nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒03‒13
twenty papers chosen by

  1. The Importance of Reallocation for Productivity Growth: Evidence from European and US Banking By Bos, Jaap W.B.; van Santen, Peter C.
  2. Energy Efficiency in Swedish Industry A Stochastic Frontier Approach By Lundgren, Tommy; Marklund, Per-Olov; Zhang, Shanshan
  3. Energy Efficiency in Swedish Industry - A Firm-level Data Envelopment Analysis By Lundgren, Tommy; Zhang, Shanshan; Zhou, Wenchao
  4. On the Development Gap between Latin America and East Asia: Welfare, Efficiency, and Misallocation By Mendez-Guerra, Carlos
  5. Grasp the Large, Let Go of the Small: The Transformation of the State Sector in China By Chang-Tai Hsieh; Zheng (Michael) Song
  6. Innovation dynamics and productivity : evidence for Latin America By Crespi G.A.; Tacsir E.; Vargas F.
  7. Robots at work By Georg Graetz; Guy Michaels
  8. The roles of import competition and export opportunities for technical change By Claudia Steinwender
  9. The accumulation of capital and economic growth in Brazil. A long-term prospective (1950-2008) By Mateo Tomé, Juan Pablo
  10. Productivity, Firm Size, Financial Factors, and Exporting Decisions: The case of Japanese SMEs By OGAWA Kazuo; TOKUTSU Ichiro
  11. International Knowledge Spillovers: The Benefits from Employing Immigrants By Jürgen Bitzer; Erkan Gören; Sanne Hiller
  12. Regional heterogeneity and interregional research spillovers in European innovation: modeling and policy implications By Gianni Guastella; Frank van Oort
  13. Measurement of agricultural productivity in Africa south of Sahara: A spatial typology application: By Yu, Bingxin; Guo, Zhe
  14. New patterns of structural change and effects on inclusive development: A case study of South Africa and Brazil By Greenstein, Joshua
  15. The effect of incomplete land tenure contracts on agricultural investment and productivity in Cameroon By Niee Foning, Maxime; Kane, Gilles Quentin; Ambagna, Jean Joël; Fondo, Sikod; Abayomi Oyekale, Samuel
  16. Convergence of carbon dioxide performance across Swedish industrial sectors An environmental index approach By Brännlund, Runar; Lundgren, Tommy; Söderholm, Patrik
  17. The relevance of the EU banking sector to economic growth and the recent financial crisis By Cândida Ferreira
  18. Service Trade and Productivity: Firm-level evidence from Japan By MORIKAWA Masayuki
  19. Convergence in global environmental performance Assessing country heterogeneity By Brännlund, Runar; Karimu, Amin
  20. Why does financial sector growth crowd out real economic growth? By Stephen G Cecchetti; Enisse Kharroubi

  1. By: Bos, Jaap W.B. (Maastricht University School of Business and Economics); van Santen, Peter C. (Research Department, Central Bank of Sweden)
    Abstract: To what extent has input reallocation contributed to aggregate productivity growth in the banking sectors of Europe and the United States? Interestingly, under-performing banks capture market share, while more productive banks lose market share, in particular in the US. The pattern of reallocation is markedly different between the geographical regions: European productivity has grown by reallocating inputs through the first half of the sample period, at the same time when reallocation diminished growth in the US. The long-run positive effects of creative destruction are especially apparent in the US, where reallocation is an important driver of increases in productivity.
    Keywords: reallocation; productivity growth; efficiency; banking
    JEL: C24 D24 O30 O47
    Date: 2015–02–01
  2. By: Lundgren, Tommy (CERE); Marklund, Per-Olov (CERE); Zhang, Shanshan (CERE)
    Abstract: This paper estimates firm level energy efficiency and its determinants in 14 sectors of Swedish manufacturing by using stochastic frontier analysis (SFA). We derive energy demand frontiers both from cost minimizing and profit maximizing perspectives. To account for firms’ heterogeneity, Greene’s true random effects model is adopted. Results show that, from both firm behavior perspectives, there is room to improve energy efficiency in all sectors of Swedish manufacturing. The EU ETS seem to have had a moderate or no effect on Swedish firms’ efficient use of energy. Moreover, we found that energy intensity or energy productivity (energy use over production value) is not an appropriate proxy for energy efficiency.
    Keywords: energy demand; energy efficiency; manufacturing; stochastic frontier analysis; true random effects
    JEL: D22 D24 L60 Q41
    Date: 2014–09–12
  3. By: Lundgren, Tommy (CERE); Zhang, Shanshan (CERE); Zhou, Wenchao (Centre for Regional Science)
    Abstract: This paper assesses energy efficiency in Swedish industry. Using unique firm-level panel data covering the years 2001-2008, the efficiency estimates are obtained for firms in 14 industrial sectors by using data envelopment analysis (DEA). The analysis accounts for multi-output technologies where undesirable outputs are produced alongside with the desirable output. The results show that there was potential to improve energy efficiency in all the sectors and relatively large energy inefficiencies existed in small energy-use industries in the sample period. Also, we assess how the EU ETS, the carbon dioxide (CO2) tax and the energy tax affect energy efficiency by conducting a second-stage regression analysis. To obtain consistent estimates for the regression model, we apply a modified, input-oriented version of the double bootstrap procedure of Simar and Wilson (Journal of Econometrics 136(1):31-64, 2007). The results of the regression analysis reveal that the EU ETS and the CO2 tax did not have significant influences on energy efficiency in the sample period. However, the energy tax had a positive relation with the energy efficiency.
    Keywords: energy efficiency; EU ETS; data envelopment analysis; double bootstrap
    JEL: D22 D24 L60 Q41
    Date: 2015–02–18
  4. By: Mendez-Guerra, Carlos
    Abstract: Both long economic stagnation in Latin America and sustained growth and in East Asia imply a rapidly raising development gap between the two regions. Using a series of numerical decompositions, this article documents three facts about this gap. First, differences in welfare-adjusted development are larger than those predicted by per-capita GDP. Second, differences in labor productivity account for most of the differences in both production and welfare-adjusted development. Third, inefficient production is the main factor holding down labor productivity. Furthermore, detailed analysis of the sectorial dynamics suggests that labor misallocation across sectors had been reducing economy-wide efficiency in Latin America. In particular, premature deindustrialization (i.e., workers moving from manufacturing into services) and falling productivity in the service sector had potentially large negative effects on efficiency, productivity, and welfare-adjusted development.
    Keywords: welfare efficiency misallocation
    JEL: O4 O40 O5 O53 O54 O57
    Date: 2014–02–05
  5. By: Chang-Tai Hsieh; Zheng (Michael) Song
    Abstract: Starting in the late 1990s, China undertook a dramatic transformation of the large number of firms under state control. Small state-owned firms were privatized or closed. Large state-owned firms were corporatized and merged into large industrial groups under the control of the Chinese state. The state also created many new and large firms. We use detailed firm-level data to show that from 1998 to 2007, (i) state-owned firms that were closed were smaller and had low labor and capital productivity; (ii) the labor productivity of state-owned firms converged to that of private firms; (iii) the capital productivity of state-owned firms remained significantly lower than that of private firms; and (iv) total factor productivity (TFP) growth of state-owned firms was faster than that of private firms. We find the reforms of the state sector were responsible for 20 percent of aggregate TFP growth from 1998 to 2007.
    JEL: N15 O0
    Date: 2015–03
  6. By: Crespi G.A.; Tacsir E.; Vargas F. (UNU-MERIT)
    Abstract: Innovation is fundamental for economic catching-up and raising living standards. Evidence demonstrate a virtuous circle in which RD spending, innovation, productivity, and per capita income mutually reinforce each other and lead to long-term, sustained growth rates and may foster job creation. Previous evidence highlights that Latin America and the Caribbean LAC has great potential to benefit from investment and policies that foster innovation. However, one important limitation of previous research on innovation in LAC is the absence of harmonised and comparable indicators across the different countries. This seriously limits the possibility to infer policy conclusions that are not affected by country specificities with respect to data quality and coverage. Also, most of this research is focused on estimating firm level correlations without attempting to identify market failures or other limitations which harm innovation investment or which could guide policy. In this paper, a wide range of innovation indicators are analysed in order to describe the innovation behaviour of manufacturing firms in LAC using the Enterprise Survey ES database. Our objective is to understand the main characteristics of innovative firms in LAC and to gather new evidence with regard to the nature of the innovation process in the region. In this paper we apply a structural model based on Crepon, Duget and Mairesse 1998, to estimate the determinants of innovation RD and its impact on total factor productivity. We pay special attention to whether there is heterogeneity in the effects of investments in innovation on productivity and whether there is any evidence of spillovers that could guide policy design. We found strong evidence concerning the relationships between innovation input and output, and innovation output and productivity. We found that private returns to innovation depend on the type of innovation, being larger for product than process innovation. Furthermore, we found some evidence that spillovers are stronger in the case of product than process innovation. It was also found that innovation returns are higher for the most productive firms. This increasing relationship between returns and productivity is not consistent with an interpretation that financial constraints cause more harm to low productivity firms. However, it is consistent with alternative interpretations about the lack of innovation opportunities in the case of low productivity firms or that low private returns are the results of poor appropriability.
    Keywords: Microeconomic Analyses of Economic Development; Industrialization; Manufacturing and Service Industries; Choice of Technology; Innovation and Invention: Processes and Incentives; Technological Change: Choices and Consequences; Diffusion Processes; Economic Growth and Aggregate Productivity: General;
    JEL: O12 O14 O31 O33 O40
    Date: 2014
  7. By: Georg Graetz; Guy Michaels
    Abstract: Despite ubiquitous discussions of robots’ potential impact, there is almost no systematic empirical evidence on their economic effects. In this paper we analyze for the first time the economic impact of industrial robots, using new data on a panel of industries in 17 countries from 1993-2007. We find that industrial robots increased both labor productivity and value added. Our panel identification is robust to numerous controls, and we find similar results instrumenting increased robot use with a measure of workers’ replaceability by robots, which is based on the tasks prevalent in industries before robots were widely employed. We calculate that the increased use of robots raised countries’ average growth rates by about 0.37 percentage points. We also find that robots increased both wages and total factor productivity. While robots had no significant effect on total hours worked, there is some evidence that they reduced the hours of both low-skilled and middle-skilled workers.
    Keywords: robots; productivity; technological change
    JEL: E23 J23 O30
    Date: 2015–03
  8. By: Claudia Steinwender
    Abstract: A variety of empirical and theoretical trade papers have suggested and documented a positive impact of trade on the productivity of firms. However, there is less consensus about the underlying mechanism at work. While trade papers focus on access to export markets, other papers stress the importance of import competition. Since imports and exports (and even tariffs affecting either) are usually highly correlated, it is unclear which mechanism the existing empirical papers uncover. This paper conducts a “horse race” between export opportunities and import competition. Using Spanish firm level data, instrumenting for exports and imports with tariff changes and controlling for selection, I find robust evidence that access to export markets leads to productivity increases, but only for firms that were already highly productive before. The evidence on import competition is weaker. If anything, initially low-tech firms manage to increase their productivity in response to increased competition from abroad. The latter finding is at odds with most trade models, so I propose a model incorporating non-profit maximizing managers to reconcile theory with the evidence. Empirically, I find that all productivity upgrades are driven by increased R&D, patenting, and product innovation. Access to export markets also leads to the adaptation of foreign technologies. There is no evidence that either mechanism leads to increased full time employment, instead full time workers seem to be replaced by part-time or temporary workers.
    Keywords: import competition; technical change; productivity; exporting
    JEL: F12 F13 F14 L25
    Date: 2015–02
  9. By: Mateo Tomé, Juan Pablo (Kingston University London)
    Abstract: This article analyses the development of economic growth in Brazil in terms of capital accumulation, following the Marxist approach. The aim is to identify the relationship between the two processes, looking at the profit rate, which along with investment effort determines productive investment. In turn, this one affects the capital-labour ratio and labour productivity. Both, with the addition of the price ratio, determine the productivity of capital, a key variable in understanding the accumulation process in Brazil. Using the period 1950-2008 allows comparing two phases in the Brazilian economy, the period of substitutive industrialisation and the neoliberal phase, all from the perspective of the relationship between the aforementioned variables.
    Keywords: growth; investment; profitability; productivity
    JEL: E11 E22 E32 N16 O40
    Date: 2015–03–04
  10. By: OGAWA Kazuo; TOKUTSU Ichiro
    Abstract: This study is an empirical attempt to compare the exporting behavior of small and medium-sized enterprises (SMEs) with large firms from the viewpoints of export market participation decision (extensive margin) and export volume decision (intensive margin), using firm-level panel data. We find that firm size is an important determinant of both extensive margin and intensive margin decision for SMEs as well as large firms. In contrast, productivity affects only the intensive margin of export for both SMEs and large firms. Quantitatively, the contribution of productivity to export volume is much larger for large firms. Financial factors are also important determinants of export. Liquidity reserve has positive effects on the extensive margin of export for SMEs and large firms. Moreover, financial institutions play an important role in supporting the export activities of SMEs.
    Date: 2015–03
  11. By: Jürgen Bitzer (University of Oldenburg - Department of Economics & ZenTra); Erkan Gören (University of Oldenburg - Department of Economics); Sanne Hiller (Aarhus University - Department of Economics and Business)
    Abstract: This paper explores the role of immigrant employees for a firm’s capability to absorb international knowledge. Using matched employer-employee data from Denmark for the years 1996 to 2009, we are able to show that non-Danish employees from technological advanced countries contribute significantly to a firm’s economic output through their ability to access international knowledge. The empirical results suggest that the immigrants’ impact increases if they come from technological advanced countries, have a high educational level, and are employed in high-skilled positions.
    Keywords: R&D Spillovers, Absorptive Capacity, Firm-Level Analysis, Foreign Workers, Immigrants
    JEL: D20 J82 L20 O30
    Date: 2015–03
  12. By: Gianni Guastella; Frank van Oort
    Abstract: In agglomeration studies, the effects of various regional externalities related to knowledge spillovers remain largely unclear. To explain innovation clustering, scholars emphasize the contribution of Localized Knowledge Spillovers (LKS) and, specifically when estimating the Knowledge Production Function (KPF), of (interregional) research spillovers. However, less attention is paid to other causes of spatial heterogeneity. In applied works, spatial association in data is econometrically related to evidence of research spillovers. This paper argues that, in a KPF setting, omitting spatial heterogeneity might lead to biased estimates of the effect of research spillovers. As an empirical test, a spatial KPF is estimated using EU25 regional data, including a spatial trend to control for unexplained spatial variation in innovation. Accounting for geographical characteristics substantially weakens evidence of interregional research spillovers.
    Keywords: Generalized Additive Models, Knowledge Spillovers, Regional Innovation, European Union
    JEL: R12 R58
    Date: 2015–03
  13. By: Yu, Bingxin; Guo, Zhe
    Abstract: The great diversity of agricultural activities and practices across the African continent has significant implications for technology transfer and productivity growth. This paper compiles diverse spatial data on biophysical conditions, farming systems, demographics, and infrastructure to spatially disaggregate country targets into subsystem units, namely agricultural production zones. The resulting typologies highlight the limitations of simple national aggregates and reveal remarkable heterogeneity in the subsystems within the country. The typologies provide a natural linkage between national-level analysis and localized production information and can help policymakers in refining national agricultural strategies through location- and subsystem-oriented policies based on local comparative advantages and constraints. The classification is useful in identifying commonalities beyond a country’s borders and hence encourages cross learning and joint efforts in scaling up policies.
    Keywords: productivity, Agricultural policies, Markets, Market access, Economic development, Population density, Typology, farming systems, Normalized Difference Vegetation Index (NDVI),
  14. By: Greenstein, Joshua
    Abstract: This study explores the question of structural change and inclusive development in South Africa and Brazil. Using Census data from the two countries, the analysis combines a household level multidimensional indicator of well-being with the applications of
    Keywords: structural change, inclusive development, productivity, employment and development, South Africa, Brazil
    Date: 2015
  15. By: Niee Foning, Maxime; Kane, Gilles Quentin; Ambagna, Jean Joël; Fondo, Sikod; Abayomi Oyekale, Samuel
    Abstract: The aim of this paper was to analyse the effects of secure land tenure contracts on agricultural productivity. These effects will be highlighted through investment. Data from the third Cameroonian household survey (ECAM III) was used to estimate a binary choice model and productivity equation by instrumental variables. Firstly, the results suggest that there is a moral hazard in the investment behaviour of sharecroppers.This result could support the hypothesis of a holdup problem, which would reduce the incentives for agricultural households to make optimal investments. Secondly, the insecurity of land tenure contract would reduce the probability of purchasing modern equipment by about 0.44 and reduce the probability ofusing fertilizer by about 0.21. However, these investments determine the differences in term of productivity among agricultural household. Thus, the sharecroppers are less productive because they invest less than landlords. Therefore, it seems necessary to implement institutional mechanisms that can help to release the constraints on land access and to ensure the respect for rights and obligations between all the actors involved in agriculturalleases.
    Keywords: Security of land tenure contracts, moral hazard, sharecroppers, holdup.
    JEL: O55 Q12 Q15 Q18
    Date: 2013–11–13
  16. By: Brännlund, Runar (CERE); Lundgren, Tommy (CERE); Söderholm, Patrik (Economics Unit, Luleå University of Technology)
    Abstract: The overall objective of the paper is to analyze convergence of CO2 emission intensity across manufacturing sectors in Sweden. Our approach differs from previous work on carbon convergence in that it employs a theoretical framework to construct a CO2 performance index, which explicitly takes into account that industrial firms produce good as well as bad outputs. This index is then used as the dependent variable in a growth-type regression equation. We employ a data set covering 14 industrial sectors over the time period 1990-2008. The results suggest the presence of conditional beta-convergence in CO2 performance among the industrial sectors in Sweden. Moreover, the speed of convergence varies significantly in the sense that the higher the capital intensity is, the lower is the convergence rate to the different steady states. This reflects the importance of – and in part the costs associated with – capital turnover to achieve a transition towards lower CO2 emission paths.
    Keywords: convergence; carbon dioxide emission intensity; industry; Sweden
    JEL: Q30
    Date: 2014–09–12
  17. By: Cândida Ferreira
    Abstract: Using static and dynamic panel estimates in a sample including all 28 European Union countries during the last decade, this paper seeks to improve upon the existing literature with empirical evidence on the important role that well-functioning EU banking institutions can play in promoting economic growth. The banking sector performance is proxied by the evolution of some relevant financial ratios and economic growth is represented by the annual Gross Domestic Product growth rate. In order to analyse the possible differences arising after the outbreak of the recent international financial crisis, the estimations consider two panels: one for the time period 1998– 2012 and another for the subinterval 2007–2012. The results obtained allow us to draw conclusions not only on the importance of the variation of different operational, capital, liquidity and assets quality financial ratios to economic growth but also on some differences evidenced in the two considered panels, reflecting the consequences of the recent financial crisis and the correspondent reactions of the European banking institutions.
    Keywords: bank performance, economic growth, European Union, financial crisis, panel estimates
    JEL: G21 F43 F36 C23
    Date: 2015–02
  18. By: MORIKAWA Masayuki
    Abstract: Studies on the globalization of firm activities have been progressing rapidly, but empirical studies on service trade using firm-level data have been scarce. This paper, using panel data from Japanese firms, analyzes the relationship between service trade and firm characteristics such as productivity and finds the following. 1) The number of firms engaged in service trade is far less than that engaged in goods trade, and the ratio of service trade value to total sales is also small. 2) The share of trade with overseas affiliate firms is larger in service trade than in goods trade. 3) The productivity and wage level of service trading firms are higher than those of domestic firms and goods trading firms. 4) The productivity of firms that export services beyond the boundary of their firm groups is higher than those firms that export services only to their affiliate firms. Collectively, the results suggest that the fixed costs to initiate service trade exceed that to initiate goods trade, thus indicating the potentially important role of policies to liberalize and facilitate service trade.
    Date: 2015–03
  19. By: Brännlund, Runar (CERE); Karimu, Amin (CERE)
    Abstract: A large body of literature explores convergence in environmental performance (EP) using a simple measure of the percentage change of per capita CO2 as dependent variable and the level of per capita CO2 and GDP as explanatory variables. As such it conforms to the standard convergence literature in the economic growth literature. This study differs from these studies by constructing a measure based on production theory, where production processes explicitly results in the production of two outputs; a good output (GDP) and a bad output (CO2). Based on this we derive an EP index that can be expressed as the ratio of the inverse of the change of the emission intensity. We use the derived EP index to test the beta-convergence hypothesis for a panel of 94 countries. The results reveal strong evidence in support of beta-convergence in environmental, or carbon, performance. Moreover we find evidence of heterogeneity between groups of countries in line with the concept of “club” convergence and also heterogeneity between countries within country groups, especially for the high-income group. Additionally, we find evidence of a negative relation between environmental performance and fossil fuel share both at the global level as well as within sub-samples, which tend to vary with capital intensity. As such the results conform to the results from studies of the dynamics of per capita emissions. These results are therefore very informative and can help in both regional and international negotiations regarding burden sharing of global CO2 emissions. The results also suggest a balanced policy mix between efficiency and conservation policies in order to promote good environmental performance.
    Keywords: Convergence; Environmental Performance; Fossil fuel; Kyoto Protocol; Spillovers
    JEL: Q20 Q28 Q38
    Date: 2015–02–18
  20. By: Stephen G Cecchetti; Enisse Kharroubi
    Abstract: In this paper we examine the negative relationship between the rate of growth of the financial sector and the rate of growth of total factor productivity. We begin by showing that by disproportionately benefiting high collateral/low productivity projects, an exogenous increase in finance reduces total factor productivity growth. Then, in a model with skilled workers and endogenous financial sector growth, we establish the possibility of multiple equilibria. In the equilibrium where skilled labour works in finance, the financial sector grows more quickly at the expense of the real economy. We go on to show that consistent with this theory, financial growth disproportionately harms financially dependent and R&D-intensive industries.
    Keywords: growth, financial development, credit booms, R&D intensity, financial dependence
    Date: 2015–02

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