nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒09‒05
twenty papers chosen by

  1. ​ Intangible Investment and Technical Efficiency: The Case of Software-Intensive Manufacturing Firms in Turkey By Derya Findik; Aysit Tansel
  2. Determining drivers of eco-efficiency: decomposition method By Eduard Nezinsky
  3. Agricultural Productivity Growth in the United States: Measurement, Trends, and Drivers By Wang, Sun Ling; Heisey, Paul; Schimmelpfennig, David; Ball, Eldon
  4. Robust non-parametric estimation of cost efficiency with an application to banking industry By Galina Besstremyannaya; Jaak Simm
  5. Capital Allocation and Productivity in South Europe By Gita Gopinath; Sebnem Kalemli-Ozcan; Loukas Karabarbounis; Carolina Villegas-Sanchez
  6. Former Foreign Affiliates: Cast Out and Outperformed? By Beata Smarzynska Javorcik; Steven Poelhekke
  7. Did the Financial Crisis Affect Environmental Efficiency? Evidence from the Japanese Manufacturing Sector By Fujii, Hidemichi; Assaf, A. George; Managi, Shunsuke; Matousek, Roman
  8. Business practices in small firms in developing countries By Mckenzie,David J.; Woodruff,Christopher M.
  9. Family business: management effort and firm performance By Oriana Bandiera; Andrea Prat; Raffaella Sadun
  10. The Turnaround of Swedish Industry: Reforms, Firm Diversity and Job and Productivity Dynamics By Heyman, Fredrik; Norbäck, Pehr-Johan; Persson, Lars
  11. Labour Elasticity in V4 countries: Structural decomposition analysis By Martin Lábaj; Karol Morvay; Martin Hudcovský
  12. Time Efficiency at World Container Ports By César Ducruet; Hidekazu Itoh; Olaf Merk
  13. Productivity and technical change according to Salter – A note By Amavilah, Voxi Heinrich
  14. Development Accounting and International Trade By Hirokazu Ishise
  15. Testing the "Separability" Condition in Two-Stage Nonparametric Models of Production By Cinzia Daraio; Leopold Simar; Paul W. Wilson
  16. Structural policies and productivity: Evidence from Portuguese firms By Jens Arnold; Natália Barbosa
  17. Cost-Effectiveness of Greenhouse Gas Mitigation Measures for Agriculture: A Literature Review By Michael MacLeod; Vera Eory; Guillaume Gruère; Jussi Lankoski
  18. Eco-efficiency and convergence By Eduard Nezinsky
  19. Bank Ownership Structure, SME Lending and Local Credit Markets By Hasan, Iftekhar; Jackowicz, Krzysztof; Kowalewski, Oskar; Kozlowski, Lukasz
  20. The Complementary Use of Experiments and Field Data to Evaluate Management Practices: The Case of Subjective Performance Evaluations By Kampkötter, Patrick; Sliwka, Dirk

  1. By: Derya Findik (Science and Technology Policy Studies Program, Middle East Technical University 06800 Ankara, Turkey); Aysit Tansel (Cornell University, Ithaca, USA & Middle East Technical University, Ankara, Turkey)
    Abstract: This chapter analyzes the effect of intangible investment on firm efficiency with an emphasis on its software component. Stochastic production frontier approach is used to simultaneously estimate the production function and the determinants of technical efficiency in the software intensive manufacturing firms in Turkey for the period 2003-2007. Firms are classified based on the technology group. High technology and low technology firms are estimated separately in order to reveal differentials in their firm efficiency. The results show that the effect of software investment on firm efficiency is larger in high technology firms which operate in areas such as chemicals, electricity, and machinery as compared to that of the low technology firms which operate in areas such as textiles, food, paper, and unclassified manufacturing. Further, among the high technology firms, the effect of the software investment is smaller than the effect of research and development personnel expenditure. This result shows that the presence of R&D personnel is more important than the software investment for software intensive manufacturing firms in Turkey.
    Date: 2015
  2. By: Eduard Nezinsky (University of Economics in Bratislava, Faculty of National Economy, Department of Economic Policy)
    Abstract: There has been a lively discussion about measures of social welfare beyond GDP induced by Stiglitz Report (Stiglitz et al, 2009) which can be viewed as a summation of the earlier efforts to deal with those challenges. Environmental indicators constitute one important dimension to be taken into account in assessing the welfare along with the economic and social indicators. Employing non-parametrical approach, the Data Envelopment Analysis SBM model is extended for environment to measure the so called eco-efficiency. Resulting scores and benchmarks are used to decompose eco-productivity into factors attributable to changes in efficiency, technology, extensive factors of production, and emissions. Results suggest that in European countries in the span 2000 – 2010, an environment-saving rather than input-saving technology change has been taking place.
    Keywords: eco-efficiency, data envelopment analysis, beyond GDP, decomposition
    JEL: C43 C61 O47
    Date: 2014–12–23
  3. By: Wang, Sun Ling; Heisey, Paul; Schimmelpfennig, David; Ball, Eldon
    Abstract: U.S. agricultural output more than doubled between 1948 and 2011, with growth averaging 1.49 percent per year. With little growth in total measured use of agricultural inputs, the extraordinary performance of the U.S. farm sector was driven mainly by increases in total factor productivity (TFP—measured as output per unit of aggregate input). Over the last six decades, the mix of agricultural inputs used shifted significantly, with increased use of intermediate goods (e.g., fertilizer and pesticides) and less use of labor and land. The output mix changed as well, with crop production growing faster than livestock production. Based on econometric analysis of updated (1948-2011) TFP data, this study finds no statistical evidence that longrun U.S. agricultural productivity has slowed over time. Model-based projections show that in the future, slow growth in research and development investments may have only minor effects on TFP growth over the next 10 years but will slow TFP growth much more over the long term.
    Keywords: U.S. agriculture, total factor productivity, TFP, labor productivity, land productivity, productivity slowdown, public R&D, private R&D, extension, infrastructure, public research., Agricultural and Food Policy, Labor and Human Capital, Production Economics, Productivity Analysis, Teaching/Communication/Extension/Profession,
    Date: 2015–07
  4. By: Galina Besstremyannaya (CEFIR at New Economic School); Jaak Simm (University of Leuven)
    Abstract: The paper modifies the methodology of Simar and Wilson 2007 [J Econometrics 136] and 1998 [Manage Sci 44] to propose a new algorithm for robust estimation of cost efficiency in data envelopment analysis in terms of bias correction and estimating returns to scale. Simulation analyses with multi-input multi-output Cobb-Douglas production function with correlated outputs, and correlated technical and cost efficiency demonstrate consistency of the new algorithm both in absence and presence of environmental variables. Finally, we offer real data estimates for Japanese banking industry. An R package `rDea', developed for computations, is available from GitHub and CRAN repositary.
    Keywords: data envelopment analysis, cost efficiency, bias correction, bootstrap
    JEL: C44 C61
    Date: 2015–08
  5. By: Gita Gopinath; Sebnem Kalemli-Ozcan; Loukas Karabarbounis; Carolina Villegas-Sanchez
    Abstract: Following the introduction of the euro in 1999, countries in the South experienced large capital inflows and low productivity. We use data for manufacturing firms in Spain to document a significant increase in the dispersion of the return to capital across firms, a stable dispersion of the return to labor across firms, and a significant increase in productivity losses from misallocation over time. We develop a model of heterogeneous firms facing financial frictions and investment adjustment costs. The model generates cross-sectional and time-series patterns in size, productivity, capital returns, investment, and debt consistent with those observed in production and balance sheet data. We illustrate how the decline in the real interest rate, often attributed to the euro convergence process, leads to a decline in sectoral total factor productivity as capital inflows are misallocated toward firms that have higher net worth but are not necessarily more productive. We conclude by showing that similar trends in dispersion and productivity losses are observed in Italy and Portugal but not in Germany, France, and Norway.
    JEL: D24 E22 F41 O16 O47
    Date: 2015–08
  6. By: Beata Smarzynska Javorcik; Steven Poelhekke
    Abstract: The literature has documented a positive effect of foreign ownership on firm performance. But is this effect due to a one-time knowledge transfer or does it rely on continuous injections of knowledge? To shed light on this question we focus on divestments, that is, foreign affiliates that are sold to local owners. To establish a causal effect of the ownership change we combine a difference-in-differences approach with propensity score matching. We use plant-level panel data from the Indonesian Census of Manufacturing covering the period 1990-2009. We consider 157 cases of divestment, where a large set of plant characteristics is available two years before and three years after the ownership change and for which observationally similar control plants exist. The results indicate that divestment is associated with a drop in total factor productivity accompanied by a decline in output, markups as well as export and import intensity. The findings are consistent with the benefits of foreign ownership being driven by continuous supply of headquarter services from the foreign parent.
    Keywords: divestment, foreign direct investment, Indonesia and productivity
    JEL: F23
    Date: 2014
  7. By: Fujii, Hidemichi; Assaf, A. George; Managi, Shunsuke; Matousek, Roman
    Abstract: This study examined the impact of the financial crisis on the environmental and technical efficiencies of the Japanese manufacturing industry. Overall, we found that while the crisis had a negative impact on technical efficiency it did not affect environmental efficiency- the only exception was the transportation equipment sector which improved its environmental efficiency following the crisis. Additionally, we found that capital intensity does not necessarily affect environmental efficiency. We discuss the implications of these findings and provide directions for future research.
    Keywords: Environmental Efficiency; Technical Efficiency, Financial Crisis; Bayesian Stochastic Frontier
    JEL: G01 O47 Q54 Q57
    Date: 2015–08–31
  8. By: Mckenzie,David J.; Woodruff,Christopher M.
    Abstract: Management has a large effect on the productivity of large firms. But does management matter in micro and small firms, where the majority of the labor force in developing countries works? This study developed 26 questions that measure business practices in marketing, stock-keeping, record-keeping, and financial planning. These questions have been administered in surveys in Bangladesh, Chile, Ghana, Kenya, Mexico, Nigeria, and Sri Lanka. This paper shows that variation in business practices explains as much of the variation in outcomes ? sales, profits, and labor productivity and total factor productivity ? in microenterprises as in larger enterprises. Panel data from three countries indicate that better business practices predict higher survival rates and faster sales growth. The effect of business practices is robust to including many measures of the owner?s human capital. The analysis finds that owners with higher human capital, children of entrepreneurs, and firms with employees employ better business practices. Competition has less robust effects.
    Keywords: E-Business,Business Environment,Competitiveness and Competition Policy,Emerging Markets,Business in Development
    Date: 2015–08–27
  9. By: Oriana Bandiera; Andrea Prat; Raffaella Sadun
    Abstract: Might familyowned, familyrun firms be a serious obstacle to productivity growth in Europe? Oriana Bandiera, Andrea Prat and Raffaella Sadun have collected time use data on over 1,000 chief executive officers to explore differences in the hours worked by family and professional managers - and the impact on their firms' performance.
    Keywords: CEO, Time, Family firms, Competition, Productivity
    JEL: M12 L2 D24
    Date: 2015–07
  10. By: Heyman, Fredrik (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: In this paper, we argue that fundamental reforms of the Swedish business sector can explain the remarkable productivity and employment growth that followed the deep economic crisis in Sweden in the early 1990s. In the 1970s and 1980s, Sweden had one of the most regulated business sectors in the developed world. In the 1990s, however, Sweden reformed its labour market, product market, and corporate tax system as well as removed barriers to foreign direct investment (FDI). Our main finding from our institutional and theoretical examination is that the removal of barriers to entry and growth for new and productive firms and the increased rewards for investments in human capital and effort in workplaces were crucial to the success of these reforms. We find support for our thesis using detailed matched plant-firm-worker data. In particular, we observe increased allocative efficiency, measured as increased market share for more productive firms. Moreover, we show that foreign firms substantially contributed to productivity and employment growth during this period, which suggests that the liberalization of FDI was an important factor in the success of the reforms. Finally, we discuss how other countries can benefit from the Swedish experience by examining factors that appear to be specific to Sweden and others that can be generalized to other countries.
    Keywords: Regulations; Allocative efficiency; Productivity; Job dynamics; Matched employer-employee data; Industrial structure and structural change
    JEL: D22 E23 J21 J23 K23 L11 L16 L51
    Date: 2015–09–01
  11. By: Martin Lábaj (University of Economics in Bratislava, Faculty of National Economy, Department of Economic Policy); Karol Morvay; Martin Hudcovský
    Abstract: In the present paper, we analyse determinants of labour elasticity in V4 countries. While the standard approach relies on the parametric estimation of labour elasticity coefficients, we employ a novel approach based on structural decomposition analysis. This allows us to identify several determinants that mitigate the effects of economic growth on employment. We decompose the overall change in employment into the contribution of six factors: changes in labour productivity, changes in import of intermediate products, changes in the structure of production, changes in the final demand structure by industries and by sectors, and a change in final demand volume. We show that besides generally accepted influence of labour productivity growth on employment other factors such as structural changes and changes in final demand played an important role in employment changes. These results shed some light on low labour elasticity in V4 countries that goes beyond the simple labour productivity growth argument.
    Keywords: structural decomposition analysis, labour elasticity, V4 countries, input-output analysis
    JEL: C67 J21
    Date: 2015–08–27
  12. By: César Ducruet; Hidekazu Itoh; Olaf Merk
    Abstract: The ability of ports to ensure efficient cargo transfers is one central dimension of their overall function as transport nodes. Before containerization, such as in the late nineteenth century, large seaports were already competing in their attempt providing fast transit between sea and land, in a context of growing global trades (Marnot, 2012). Such aspects are even more crucial nowadays when the port can be considered as only one element of value-driven supply chains (Robinson, 2002) or as a set of independent terminals operated by global actors (Olivier and Slack, 2006). While port efficiency as a whole may be understood from various perspectives, its influence on trade facilitation (Clark et al., 2004) and regional development (Haddad et al., 2010) has been well underlined. Ways to measure port efficiency and performance are very diverse, but the time factor has been so far largely left aside, especially in international comparative studies of ports. More frequent are case studies of specific aspects such as fast-ship services (De Langen, 1999), broader approaches such as the global synchronization of transport terminals in a context of space/time collapse (Rodrigue, 1999), or operations research about queuing models of vessels in relation to port entrance channels and berth allocation and productivity.
    Date: 2014–08
  13. By: Amavilah, Voxi Heinrich
    Abstract: Salter’s simple and clear explanation of productivity and how it relates to technical change has anchored many elaborate and fancy growth and change analyses. Unfortunately many of these elaborations do not even reference Salter. They should. This note shows that some old ideas are like wine which gets better with age.
    Keywords: Salter and productivity; Salter and technical change; productivity and technical change
    JEL: O3 O4
    Date: 2015–07–15
  14. By: Hirokazu Ishise
    Abstract: Development accounting shows that a significant part of cross-country income differences is attributed to differences in total factor productivity (TFP), but the sources of TFP differences are not well understood. This paper considers the role of international trade to explain cross-country income differences in TFP. By using a multi-country Ricardian trade model, I distinguish trade costs and trade policy factors from a pure technology factor in TFP. Under the baseline parameterization, my model shows that conventional TFP measures overestimate fundamental productivity differences by 30%. I then show that trade costs significantly influence welfare: small European countries enjoy 10-15% higher welfare through their proximity to larger and more productive neighboring countries, while Oceanian and countries in southern Africa suffer from 10-20% lower welfare due to their remoteness. Trade policy also has impacts: tariffs decrease welfare by 1-10%, while free-trade agreements increase welfare by 1-5%. These gains from trade are considerably smaller if general equilibrium effects are not considered.
    Date: 2015–08
  15. By: Cinzia Daraio (Department of Computer, Control and Management Engineering Antonio Ruberti (DIAG), University of Rome La Sapienza, Rome, Italy); Leopold Simar (Institut de Statistique, Biostatistique et Sciences Actuarielles, Universite' Catholique de Louvain, Louvain-la-Neuve, Belgium); Paul W. Wilson (Department of Economics and School of Computing, Clemson University, Clemson, SC 29634)
    Abstract: Simar and Wilson (J. Econometrics, 2007) provided a statistical model that can rationalize two-stage estimation of technical efficiency in nonparametric settings. Two-stage estimation has been widely used, but requires a strong assumption: the second-stage environmental variables cannotaffect the support of the input and output variables in the first stage. In this paper, we provide a fully nonparametric test of this assumption. The test relies on new central limit theorem (CLT) results for unconditional efficiency estimators developed by Kneip et al. (Econometric Theory, 2015a) and new CLTs for conditional efficiency estimators developed in this paper. The test can be implemented relying on either asymptotic normality of the test statistics or using bootstrap methods to obtain critical values. Our simulation results indicate that our tests perform well both in terms of size and power. We present a real-world empirical example by updating the analysis performed by Aly et al. (R. E. Stat., 1990) on U.S. commercial banks; our tests easily reject the assumption required for two-stage estimation, calling into question results that appear in hundreds of papers that have been published in recent years.
    Keywords: technical efficiency ; conditional efficiency ; two-stage estimation ; bootstrap ; separability ; data envelopment analysis (DEA) ; free-disposal hull (FDH).
    Date: 2015
  16. By: Jens Arnold; Natália Barbosa
    Abstract: This paper provides empirical evidence on links between the productivity of Portuguese firms and a number of policy variables in Portugal. The analysis is based on a census of Portuguese manufacturing companies, covering more than 40,000 firms between 2006 and 2011. The results suggest that a number of these variables matter for firm performance, including the number of procedures required to start a business, a more extensive coverage of collective wage bargaining agreements, the tax burden, tax compliance costs and the number of procedures required to enforce a contract.<P>Politiques structurelles et productivité : Résultats empiriques du Portugal<BR>Ce document présente des résultats empiriques sur la productivité des entreprises au Portugal et une série de variables de politiques. L’analyse est basée sur plus de 40 000 entreprises Portugaises entre 2006 et 2011. Les résultats suggèrent une influence significative de ces politiques sur la productivité des entreprises, notamment pour le nombre de procédures requises pour créer une entreprise, l’extension administrative des accords de négociations salariales, les impôts et leur complexité ainsi que le nombre de procédures requises pour exécuter un contrat.
    Keywords: total factor productivity, structural policies, firm-level analysis
    Date: 2015–08–21
  17. By: Michael MacLeod; Vera Eory; Guillaume Gruère; Jussi Lankoski
    Abstract: This paper reviews the international literature on the cost-effectiveness of supply-side mitigation measures that can reduce the emissions intensity of agriculture while maintaining or increasing production. Sixty-five recent international studies of cost-effectiveness covering 181 individual activities are reviewed. Nine case studies of well covered mitigation measures, generally using a cost-engineering approach, illustrate significant differences in the cost-effectiveness of measures across countries and studies, in part due to contextual differences. Although caution needs to be exercised in comparing heterogeneous studies, the results suggest that measures based on fertiliser use efficiency, cattle breeding, and potentially improving energy efficiency in mobile machinery, are often considered highly cost-effective mitigation measures across countries. A preliminary overview of policy highlights the existence of a range of options to encourage the adoption of cost-effective measures, from information to incentive-based policies. Further analysis is needed to address remaining estimation challenges and to help determine how mitigation measures may be embedded into broader climate, agricultural and environmental policy frameworks.
    Keywords: climate change, greenhouse gas mitigation, agricultural, cost-effectiveness, agriculture
    JEL: Q16 Q52 Q54 Q58
    Date: 2015–08
  18. By: Eduard Nezinsky (University of Economics in Bratislava, Faculty of National Economy, Department of Economic Policy)
    Abstract: In pursuit of welfare, environmental issues constitute one important dimension to be taken into account in assessing the welfare along with the economic and social indicators. There has been a lively discussion about measures of social welfare beyond GDP articulated by Stiglitz Report (Stiglitz et al, 2009) which can be viewed as a summation of the earlier efforts to deal with those challenges. This study concentrates on environmental aspects of economic growth in European countries and the changes undergone in the period of 2000 – 2010. Time series of obtained eco-efficiency scores from SBM models were used to infer on the ?- and ß-convergence analysed in line with the classical econometric approach. Results suggest that except of the post crisis disruption a process of convergence with respect to eco-efficiency has been taking place in European countries.
    Keywords: eco-efficiency, data envelopment analysis, convergence
    JEL: C43 C61 O47
    Date: 2014–12–27
  19. By: Hasan, Iftekhar (Fordham University and Bank of Finland); Jackowicz, Krzysztof (Kozminski University); Kowalewski, Oskar (Institute of Economics, Polish Academy of Sciences); Kozlowski, Lukasz (Bank BGZ BNP Paribas SA)
    Abstract: In this paper, by employing a novel approach, we study the relationship between bank type and small-business lending in a post-transition country. Using a unique dataset on bank branches and firm-level data, we find that local cooperative banks lend more to small businesses than do large domestic banks and foreign-owned banks, even when controlling for the financial situation of the cooperative banks. Additionally, our results suggest that cooperative banks provide loans to small businesses at lower costs than foreign-owned banks or large domestic banks. Finally, we show that small and medium-sized firms perform better in counties with a large number of cooperative banks than in counties dominated by foreignowned banks or large domestic banks. Our results are important from a policy perspective, as they show that foreign bank entry and industry consolidation may raise valid concerns for small firms in developing countries.
    JEL: G21 G28
    Date: 2014–08
  20. By: Kampkötter, Patrick (University of Cologne); Sliwka, Dirk (University of Cologne)
    Abstract: Most firms rely on subjective evaluations by supervisors to assess their employees' performance. This article discusses the implementation of such appraisal processes, exploring the use of multiple research methods such as the analysis of personnel records, survey data, and lab and field experiments to study them in detail. We argue that the complementary use of these methods helps to build a better understanding of how subjective evaluations are conducted and appraisal systems should be designed.
    Keywords: subjective performance evaluation, performance appraisals, management practices, experiments, field data, LPP
    JEL: D22 J33 M12 M52
    Date: 2015–08

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