nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2014‒08‒20
thirteen papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Knowledge spillovers, ICT and productivity growth By Haskel, J; Corrado, C; Jona-Lasinio, C
  2. Does land fragmentation affect farm performance? A case study from Brittany By Laure Latruffe; Laurent Piet
  3. Identifying Factor Productivity from Micro-data: The case of EU agriculture By Petrick, Martin; Kloss, Mathias
  4. How costly are the public sector ineffiencies? An integrated theoretical framework for its welfare assessment. By Jorge Onrubia-Fernández; A. Jesús Sánchez-Fuentes
  5. Performance of Islamic Banks across the world: an empirical analysis over the period 2001-2008 By Sandrine KABLAN; Ouidad YOUSFI
  6. Productivity Measurement with Natural Capital and Bad Outputs By Nicola Brandt; Paul Schreyer; Vera Zipperer
  7. The effect of land fragmentation on labor allocation and the economic diversity of farm households: The case of Vietnam By Nguyen, Huy
  8. An Impact Analysis of Logistics Accessibility Improvements on the Productivity of Manufacturing Sectors By Hidekazu Itoh
  9. The Analysis Of Factors That Influence Relative Efficiency Of General Banks After The Implementation Of Indonesia Banking Architecture By Bertha Elizabeth; Nanny Dewi; Aldrin Herwany
  10. Effects of Economic Factors on Adoption of Robotics and Consequences of Automation for Productivity Growth of Dairy Farms By Heikkila, Anna-Maija; Myyra, Sami; Pietola, Kyosti
  11. Drivers of agricultural capital productivity in selected EU member states By Petrick, Martin; Kloss, Mathias
  12. Comparaison de l'efficacité et l'efficience des Banques islamiques et conventionnels: cas de l'Indonésie By Jaouadi, Said; Ben Jazia, Rachida; Ziedi, Azza
  13. Stochastic Frontier Models Using GAUSS By Young H. Lee

  1. By: Haskel, J; Corrado, C; Jona-Lasinio, C
    Date: 2014–07–21
  2. By: Laure Latruffe (Structures et Marchés Agricoles, Ressources et Territoires, INRA); Laurent Piet (Structures et Marchés Agricoles, Ressources et Territoires)
    Abstract: Agricultural land fragmentation is widespread and may affect farmers’ decisions and impact farm performance, either negatively or positively. We investigated this impact for the western region of Brittany, France, in 2007. To do so, we regressed a set of performance indicators on a set of fragmentation descriptors. The performance indicators (production costs, yields, revenue, profitability, technical and scale efficiency) were calculated at the farm level using Farm Accountancy Data Network (FADN) data, while the fragmentation descriptors were calculated at the municipality level using data from the cartographic field pattern registry (RPG). The various fragmentation descriptors enabled us to account for not only the traditional number and average size of plots, but also their geographical scattering. We found that farms experienced higher costs of production, lower crop yields and lower profitability where land fragmentation (LF) was more pronounced. Total technical efficiency was not found to be significantly related to any of the municipality LF descriptors used, while scale efficiency was lower where the average distance to the nearest neighbouring plot was greater. Pure technical efficiency was found to be negatively related to the average number of plots in the municipality, with the unexpected result that it was also positively related to the average distance to the nearest neighbouring plot. By simulating the impact of hypothetical consolidation programmes on average pre-tax profits and wheat yield, we also showed that the marginal benefits of reducing fragmentation may differ with respect to the improved LF dimension and the performance indicator considered. Our analysis therefore shows that the measures of land fragmentation usually used in the literature do not reveal the full set of significant relationships with farm performance and that, in particular, measures accounting for distance should be considered more systematically.
    Keywords: agricultural land fragmentation, farm performance, cartographic field pattern registry, france
    JEL: Q12 Q15 D24
    Date: 2013
  3. By: Petrick, Martin; Kloss, Mathias
    Abstract: The classical problem of agricultural productivity measurement has regained interest owing to recent price hikes in world food markets. At the same time, there is a new methodological debate on the appropriate identification strategies for addressing endogeneity and collinearity problems in production function estimation. We examine the plausibility of four established and innovative identification strategies for the case of agriculture and test a set of related estimators using farmlevel panel datasets from seven EU countries. The newly suggested control function and dynamic panel approaches provide attractive conceptual improvements over the received ‘within’ and duality models. Even so, empirical implementation of the conceptual sophistications built into these estimators does not always live up to expectations. This is particularly true for the dynamic panel estimator, which mostly failed to identify reasonable elasticities for the (quasi-) fixed factors. Less demanding proxy approaches represent an interesting alternative for agricultural applications. In our EU sample, we find very low shadow prices for labour, land and fixed capital across countries. The production elasticity of materials is high, so improving the availability of working capital is the most promising way to increase agricultural productivity.
    Keywords: Factor Productivity, Factor Markets, Productivity Analysis,
    Date: 2013–01–15
  4. By: Jorge Onrubia-Fernández; A. Jesús Sánchez-Fuentes
    Abstract: This paper provides a theoretical framework which integrates the conventional methodology for measuring the productive efficiency and the monetary assessment of social welfare changes associated with public sector performance. Two equivalent measures of social welfare changes generated by an improvement (or worsening) in productive efficiency are deduced using duality theory. The first one is obtained from the cost function, while the second one arises directly from the production function. Moreover, the paper induces the application of the theoretical framework proposed to empirical analysis.
    Keywords: Public sector efficiency, technical efficiency, allocative efficiency, social welfare changes.
    JEL: D24 D60 D61 H40 H50
    Date: 2014–07
  5. By: Sandrine KABLAN; Ouidad YOUSFI
    Abstract: Our study aims at analyzing Islamic bank efficiency over the period 2001-2008. We found that they were efficient at 92%. The level of efficiency could however vary according to the region where they operate. Asia displays the highest score with 96%. Indeed, country like Malaysia made reforms in order to allow these banks to better cope with the existing financial system, display the highest scores. On the contrary countries with Islamic banking system do not necessarily display efficiency scores superior to the average. The subprime crisis seems to have impacted those banks indirectly. And market power and profitability have a positive impact on Islamic banks efficiency, while it is the contrary for their size. The latter implies that they do not benefit from scale economy, may be because of the specificity of Islamic financial products.
    Keywords: Islamic Finance, Islamic Banks, performance, efficiency, stochastic frontier analysis.
    JEL: G21 G24 G15
    Date: 2014–07–24
  6. By: Nicola Brandt; Paul Schreyer; Vera Zipperer
    Abstract: This paper presents a productivity growth measure that explicitly accounts for natural capital as an input factor and for undesirable goods, or “bads”, as an output of the production process. The discussion focuses on the extension of productivity measurement for bad outputs and estimates of their shadow prices, while the inclusion of natural capital is discussed in more depth in a companion paper. As bad outputs are the target of environmental policies, a productivity measure that does not take bad outputs into account will underestimate productivity growth, whenever countries devote some inputs to reducing bad outputs, thus improving the environmental impact of their production processes, rather than to increasing the production of goods and services. An adjusted productivity measures is needed in an analysis of the effect of bad outputs on productivity growth as otherwise the effectiveness of environmental policies in promoting production processes that make more efficient use of the environment will be wrongly assessed. Results suggest that the adjustment of the traditional productivity growth measure for bad outputs is small. While this partly hinges on the fact, that due to a lack of more comprehensive data, only a limited set of bad outputs are considered in this paper, namely CO2, SOX and NOX emissions, the relatively small adjustment of the traditional productivity growth measure is good news for two reasons. First, it implies that ignoring the bad outputs considered in this paper results in a relatively small bias of productivity measurement, and thus analysis based on traditional measures should be relatively reliable in this regard. Second, it also implies that the acceleration in productivity growth that would help to substantially reduce the bad outputs considered in this paper, without reducing output growth, should be possible to achieve. Une mesure de productivité avec capital naturel et des produits indésirables Ce rapport présente une mesure de croissance de la productivité qui inclut explicitement le capital naturel et des produits non-désirables, ou des « bads », comme outputs du processus de production. La discussion se focalise sur l’extension de la mesure de croissance de productivité qui provient des « bad outputs » et sur l’estimation des leurs prix virtuels, alors que l’inclusion du capital naturel est discuté plus en détail dans un autre papier. Une mesure de productivité qui ne prend pas en compte des produits non-désirés est susceptible de sous-estimer la croissance de productivité chaque fois qu’un pays dédie quelques entrants à la réduction de ces produits non-désirables, pour ainsi améliorer l’impact environnemental de ses processus de production, plutôt qu’à la croissance de la production des biens (désirables) et des services. Comme les produits non-désirables sont la cible de la politique environnementale, une analyse de comment celle-ci impacte sur la croissance de productivité requiert une mesure qui inclut les « bad outputs «, comme celle présentée dans ce papier. Sinon, il y a peu d’espoir d’obtenir une évaluation correcte de l’impact des politiques environnementales sur la promotion des processus de production qui utilisent l’environnement avec plus d’efficacité. Les résultats présentés dans ce papier suggèrent que l’ajustement de la mesure traditionnelle de croissance de productivité pour des produits non-désirables est faible. Ceci est en partie dû au fait que, faute d’avoir accès à des donnés plus complètes, les produits non-désirables inclut dans ce papier se limitent aux émissions des dioxydes de carbon (CO2), des oxydes de soufre (SOX) et des oxydes d’azote (NOX). Néanmoins, l’ajustement relativement faible de la mesure de croissance de productivité est une bonne nouvelle pour deux raisons. Premièrement, ceci implique qu’ignorer les produits non-désirables considérés dans ce papier mène à un biais de la mesure de croissance de productivité relativement faible et donc les analyses basées sur des mesures traditionnelles de croissance de productivité devraient être assez fiables. Deuxièmement, ce résultat implique aussi que l’accélération de la croissance de productivité qui contribuerait à réduire substantiellement les produits non-désirables considérés dans ce papier, sans pour autant réduire la croissance de la production des biens et des services, devrait être atteignable.
    Keywords: natural capital stock, emission shadow prices, multi-factor productivity, nitrogen oxide emissions, sulphur oxide emissions, carbon dioxide emissions, green productivity, total factor productivity, productivité globale des facteurs, productivité verte, stock de capital naturel, émissions dioxydes de carbon, émissions des oxydes d’azote., productivité multifacteurs, prix sous-jacents des émissions, émissions oxydes de soufre
    JEL: D24 O47 Q3 Q52 Q53
    Date: 2014–07–24
  7. By: Nguyen, Huy
    Abstract: This paper investigates the impacts of land fragmentation on economic diversity of farm households in Vietnam. To develop the empirical analysis, a model is presented in which the estimated impact of land fragmentation on economic diversification allows for non-neutral technical change. The paper tests the theoretical predictions of this model by providing empirical evidence of the impact of land fragmentation on farm and nonfarm outcomes such as labour supply, profits, labour intensity and productivity. By using different methods aimed at verifying and checking the consistency of the results, we find that land consolidation may reduce farm labour supply, labour intensity, and improve farm profits and productivity. Similarly, it may release more farm labour to nonfarm sectors and increase nonfarm profits. The empirical results also show that factor-biased technical change plays an important role in explaining the impact of agricultural technical change on economic diversification in Vietnam.
    Keywords: Agricultural technical change, land fragmentation, land consolidation, labour allocation, and elasticity of substitution, nonfarm sectors, and economic diversification
    JEL: D13 J2 Q15
    Date: 2014–07–29
  8. By: Hidekazu Itoh (Kwansei Gakuin University - Kwansei gakuin University)
    Abstract: This study constructs a theoretical production function that incorporates logistics accessibility and analyzes the economic impacts of improvements in freight transport for a regional economy. Using panel data between 1995 and 2010 for Japan, we evaluate the impacts of interregional logistics accessibility, or inbound (outbound) shipping of intermediate (final) goods, on production activity. The results show that the production function has increasing returns to scale, which positively affects production activity, regarding logistics accessibility. In addition, the estimated elasticity of transportation costs changes; that is, logistics improvements in procurements (sales) decrease (increase) with time. Furthermore, the impacts of cost improvements on production activity differ across manufacturing sectors. This empirical analysis supports the logistics strategies of transportation efficiency and relocation of factories and warehouses in manufacturing sectors. In accordance with the Weber location-production problem, this empirical analysis supports production-oriented location for input goods and market-oriented location for output goods.
    Date: 2014–07–28
  9. By: Bertha Elizabeth (Department of Management and Business, Padjadjaran University); Nanny Dewi (Department of Management and Business, Padjadjaran University); Aldrin Herwany (Department of Management and Business, Padjadjaran University)
    Abstract: One of implementations that is done by Bank Indonesia to reach the vision of Arsitektur Perbankan Indonesia (API) is by determining anchor bank criteria and good performance bank criteria. Those criterias are determined from various aspects such as some ratios that consist of CAR, NPL, LDR, ROA, and the banking assets. These determinations are expected to be an encouragement for banks in Indonesia to improve the banking efficiency. The measurement and the efficiency analysis are done by implementing Data Envelopment Analysis (DEA) method through the approach of efficiency intermediation that is oriented toward output. This efficiency value will be the dependent variable in analysing the next regression that is done by applying the tobit regression. The independent variables that are applied in the regression are CAR, NPL, LDR, ROA, asset, SBI rate, inflation, and the Rupiah exchange toward Dollar. This research involves 108 conventional banks during 2004-2011 in Indonesia. The result of the efficiency measurement showed that Indonesia banking is not efficient in doing its function as the financial intermediator. The hypothesis testing result from tobit regression showed that the variables that influence the bank efficiency with 5% signification are CAR, NPL, the exchange rate, SBI rate, and inflation. Macro variables has bigger and more significant influence toward the intermediation efficiency compared with micro variables. Among micro variables CAR, LDR, NPL, ROA, and total asset, only CAR and NPL have significant influence in affecting intermediation efficiency. It happens because the measurement that is used in efficiency inputs ouputs are partial finance ratio where banks can manage it, so that the real bank performance can not reflected well.
    Keywords: Efficiency, Data Envelopment Analysis, Tobbit, and Indonesia Banking Architecture
    JEL: M0
    Date: 2012–12
  10. By: Heikkila, Anna-Maija; Myyra, Sami; Pietola, Kyosti
    Abstract: In the long term, productivity and especially productivity growth are necessary conditions for the survival of a farm. In this paper, we focus on the technology choice of a dairy farm, i.e. the choice between a conventional and an automatic milking system. Our aim is to reveal the extent to which economic rationality explains investing in new technology. The adoption of robotics is further linked to farm productivity to show how capital-intensive technology has affected the overall productivity of milk production. In our empirical analysis, we apply a probit model and an extended Cobb-Douglastype production function to a Finnish farm-level dataset for the years 2000–10. The results show that very few economic factors on a dairy farm or in its economic environment can be identified to affect the switch to automatic milking. Existing machinery capital and investment allowances are among the significant factors. The results also indicate that the probability of investing in robotics responds elastically to a change in investment aids: an increase of 1% in aid would generate an increase of 2% in the probability of investing. Despite the presence of non-economic incentives, the switch to robotic milking is proven to promote productivity development on dairy farms. No productivity growth is observed on farms that keep conventional milking systems, whereas farms with robotic milking have a growth rate of 8.1% per year. The mean rate for farms that switch to robotic milking is 7.0% per year. The results show great progress in productivity growth, with the average of the sector at around 2% per year during the past two decades. In conclusion, investments in new technology as well as investment aids to boost investments are needed in low-productivity areas where investments in new technology still have great potential to increase productivity, and thus profitability and competitiveness, in the long run.
    Keywords: Dairy farms, robotics, factor markets, Productivity Analysis,
    Date: 2012–12–05
  11. By: Petrick, Martin; Kloss, Mathias
    Abstract: The aim of this Working Paper is to provide an empirical analysis of the marginal return on working capital and fixed capital in agriculture, based on data gathered by the Farm Accountancy Data Network from seven EU member states. Particular emphasis is placed on the detection of credit market imperfections. The key idea is to provide farm group-specific estimates of the shadow price of capital, and to use these to analyse the drivers of on-farm capital use in European agriculture. Based on Cobb Douglas estimates of farm-type specific production functions, we find that working capital is typically used in more than economically optimal quantities and often displays negative marginal returns across countries and farm types. This is less often the case with regard to fixed capital, but it is only in a small set of sectors where access to fixed capital appears severely constrained. These sectors include field crop and mixed farms in Denmark, dairy farms in East Germany, as well as mixed farms in Italy and the UK. The relationship between farm financial indicators and the estimated shadow prices of capital varies considerably across countries and sectors. Among the farms with a high shadow price for fixed capital in Denmark, high debt levels and little owned land tended to induce more intensive capital use, which may reflect the liberal Danish banking system. In East Germany, Italy and the UK, high debt levels made farmers more tightly capital constrained. Hence, in the latter group of countries, more traditional mechanisms of capital allocation based on debt capacity seemed to be at work. As a general conclusion, EU agriculture appears to be characterised by overcapitalisation rather than by credit constraints.
    Keywords: credit market, Farm Accountancy Data Network, on-farm capital use, capital productivity, Agricultural Finance,
    Date: 2012–09–01
  12. By: Jaouadi, Said; Ben Jazia, Rachida; Ziedi, Azza
    Abstract: This study investigates the comparison between Islamic and conventional Indonesian banks and that by applying an approach called Efficiency - effectiveness in order to elucidate the determinants of performance of the Indonesian banking sector while placing identify factors that affect their profits. The history of conventional banks in Indonesia is very easy comparison with the Indonesian Islamic banks. The Islamic banking industry in Indonesia is in its infancy a slightly reduced number of banks active in this sector and achieves such a performance. This paper is based on monthly data of the banking sector in Indonesia dating from March 2010 to July 2011 collected on annual reports of the Indonesian central bank. A multiple regression is applied to judge the effectiveness and efficiency of conventional and Islamic banks in Indonesia. In making a connection between the results for conventional and Islamic banking sector, it turned out that they operate in manner linen to be effective and efficient, which leads us to value the contribution of economic and financial Islamic banking in terms of financial stability and sustainable development.
    Keywords: Islamic Finance, Conventional Finance, Efficiency – effectiveness approach, Multiple Regressions
    JEL: F21 G21
    Date: 2011–04–12
  13. By: Young H. Lee (Department of Economics, Sogang University, Seoul)
    Abstract: This paper discusses the use of ten different GAUSS programs for various stochastic frontier models. SFM_MLE_cross-section provides maximum likelihood estimates (MLE) for four different stochastic frontier models with cross-sectional data: those of Aigner, Lovell, and Schmidt (1977), Stevenson (1980), Almanidis, Qian, and Sickles (2014), and Lee and Lee (2014). There are two programs for panel data stochastic frontier models with the time-invariant efficiency assumption. SFM_BC88_MLE provides the MLE of Battese and Coelli (1988) and SFM_SS presents the within and generalized least squared estimates of Schmidt and Sickles (1984). Finally, seven programs allow the use of different stochastic frontier models with time-varying efficiency: SFM_BC92 for Battese and Coelli (1992), SFM_Kum for Kumbhakar (1991), SFM_CSS for Cornwell, Schmidt, and Sickles (1990), SFM_LS for Lee and Schmidt (1993), SFM_GrLS for Lee (2006), SFM_GrBC for Lee (2010), and SFM_ALS07 for Ahn, Lee, and Schmidt (2007). A noteworthy feature is that all seven programs estimate production function parameters by adopting the fixed effect treatment.
    Date: 2014

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