foreign Investment By Christian Fons-Rosen; Sebnem Kalemli-Ozcan; Bent E. Sorensen; Carolina Villegas-Sanchez; Vadym Volosovych
  6. Multilevel Approaches and the Firm-Agglomeration Ambiguity in Economic Growth Studies By Frank G. van Oort; Martijn J. Burger; Joris Knoben; Otto Raspe
  7. Efficiency Gains of a European Banking Union By Dirk Schoenmaker; Arjen Siegmann
  8. Is EU Support to Malawi Agriculture Effective? By Wouter Zant
  9. Total Factor Productivity and the Role of Entrepreneurship By Hugo Erken; Piet Donselaar; Roy Thurik
  11. Economic Impacts of Cultural Diversity in the Netherlands: Productivity, Utility, and Sorting By Jessie Bakens; Peter Mulder; Peter Nijkamp
  12. Output upstreamness and input downstreamness of industries/countries in world production By Temurshoev, Umed; Miller, Ronald E.
  13. How Substitutable are Fixed Factors in Production? Evidence from Pre-industrial England By Joshua Wilde

  1. By: Ertugrul Deliktas (Department of Economics, Ege University)
    Abstract: This study measures economic performances of the 15 transition economies for two periods: The Soviet Union period and transition period. These periods include data of countries for 1970-1989 and 1991-2005. It is known that centrally planned economies are mainly criticized for widespread economic inefficiency and low total factor productivity. Thus, in order to see how the efficiency levels and productivity growth of the former Soviet union countries have changed during the transition or market-based period, we analyze two periods by using Data Envelopment Analysis. The results of analysis indicate that, on average, technical efficiency has slightly increased, however, total factor productivity decreased due to technical regress over the transition period when compared to the era of Soviet union for 15 countries.
    Keywords: technical efficiency, total factor productivity, transition countries, Soviet union countries, data envelopment analysis
    Date: 2013–05
  2. By: Alvaro Garcia Marin; Nico Voigtländer
    Abstract: Gains from trade due to exporting can result from the reallocation of resources to more productive producers, or from efficiency increases within exporting firms over time. While there is strong evidence for the former, the latter has received little support in the data. Previous research has documented minuscule or no efficiency gains within exporting plants. This result is derived from revenue productivity measures and thus also reflects variation in prices. Using a census panel of Chilean manufacturing plants, we first show that, in line with the previous results, there is no evidence for within-plant increases in revenue productivity after export entry. We then derive product-plant level marginal cost and use it as an efficiency measure that is not affected by prices. We find that marginal costs drop substantially when plants begin to export – on average by 15-25%. Prices drop by the same order of magnitude (while volume grows). Since new exports initially charge lower prices, revenue productivity measures fail to identify these within-plant efficiency gains from exporting.
    JEL: D24 F14 L25 L60
    Date: 2013–05
  3. By: Sunil Kanwar (Department of Economics, Delhi School of Economics, Delhi, India)
    Abstract: This paper studies the innovation, production efficiency and productivity responses to the stronger protection of intellectual property post-Trade Related Intellectual Property Rights (TRIPs) agreement, with specific reference to manufacturing industry in the BRIC economy of India. Using the fact that the post-TRIPs strengthening of intellectual property rights in developing countries was largely exogenous, we are able to correct for any endogeneity biases that may obtain in the estimation. Using a large panel data set for Indian firms in the manufacturing sector spanning the period 1995-2011, we find that intellectual property reform is associated with a significant increase in the rates of technical change, production efficiency change, and productivity growth. Thus, the annual rate of technological growth spurted by about 3 percentage points or more, production efficiency grew by almost 8 percentage points, and consequently total factor productivity growth accelerated by about 0.8 percentage points in the post-reform period. This holds promise for other similar reforming countries, and helps to set at rest the misgivings one might have for the tightening of intellectual property protection.
    Keywords: Innovation, Efficiency, Productivity, IPRs
    JEL: O34 O33 O31 O11
    Date: 2013–04
  4. By: Roos K. Andadari (Satya Wacana Christian University); Henri L.F. de Groot (VU University Amsterdam); Piet Rietveld (VU University Amsterdam)
    Abstract: This paper exploits micro firm level data to examine the impact of spatial clustering and links to foreign buyer networks on firm performance in the wood furniture industry in Central Java, Indonesia. The analysis is based on an annual manufacturing survey. We identify the impact of specialization of the cluster, diversification, and links to foreign buyer networks. For this purpose, a production function framework is developed. The results lend support to the view that clustering of large and medium scale specialized firms improves firm performance, while clustering of small scale specialized firms and clustering of diverse firms are not conducive to firm performance. We also find a clear positive association between involvement in exporting activities and firm performance.
    Keywords: Productivity, Externalities, Wood Furniture Industry, Indonesia
    JEL: D20 R11 R32
    Date: 2012–07–18
  5. By: Christian Fons-Rosen (Universitat Pompeu Fabra and Barcelona Graduate School of Economics); Sebnem Kalemli-Ozcan (University of Maryland, CEPR, and NBER); Bent E. Sorensen (University of Houston and CEPR); Carolina Villegas-Sanchez (ESADE - Universitat Ramon Llull); Vadym Volosovych (Erasmus University Rotterdam and ERIM Research Institute of Management)
    Abstract: We quantify the causal effect of foreign investment on total factor productivity (TFP) using a new global firm-level database. Our identification strategy relies on exploiting the difference in the amount of foreign investment by financial and industrial investors and simultaneously controlling for unobservable firm and country-sector-year factors. Using our well identified firm level estimates for the direct effect of foreign ownership on acquired firms and for the spillover effects on domestic firms, we calculate the aggregate impact of foreign investment on country-level productivity growth and find it to be very small.
    Keywords: Multinationals, FDI, Knowledge Spillovers, Selection, Productivity
    JEL: E32 F15 F36 O16
    Date: 2013–04–11
  6. By: Frank G. van Oort (Utrecht University); Martijn J. Burger (Erasmus University Rotterdam); Joris Knoben (Tilburg University); Otto Raspe (Netherlands Environmental Assessment Agency)
    Abstract: See also the publication in <A href="">'Journal of Economic Surveys'</A>, 26(3), 468-91.<p> Empirical studies in spatial economics have shown that agglomeration economies may be a source of the uneven distribution of economic activities and economic growth across cities and regions. Both localization and urbanization economies are hypothesized to foster agglomeration and growth, but recent meta-analyses of this burgeoning body of empirical research show that the results are ambiguous. Recent overviews show that this ambiguity is fuelled by measurement issues and heterogeneity in terms of scale of time and space, aggregation, growth definitions, and the functional form of the models applied. Alternatively, in this paper, we argue that ambiguity may be due to a lack of research on firm-level performance in agglomerations. This research is necessary because the theories that underlie agglomeration economies are microeconomic in nature. Hierarchical or multilevel modeling, which allows micro levels and macro levels to be modeled simultaneously, is becoming an increasingly common practice in the social sciences. As illustrated by detailed Dutch data on firm-level productivity, employment growth and firm survival, we argue that these approaches are also suitable for reducing the ambiguity surrounding the agglomeration-firm performance relationship and for addressing spatial, sectoral and cross-level heterogeneity.
    Keywords: agglomeration economies, micro-macro link, multilevel analysis, productivity
    JEL: C21 O18 R1
    Date: 2012–02–16
  7. By: Dirk Schoenmaker (Duisenberg School of Finance); Arjen Siegmann (VU University Amsterdam)
    Abstract: An anticipated benefit of the prospective European Banking Union is stronger supervision of European banks. Another benefit would be enhanced resolution of banks in distress. While national governments confine themselves to the domestic effects of a banking failure, a European Resolution Authority would follow a supranational approach, under which domestic and cross-border effects within Europe are incorporated. Using a model of recapitalising banks, this paper develops indicators to measure the efficiency improvement of resolution. Next, these efficiency indicators are applied to the hypothetical resolution of the top 25 European banks, which count for the vast majority of cross-border banking in Europe. Our cost-benefit analysis indicates that the UK, Spain, Sweden, and the Netherlands are the main beneficiaries and thus have the largest economic incentives to join Europe’s Banking Union.
    Keywords: Financial Stability, Financial Crises, Public Good, International Banking
    JEL: F33 G01 G28 H41
    Date: 2013–02–11
  8. By: Wouter Zant (VU University Amsterdam)
    Abstract: We measure the impact of the Farmers Income Diversification Program (FIDP), an EU funded program implemented in Malawi from late 2005 onwards, aiming at increasing agricultural productivity, diversification, value addition, commercialization and trade of subsistence farmers. The geographical spread of the implementation of FIDP is exploited to identify its impact. Computations are based on annual data by Extension Planning Area, 198 in total, fully covering Malawi, for the period 2003-04 to 2009-10. The estimations support a statistically significant impact of FIDP on agricultural productivity, with increases reaching 20% to 24% relative to base period levels, with a lag of at least one year after the start of the program and increasing over the years. Evidence on diversification of crop income is less strong but still suggests increases ranging from 5% to 10%. Results are robust for instrumental variables, synthetic controls, clustering of standard errors and inclusion of additional covariates.
    Keywords: agricultural policy, impact evaluation, subsistence farming, Malawi, Africa
    JEL: F35 O13 O55 Q11 Q13
    Date: 2012–09–07
  9. By: Hugo Erken (Ministry of Economic Affairs, The Hague); Piet Donselaar (Ministry of Economic Affairs, The Hague); Roy Thurik (Erasmus School of Economics, Erasmus Universiteit Rotterdam, EIM Business and Policy Research, Zoetermeer)
    Abstract: Total factor productivity of twenty OECD countries for a recent period (1971-2002) is explained using six different models based on the established literature. Traditionally, entrepreneurship is not dealt with in these models. In the present paper it is shown that – when this variable is added - in all models there is a significant influence of entrepreneurship while the remaining effects mainly stay the same. Entrepreneurship is measured as the business ownership rate (number of business owners per workforce) corrected for the level of economic development (GDP per capita).
    Keywords: Total factor productivity, research and development, entrepreneurship, OECD
    JEL: E20 L26 M13 O10 O30 O40 O50
  10. By: Lidia Mannarino; Marianna Succurro (Dipartimento di Scienze Economiche, Statistiche e Finanziarie, Università della Calabria)
    Abstract: The aim of the paper is to investigate the impact of financial structure on firms’ performance in Western Europe convergence regions. While large amount of evidence exists on the relation between financial development, firms’ survival and growth both cross-country and cross-industry, much less is known at the microeconomic level of the firm. In this context, the contribution of our research - which relies on accounting data collected from the Bureau van Dijk’s Amadeus database - is twofold. First, we make a microeconomic comparison across Western Europe convergence regions, where the percentage of small and medium enterprises is relatively higher than in more developed regions. Second, following the most recent literature in this field, our research takes into account several financial ratios instead of a commonly used one-dimensional definition of financial status. The empirical evidence shows that the financial strength is a key factor explaining firm survival in Western Europe convergence regions. Some differences arise from a deeper analysis of the financial ratios. While both the debt and the cash flow ratios, as well as profitability, are strongly significant in explaining firms’ survival in Western Europe convergence regions, structure and operational ratios are not important factors explaining firms’ survival. Additional differences arise when we consider the countries separately: while debt and cash flow ratios are significant for bank based economies, they are not significant for United Kingdom, which is characterized by a more developed financial market. This analysis would have interesting applications, given the potential impact of financial constraints on market selection mechanisms and, therefore, on market structure.
    Keywords: Financial Structure, Firm Survival
    JEL: D92 E22 G33 L1
    Date: 2013–04
  11. By: Jessie Bakens (VU University Amsterdam); Peter Mulder (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam)
    Abstract: This paper identifies the role of cultural diversity in explaining spatial disparities in wages and housing prices across Dutch cities, using unique individual panel data of home owners. We distinguish between the effects of interactions-based productivity, consumption amenities and sorting of heterogeneous home owners while controlling for interactions between the labor and housing market. We find that an increase in the cultural diversity of the population positively impacts equilibrium wages and housing prices, particularly in the largest and most densely populated cities. This result is largely driven by spatial sorting of individuals in both the labor and housing market. After controlling for home owner heterogeneity we find that increasing cultural diversity no longer impacts local labor markets and negatively impacts local housing markets. The latter result is likely to be driven by a negative causal effect of increased cultural diversity on neighb orhood quality that outweighs a positive effect of increased cultural diversity in consumption goods.
    Keywords: cultural diversity, immigrants, local amenities, sorting, housing prices, productivity
    JEL: J31 R21 R23 R31
    Date: 2012–03–19
  12. By: Temurshoev, Umed; Miller, Ronald E. (Groningen University)
    Abstract: Using the world input-output tables available from the WIOD project (, we quantify production line positions of 35 industries for 40 countries and the rest of the world region over 1996-2009. In contrast to the previous related literature we do not focus only on the output supply chain, but also consider sectors? input demand chain. This distinction is important because both these chains jointly constitute the entire production process, and the output sales structure of each sector is generally different from the structure of its inputs purchases. We use the (output) upstreamness measure of Antr`as et al. (2012) and our proposed input downstreamness measure to quantify industry relative position, respectively, along the global output supply chain and the global input demand chain. The results are examined in detail at the levels of the world, six aggregate economic branches, sectors and countries.
    Date: 2013
  13. By: Joshua Wilde (Department of Economics, University of South Florida)
    Abstract: The extent to which fixed factors of production such as land constrain per-capita income growth has been a widely discussed topic in economics since at least Malthus (1798). Whether fixed factors limit growth depends crucially on two variables: the substitutability of fixed factors in production, and the extent to which innovation will be biased towards land-saving technologies. However, there are few estimates of either variable, and most models assume this elasticity of substitution is unity out of con- venience. This paper attempts to fill that gap in the literature. Using the timing of plague epidemics as an instrument for labor supply, this paper estimates the elasticity of substitution between fixed and non-fixed factors in pre-industrial England. I find that the elasticity of substitution between land and other factors during this period was signicantly less than one, which implies that the Malthusian effects of population on income were stronger than current models predict. In addition, I am able to esti- mate the direction and magnitude of induced innovation. I find evidence that denser populations -- and hence higher land scarcity -- induced innovation towards land-saving technologies. Specically, I find that a doubling of population density in England from its year 1500 level raises the difference in the growth rates of land- and labor-enhancing productivity by 0.22% per year.
    Keywords: Land, Substitution, Population, England, Industrial Revolution, Demographic Transition, Induced Innovation, Plagues, Malthus
    JEL: E00 N13 N33 N53 O11 O12 O14 O31 O41 O43 O44 O47 O52
    Date: 2013–02

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