nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒06‒20
seventeen papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. The Effects of Greenfield FDI and Cross-border M&As on Total Factor Productivity By Ashraf, Ayesha; Herzer, Dierk; Nunnenkamp, Peter
  2. Agglomeration Economies and Productivity Growth : U.S. Cities, 1880-1930 By Crafts, Nicholas; Klein, Alexander
  3. The Productivity of agricultural credit in India By Sudha Narayanan
  4. A multicomponent DEA approach to measure the economic and energy efficiencies of OECD countries By Abbas Valadkhani; Israfil Roshdi; Russell Smyth
  5. Structural change and total factor productivity: Evidence from germany By Henze, Philipp
  6. Working Paper - 219 - Impact of the business Environment on Output and Productivity in Africa By AfDB AfDB
  7. The Vanishing Procyclicality of Labor Productivity By Gali, Jordi; van Rens, Thijs
  8. Productivity and performance in the public sector. By Mathieu Lefebvre; Sergio Perelman; Pierre Pestieau
  9. Exporting and Plant-Level Efficiency Gains:It’s in the Measure By Alvaro Garcia-Marin; Nico Voigtländer
  10. “Differences in efficiency between Formal and Informal Micro Firms in Mexico” By Antonio Baez-Morales
  11. Measurement of Energy Efficiency Based on Economic Foundations By Massimo Filippini; Lester Hunt
  12. Industrial Scope of Agglomeration Economies in Brazil By Ana Maria Bonomi Barufi; Eduardo A. Haddad, Peter Nijkamp
  13. Women as ‘gold dust’: gender diversity in top boards and the performance of Italian banks By Silvia Del Prete; Maria Lucia Stefani
  14. How Important are ICT and R&D Investments for Value Added in the Swedish Business Sector? By Edquist, Harald; Henrekson, Magnus
  15. Inverted-U relationship between innovation and survival: Evidence from firm-level UK data By Guidi, Francesco; Solomon, Edna; Trushin, Eshref; Ugur, Mehmet
  16. PROFITABILITY ANALYSIS OF BANKS BY USING CLUSTERING METHOD: AN APPLICATION ON TURKISH BANKING SECTOR By CEREN ORAL; G. CENK AKKAYA
  17. BUSINESS MODELS AND THEIR IMPACT ON BANK PERFORMANCE: A LONG-TERM PERSPECTIVE By Frederik Mergaerts; Rudi Vander Vennet

  1. By: Ashraf, Ayesha; Herzer, Dierk; Nunnenkamp, Peter
    Abstract: We examine the effects of greenfield FDI and cross-border mergers and acquisitions (M&As) on total factor productivity (TFP) in developed and developing host countries of FDI. Using panel data for up to 123 countries over the period from 2003 to 2011, we find that greenfield FDI has no statistically significant effect on TFP while M&As have a positive effect on TFP in the total sample. Greenfield FDI and M&As both appear to be ineffective in increasing TFP in the sub-sample of developing countries. In contrast, M&As have a strong and positive effect on TFP in the sub-sample of developed countries.
    Keywords: greenfield FDI; cross-border mergers and acquisitions; total factor productivity
    JEL: F21 F23 O47
    Date: 2014–08–03
    URL: http://d.repec.org/n?u=RePEc:pra:mprapa:65060&r=eff
  2. By: Crafts, Nicholas (University of Warwick); Klein, Alexander (University of Kent)
    Abstract: We investigate the role of industrial structure in labor productivity growth in U.S. cities between 1880 and 1930 using a new dataset constructed from the Census of Manufactures. We find that increases in specialization were associated with faster productivity growth but that diversity only had positive effects on productivity performance in large cities. We interpret our results as providing strong support for the importance of Marshallian externalities. Industrial specialization increased considerably in U.S. cities in the early 20th century, probably as a result of improved transportation, and we estimate that this resulted in significant gains in labor productivity.
    Keywords: agglomeration economies ; Jacobian externalities ; manufacturing productivity ; Marshallian externalities ; industrial structure JEL Classification: N91 ; N92 ; O7 ; R32
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:cge:wacage:235&r=eff
  3. By: Sudha Narayanan (Indira Gandhi Institute of Development Research)
    Abstract: This study examines the nature of the relationship between formal agricultural credit and agricultural GDP in India, specifically the role of the former in supporting agricultural growth, using state level panel data covering the period 1995-96 to 2011-12. The study uses a mediation analysis framework to map the pathways through which institutional credit relates to agricultural GDP relying on a control function approach to tackle the problem of endogeneity. The findings from the analysis suggest that over this period, all the inputs are highly responsive to an increase in institutional credit to agriculture. A 10 increase in credit flow in nominal terms leads to an increase by 1.7 in fertilizers (N, P, K) consumption in physical quantities, 5.1 increase in the tonnes of pesticides, 10.8 increase in tractor purchases. Overall, it is quite clear that input use is sensitive to credit flow, whereas GDP of agriculture is not. Credit seems therefore to be an enabling input, but one whose effectiveness is undermined by low technical efficiency and productivity. Notwithstanding these aggregate findings detailed microstudies would be necessary to provide insights into this issue.
    Keywords: agricultural credit, growth, control function, elasticity, India
    JEL: Q10 Q14
    Date: 2015–01
    URL: http://d.repec.org/n?u=RePEc:ind:igiwpp:2015-001&r=eff
  4. By: Abbas Valadkhani; Israfil Roshdi; Russell Smyth
    Abstract: We employ a multicomponent Data Envelopment Analysis (DEA) framework to examine the interplay between economic and energy efficiency for all 29 OECD countries and then classify each country into one of four categories in terms of their relative economic and energy efficiency. In addition to using a broader set of inputs and improved measure of labour compared with prior studies, we make a methodological contribution in that we develop a new complete multi-component DEA measure for examining the efficiency performance of individual countries. Our proposed measure provides an efficiency index, not only at the country level, but also decomposes overall efficiency into economic and energy components. The G7 countries display the worst performance, in terms of CO2 and energy efficiencies. For the sample as a whole, there is a positive and marginally significant relationship between economic efficiency and energy efficiency. This finding suggests that higher economic and energy efficiencies are not necessarily incompatible goals.
    Keywords: Energy efficiency; CO2 emissions; Real GDP; Data envelopment analysis
    JEL: C61 O44 Q43 Q51
    Date: 2015–01
    URL: http://d.repec.org/n?u=RePEc:mos:moswps:2015-09&r=eff
  5. By: Henze, Philipp
    Abstract: This paper uses a long time series of German employment data to test the theory of Ngai & Pissarides (2007). The theory suggests that the shift of employment shares from manufacturing to services is due to divergent growth rates of total factor productivity (TFP) in the two sectors. To test the theoretical predictions, I use the "Establishment History Panel" together with sectoral data on total factor productivity. The results confirm the theoretical predictions, i.e. they show a negative relationship between employment growth and TFP growth.
    Keywords: Structural Change,Economic Growth,Total Factor Productivity
    JEL: L16 O14 O40 D24
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:zbw:cauewp:201503&r=eff
  6. By: AfDB AfDB
    Date: 2015–03–09
    URL: http://d.repec.org/n?u=RePEc:adb:adbwps:2159&r=eff
  7. By: Gali, Jordi (CREI, Universitat Pompeu Fabra and Barcelona GSE); van Rens, Thijs (Department of Economics University of Warwick, Centre for Macroeconomics (LSE), IZA and CEPRabstract: We document three changes in postwar US macroeconomic dynamics: (i) the procyclicality of labor productivity vanished, (ii) the relative volatility of employment rose, and (iii) the relative (and absolute) volatility of the real wage rose. We propose an explanation for all three changes that is based on a common source: the decline in labor market turnover, which reduced hiring frictions. We develop a simple model with hiring frictions, variable effort, and endogenous wage rigidities to illustrate the mechanisms underlying our explanation. We show that the decline in turnover may also have contributed to the observed decline in output volatility. JEL classification: E24 ; E32Keywords: labor hoarding ; labor market turnover ; hiring frictions ; wage rigidities ; effort choice)
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:wrk:warwec:1062&r=eff
  8. By: Mathieu Lefebvre; Sergio Perelman; Pierre Pestieau
    Abstract: In times of budgetary difficulties it is not surprising to see public sector performance questioned. What is surprising is that what is meant by performance, and how it is measured, does not seem to matter to either the critics or the advocates of the public sector. The purpose of this paper is to suggest a definition, and a way to measure the performance of the public sector or rather of its main components. Our approach is explicitly rooted in the principles of welfare and production economics. We will proceed in two stages. First of all we present what we call the "performance approach" to the public sector. This concept rests on the principal-agent relation that links a principal, i.e., the public authority, and an agent, i.e., the person in charge of the public sector unit, and on the definition of performance as the extent to which the agent fulfils the objectives assigned to him by the principal. The performance is then measured by using the notion of productive efficiency and the "best practice" frontier technique. We then move to the issue of measuring the performance of some canonical components of the public sector (railways transportation, waste collection, secondary education and health care). We survey some typical studies of efficiency and emphasize the important idea of disentangling conceptual and data problems. This raises the important question that given the available data, does it make sense to assess and measure the performance of such public sector activities? In the second stage we try to assess the performance of the overall public sector. We argue that for such a level of aggregation one should restrict the performance analysis to the outcomes and not relate it to the resources involved. As an illustration we then turn to an evaluation of the performance of the European welfare states using the DEA approach.
    Keywords: performance measure, best practice frontier, social protection.
    JEL: H50 C14 D24
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:ulp:sbbeta:2015-15&r=eff
  9. By: Alvaro Garcia-Marin; Nico Voigtländer
    Abstract: While there is strong evidence for productivity-driven selection into exporting, the empir- ical literature has struggled to identify export-related efficiency gains within plants. Previous research typically derived revenue productivity (TFPR), which is downward biased if more ef- ficient producers charge lower prices. Using a census panel of Chilean manufacturing plants, we compute plant-product level marginal cost as an efficiency measure that is not affected by output prices. For export entrants, we find within-plant efficiency gains of 15-25%. Be- cause markups remain relatively stable after export entry, most of these gains are passed on to customers in the form of lower prices, and are thus not reflected by TFPR. These results are confirmed when we use tariffs to predict the timing of export entry. We also find size- able efficiency gains for tariff-induced export expansions of existing exporters. Only half of these gains are reflected by TFPR, due to a partial rise in markups. Our results thus suggest that gains from trade are substantially larger than previously documented. Evidence suggests that a complementarity between exporting and investment in technology is an important driver behind these gains.
    Date: 2015–06
    URL: http://d.repec.org/n?u=RePEc:udc:wpaper:wp405&r=eff
  10. By: Antonio Baez-Morales (Department of Econometrics. University of Barcelona)
    Abstract: The economic role of micro firms is still the subject of much discussion and debate. While these firms can be seen as potential growth drivers, as they are usually related to entrepreneurship, a relatively high share of micro firms can also be a sign of an underdeveloped productive system, which applies especially to developing countries, where micro firms represent the majority of business activity. Unlike other studies, this research separates formal and informal micro firms in order to test whether there are efficiency differences between them, and to explain these differences. One of the novelties of the study is the use of the Oaxaca-Blinder decomposition method, which enables an analysis of the differences between both groups of firms after controlling for their different allocation of factors. Micro firms in Mexico are taken as a case study, with the Encuesta Nacional de Micronegocios (ENAMIN, or the National Micro Firm Survey), for 2008, 2010 and 2011, used to carry out the analysis. The empirical evidence suggests that output differences can be explained by endowment characteristics, while efficiency differences are explained by endowment returns. The main variables to explain the gap between the groups are the owner’s level of education, the firm’s age, the owner’s motivations, and financing.
    Keywords: informality, micro firms, efficiency, productivity, decomposition method. JEL classification: D00, D22, D24
    Date: 2015–05
    URL: http://d.repec.org/n?u=RePEc:aqr:wpaper:201510&r=eff
  11. By: Massimo Filippini (ETH Zurich, Switzerland); Lester Hunt (Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey, UK)
    Abstract: Energy efficiency policy is seen as a very important activity by almost all policy makers. In practical energy policy analysis, the typical indicator used as a proxy for energy efficiency is energy intensity. However, this simple indicator is not necessarily an accurate measure given changes in energy intensity are a function of changes in several factors as well as ‘true’ energy efficiency; hence, it is difficult to make conclusions for energy policy based upon simple energy intensity measures. Related to this, some published academic papers over the last few years have attempted to use empirical methods to measure the efficient use of energy based on the economic theory of production. However, these studies do not generally provide a systematic discussion of the theoretical basis nor the possible parametric empirical approaches that are available for estimating the level of energy efficiency. The objective of this paper, therefore, is to sketch out and explain from an economic perspective the theoretical framework as well as the empirical methods for measuring the level of energy efficiency. Additionally, in the second part of the paper, some of the empirical studies that have attempted to measure the energy efficiency using such an economics approach are summarised and discussed.
    Keywords: economic foundations of energy efficiency; energy demand; stochastic frontier analysis
    JEL: D D2 Q Q4 Q5
    Date: 2015–06
    URL: http://d.repec.org/n?u=RePEc:eth:wpswif:15-216&r=eff
  12. By: Ana Maria Bonomi Barufi; Eduardo A. Haddad, Peter Nijkamp
    Abstract: The tendency towards urbanization in the emerging world accompanied by the constant pursuit for higher productivity prompts an urge for studies aiming at understanding agglomeration economies. In the context of Brazil, a country with extremely high regional disparities, exploring this issue is important not only for private stakeholders, but also for public policy practitioners. In the framework of static agglomeration effects, we investigate the industrial scope of agglomeration economies in Brazil. On the basis of identified registration data covering the whole formal labor market in three distinct years (2004, 2008 and 2012), we estimate separate models for the logarithm of the hourly individual wage for five broad economic sectors (S1 – Manufacturing low-tech, S2 – Manufacturing medium-tech, S3 – Manufacturing high-tech, S4 – Services less-knowledge, and S5 – Services high-knowledge). Different estimation strategies are considered in a two-stage mode: with and without individual fixed effects in the first stage, and with and without instrumental variables for population density in the second stage. The main results indicate that there is not a unique optimal local industrial mix to foster productivity in different technological sectors. Comparing possible theoretical approaches (MAR, Jacobs, Porter) related to combinations of diversity, specialization and competition, we find that for S5 only diversity is significant (and positive), suggesting that a Jacobs’ perspective is rather adequate. For S1, S2 and S4, the MAR framework seems more adequate to explain the underlying patterns. In the case of S3, there are elements from both Marshall’s and Jacobs’ perspectives. These results seem to be robust to different specifications and estimation strategies. Finally, the urbanization economies coefficient appears to be positive and significant for all sectors, ranging from 0.0511 to 0.0940 in different specifications, under the simplest estimation (OLS in the first and the second stages). Ordering these effects between the sectors from the highest to the lowest, we find the following sequence: S3, S1, S5, S4 and S2. This can be considered as evidence that high-tech and low-tech manufacturing sectors benefit more from the urban or metropolitan scale in Brazil, followed by services associated with higher knowledge intensity.
    Keywords: Agglomeration economies; urban scale; productivity
    JEL: J31 R32 R23
    Date: 2015–06–10
    URL: http://d.repec.org/n?u=RePEc:spa:wpaper:2015wpecon13&r=eff
  13. By: Silvia Del Prete (Bank of Italy); Maria Lucia Stefani (Bank of Italy)
    Abstract: European comparisons for the 2000s show that Italy was among the EU countries where women were least represented in bank boardrooms. Using a unique dataset on Italian banks over the period 1995-2010, this paper investigates the effects of gender diversity in boards on bank riskiness and economic performance. Taking account of omitted variables and reverse causality problems, as a source of endogeneity, our main econometric findings suggest that gender diversity may have a positive impact on the quality of credit and, to a lesser extent, on profitability. Both results may be driven by women’s higher risk aversion and their attitude to monitoring activities. Our study therefore suggests that women are ‘gold dust’ for Italian banks and that increasing their presence may be beneficial to economic performance.
    Keywords: banking, corporate governance, gender diversity, board of directors
    JEL: G21 G34 J16
    Date: 2015–06
    URL: http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1014_15&r=eff
  14. By: Edquist, Harald (Ericsson Research); Henrekson, Magnus (Research Institute of Industrial Economics (IFN))
    Abstract: Since the mid-1990s value added has grown faster in the Swedish business sector than in the business sector of most other OECD countries. We investigate the association between ICT and R&D capital and value added in the Swedish non-farm business sector. By estimating neoclassical production function models on data for 47 different industries for the period 1993–2012 we show that ICT and R&D capital are significantly associated with value added for most specifications. When controlling for economic shocks the results show that on average, if ICT capital increases by 10 percent, value added increases by 1.8 percent. We also divide ICT capital into hardware and software capital. To our knowledge, this distinction has not been made in any previous study at the industry level. In this case only the estimated elasticity of software is significantly different from zero. One possible explanation could be that all industries invest in hardware, but only the ones that successfully invest in and implement software enjoy positive effects from ICT.
    Keywords: ICT; R&D; Industrial change; Panel data
    JEL: O14 O32 O33 O47
    Date: 2015–06–08
    URL: http://d.repec.org/n?u=RePEc:hhs:iuiwop:1073&r=eff
  15. By: Guidi, Francesco; Solomon, Edna; Trushin, Eshref; Ugur, Mehmet
    Abstract: Theoretical and empirical work on innovation and firm survival has produced varied and often conflicting findings. In this paper, we draw on Schumpeterian models of competition and innovation and stochastic models of firm dynamics to demonstrate that the conflicting findings may be due to linear specifications of the innovation-survival relationship. We demonstrate that a quadratic specification is appropriate theoretically and fits the data well. Our findings from an unbalanced panel of 39,705 UK firms from 1997-2012 indicate that an inverted-U relationship holds for different types of R&D expenditures and sources of funding. We also report that R&D intensity is more likely to increase survival when firms are in more concentrated industries and in Pavitt technology classes consisting of specialized suppliers of technology and scale-intensive industries. Finally, we report that the effects of firm and industry characteristics as well as macroeconomic environment indicators are all consistent with prior findings. The results are robust to step-wise modeling, controlling for left truncation and use of lagged values to address potential simultaneity bias.
    Keywords: innovation,R&D,firm dynamics,survival anaysis
    JEL: C41 D21 D22 L1 O3
    Date: 2015–06–15
    URL: http://d.repec.org/n?u=RePEc:zbw:esprep:110896&r=eff
  16. By: CEREN ORAL (MU); G. CENK AKKAYA (DOKUZ EYLÜL UNIVERSITY, FACULTY OF ECONOMICS AND ADMINISTRATIVE SCIENCES, DEPARTMENT OF BUSINESS ADMINISTRATION)
    Abstract: Clustering analysis is currently one of the most popular and advanced mathematical grouping methods both in finance and other existing sciences. The purpose of cluster analysis is to determine the units similar to each other in terms of their characteristics studied, and to define their clustering structures. The banking sector is the most important partner of organizations and countries against developing world economy and fluctuations in global competitive environment. The importance of profitability is clear for banks so in this study we want to cluster banks in Istanbul Stock Exchange based on profitability. There are three public banks, eleven private banks and twelve foreign banks in Turkey. This study aims to cluster 26 banks, listed in the Istanbul Stock Exchange by using profitability ratios. Four profitability ratios employed in the clustering were obtained through the end of the financial statements of the banks. The financial statements are taken from the internet sites of the Banks Association of Turkey. The average of the values of the profitability ratios belonging to the years 2003-2013 were used as the data of the analysis. As a result of the k-cluster analysis, the first, second and third clusters consist of 11, 2, 11 banks respectively. We have found the most similar banks and the less similar banks in our data set and also it is concluded that banks have formed a homegenous structure with the banks except existing groups (public, private and foreign).
    Keywords: banks, profitability, clustering analysis
    JEL: G00
    URL: http://d.repec.org/n?u=RePEc:sek:iacpro:2503730&r=eff
  17. By: Frederik Mergaerts; Rudi Vander Vennet (-)
    Abstract: This paper examines the effects of bank business models on performance and risk for a sample of more than 500 banks from 30 European countries over the period from 1998 to 2013. Since we analyze strategic or business model choices, our methodology is designed to identify the long-run effects and separates these from short-run time effects. Our findings confirm that business model characteristics are important deter- minants of performance, but that no specific bank type outperforms in all dimensions. We find that deposit funding, high asset quality, income diversification and capital adequacy positively affect performance, while size and the asset composition have a more ambiguous impact. We also report substantial variation of business model effects over different bank types. Our results lend support to the new capital and funding rules proposed in the Basel III framework, but we also argue that business model con- siderations should be more fundamentally integrated in the post-crisis regulatory and supervisory practice.
    Keywords: Banks, business model, bank performance, risk-taking, profitability
    JEL: G20 G21 G28
    Date: 2015–06
    URL: http://d.repec.org/n?u=RePEc:rug:rugwps:15/908&r=eff

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