nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2015‒11‒01
25 papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. Public subsidies, TFP and Efficiency: a tale of complex relationships By Guido Pellegrini; Cristina Bernini; Augusto Cerqua
  2. Radar scanning the world production frontier By Krüger, Jens J.
  3. Looking beyond the R&D effects on innovation: The contribution of non-R&D activities to total factor productivity growth in the EU_x0003_ By jesus lopez-rodriguez; Diego Martinez
  4. Impact of Agricultural innovation on improved livelihood and productivity outcomes among smallholder farmers in Rural Nigeria By Ogunniyi Adebayo; Kehinde Olagunju
  5. Impact of Information Technology investments on firm productivity in peripherals countries: The case of Portugal By António Guerreiro; Gertrudes Guerreiro
  6. Impact of diversification on technical efficiency of organic farming in Switzerland, Austria and Southern Germany By Lakner, Sebastian; Kirchweger, Stefan; Hoop, Daniel; Brümmer, Bernhard; Kantelhardt, Jochen
  7. How large are productivity differences between Islamic and Conventional Banks? By Wahida Ahmad; David Prentice
  8. Relationship between Telecommunications Investment and Total Factor Productivity By Chuhwan Park
  9. Highways and productivity: a firm level study of Spanish manufacturing By Adelheid Holl
  10. Regulations and productivity: long run effects and non linear influences By Papaioannou, Sotiris
  11. Determining the efficiency of faculties in North West University Using Data Envelopment Analysis By Kolentino Mpeta; Jabulani Monchwe
  12. Estimating and explaining changes in potential growth in South Africa By Johannes Kemp; Ben Smit
  13. Measuring allocative efficiency in cultural economics: The case of Fundacion Princesa de Asturias By Victor Fernandez-Blanco; Ana Rodriguez-Alvarez
  14. Essays on the electricity sector in developing countries By Daniel Camos-Daurella
  15. Firm Productivity Growth and Skill By David C Maré; Dean R Hyslop; Richard Fabling
  16. The effects of knowledge and innovation on regional growth: Nonparametric evidence By Marcos Sanso-Navarro; Maria Vera-Cabello
  17. Relative Prices and Sectoral Productivity By Diego Restuccia; Margarida Duarte
  18. R&D efficiency of Mexican regions ? an output DEA approach- By Igone Porto Gomez; Jose Ramón Otegi; José Ricardo Lopez Robles
  19. Estimating the Enduring Effects of Fertilizer Subsidies on Commercial Fertilizer Demand and Maize Production: Panel Data Evidence from Malawi By Ricker-Gilbert, Jacob; Jayne, T.S.
  20. An empirical example of spatial process of productivity growth in NUTS 2 regions By Alicja Olejnik; Jakub Olejnik
  21. Why Subsidize Fertilizer if Subsidizing Water is More Effective? By Wouter Zant
  22. Firm Performance in the Periphery: On the Relation between Firm-Internal Knowledge and Local Knowledge Spillovers By Grillitsch, Markus; Nilsson, Magnus
  23. Quantifying the Effects of Patent Protection on Innovation, Imitation, Growth, and Aggregate Productivity By Pedro Bento
  24. Counterfactual Impact Evaluation of Enterprise Support Programmes. Evidence from a Decade of Subsidies to Italian Firm By Federico Biagi; Daniele Bondonio; Alberto Martini
  25. Estimating agglomeration economies in Spain: evidence from geographically disaggregated data By Alberto Díaz Dapena; Esteban Fernández Vázquez; Fernando Rubiera Morollón

  1. By: Guido Pellegrini; Cristina Bernini; Augusto Cerqua
    Abstract: The paper analyses the causal effect of capital subsidies on firms? efficiency and productivity by exploiting the conditions for a local random experiment created by Law 488/92 (henceforth L488), which has been an important policy instrument for reducing territorial disparities in Italy. The presence of sharp discontinuities in the L488 rankings used for allocating subsidies to projects allows us to use a regression discontinuity design (henceforth RDD). We show that a suitable decomposition of TFP can be applied to a large sample of subsidized firms for a relevant period of time, allowing to evaluate either the roles of technical progress and technical efficiency change, or scale and allocative efficiency change as determinants of granted firms? long-term growth. The stochastic frontier model used in this study assumes that technical inefficiency evolves over time, enabling to decompose productivity changes into the change in technical efficiency (i.e., measuring the movement of an economy towards, or away from, the production frontier), and technical progress (measuring shifts of the frontier over time). Moreover, because a flexible technology is used, the SFA allows to evaluate the presence of scale efficiency, as well as the additional measurement of changes in allocative efficiency (i.e., the Bauer-Kumbhakar decomposition; Bauer, 1990; Kumbhakar, 2000; Kumbhakar and Lovell, 2000; Brummer et al., 2002). Unlike the previous literature, we estimate the effects of the subsidies after 5 years from the subsidized investment. The results show that , after four years, the impact of public subsidies on TFP and efficiency is positive and statistically significant.
    Keywords: public subsidies; policy evaluation; regional policy; RDD; TFP
    JEL: R38 C14 H71
    Date: 2015–10
  2. By: Krüger, Jens J.
    Abstract: In this paper we report the results from a detailed investigation of the shifts of the world production frontier function over the period 1980-2010. Analogous to a radar we implement a novel measurement approach for these shifts using nonparametrically computed productivity measures to scan the frontier shifts across the entire input-output space. The shifts of the frontier function measured in this way are analyzed by various regression methods (including robust and nonparametric). The results point towards substantial non-neutrality of technological progress and furthermore show that technological progress is more pronounced in regions of high output per worker and in regions where physical and human capital are intensely used.
    Keywords: non-neutral technological change,world production frontier,nonparametric frontier function
    JEL: C14 E23 O11 O47
    Date: 2015
  3. By: jesus lopez-rodriguez; Diego Martinez
    Abstract: Although non-R&D innovation activities account for a significant portion of innovation efforts carried out across very heterogeneous economies in Europe, how to incorporate them in to economic models is not always straightforward. For instance, the traditional macro approach to estimating the determinants of total factor productivity (TFP) does not handle them well. To counter these problems, this paper proposes applying an augmented macro-theoretical model to estimate the determinants of TFP by jointly considering the effects of R&D and the impact of non-R&D innova- tion activities on the productivity levels of ?firms. Estimations from a model of a sample of EU-26 countries covering the period 2004-2008 show that the distinction between R&D and non-R&D e¤ects is significant for a number of diffffrent issues. First, the results show a sizable impact on TFP growth, as the impact of R&D is twice that of non-R&D. Second, absorptive capacity is only linked to R&D endowments. And third, the two types of endowments cannot strictly been seen as complementary, at least for the case of countries with high R&D intensities or high non-R&D intensities.
    Keywords: TFP; R&D; non-R&D expenditures; EU countries.
    JEL: O0 O3 O4
    Date: 2015–10
  4. By: Ogunniyi Adebayo (Department of Agricultural Economics, University of Ibadan, Nigeria); Kehinde Olagunju (Szent Istvan University, Institute of Regional Economics and Rural Development, Gödöllő, Hungary)
    Abstract: Agricultural research programs that are driven by Agricultural Innovation System concepts usually target to change the way in which low income rural agrarian households in a nation like Nigeria communicate with the market and the decision making strategies pertaining to development of their agri-business and the scarce resources which are at their disposal. As a result there has been a shift in the research paradigm in many African countries like Nigeria; from top down research systems to nonlinear dynamic systems that aim to enhance end users capacity to obtain and utilize knowledge and research outputs. The aim of this paper was therefore to assess the extent to which the use of these innovative agricultural research interventions impact upon the livelihood and productivity outcomes of rural smallholder farmers in Nigeria using a case study from the South west region of Nigeria. Using propensity score matching as a means of establishing a valid counterfactual and single differencing to measure impact, the study establishes that rural incomes and output are significantly impacted upon by agricultural research interventions that are driven by agricultural innovation systems concepts. The study however further finds that although participating households had better livelihood and productivity outcomes and more diversified income portfolios during the implementation of the innovative research intervention as a result of greater linkages to markets and capacity building opportunities; phasing out of the research program reduced the diversity of income portfolios and lead to the erosion of livelihoods. The study therefore concluded that agricultural research interventions that are driven by agricultural innovation system concepts have the potential to positively impact upon the livelihood outcomes of rural smallholder farmers in Nigeria however there is need for greater capacity building of local extension agents and increased budgetary support to ensure understanding and application of agricultural innovation system concepts by local level public agricultural extension agents to sustain positive livelihood and productivity outcomes. In addition agricultural innovation system concepts should be mainstreamed in all public agricultural extension and research programs to ensure sustained rural innovation and robust livelihood and improved productivity outcomes.
    Keywords: Agricultural Innovation Systems, Livelihoods, Productivity, Smallholder‟s farmers
    Date: 2015–09
  5. By: António Guerreiro; Gertrudes Guerreiro
    Abstract: IS/IT investments are seen has having an enormous potential impact on the competitive position of the firm, on its performance, and demand an active and motivated participation of several stakeholder groups. The shortfall of evidence concerning the productivity of IT became known as the ?productivity paradox?. As Robert Solow, the Nobel laureate economist stated ?we see computers everywhere except in the productivity statistics?. An important stream of research conducted all over the world has tried to understand these phenomena, called in the literature as «IS business value» field. However there is a gap in the literature, addressing the Portuguese situation. No empirical work has been done to date in order to understand the impact of Information Technology adoption on the productivity of those firms. Using data from two surveys conducted by the Portuguese National Institute of Statistics (INE), Inquiry to the use of IT by Portuguese companies (IUTIC) and the Inquiry Harmonized to (Portuguese) companies (accounting data), this study relates (using regression analysis) the amounts spent on IT with the financial performance indicator Returns on Equity, as a proxy of firm productivity, of Portuguese companies with more than 250 employees. The aim of this paper is to shed light on the Portuguese situation concerning the impact of IS/IT on the productivity of Portuguese top companies. Empirically, we test the impact of IIT expenditure on firm productivity of a sample of Portuguese large companies. Our results, based on firm-level data on Information Technology expenditure and firm productivity as measured by return on equity (1186 observations) for the years of 2003 and 2004, exhibit a negative impact of IT expenditure on firm productivity, in line with ?productivity paradox? claimants.
    Keywords: Information Technology investments; Firm Productivity; Return on Equity
    JEL: M10 M15 M20 O30
    Date: 2015–10
  6. By: Lakner, Sebastian; Kirchweger, Stefan; Hoop, Daniel; Brümmer, Bernhard; Kantelhardt, Jochen
    Abstract: The paper investigates the impact of subsidies and of para-agriculture on the technical efficiency of organic farms in Switzerland, Austria and Southern Germany. The data-set consists of bookkeeping data with 1,704 observations in the years 2003 to 2005. Technical efficiency is modelled using a stochastic distance-frontier model combined with a Metafrontier-model. The results show almost no efficiency differences among the farms in the three countries. Para-agriculture shows a strong impact on farm's efficiency and output in Austria and Switzerland, whereas in Germany the effect is rather small. The study confirms that agricultural subsidies have a direct impact on farm's efficiency.
    Keywords: Technical Efficiency,Organic Farming,Grassland Farming,Para-Agriculture
    JEL: Q12 Q18 D24 C54
    Date: 2015
  7. By: Wahida Ahmad; David Prentice
    Abstract: Despite the enormous growth in Islamic banking over the last thirty years, most studies, using DEA/stochastic frontier analysis, have found Islamic banks are either as productive or less productive than conventional banks. We take advantage of recent improvements in the direct estimation of production functions by Olley-Pakes and Ackerberg-Caves-Frazer (ACF) to develop fresh evidence on this question. Production functions are estimated and productivity calculated for conventional and Islamic banks in Bahrain and Malaysia between 1990 and 2011. We find that although in many respects the different techniques yield similar results, the ACF results are more plausible. Islamic banks in both countries tend to be around 50% as effcient as conventional banks though productivity growth is faster for Islamic banks. However, in Malaysia, a new set of banks, which we refer to as mixed banks, offering both conventional and Islamic banking, outperform conventional and Islamic banks in levels and growth. In Malaysia, at least, this new institution seems a promising way to meet the increasing demand for Islamic banking services.
    Date: 2015
  8. By: Chuhwan Park (Yeungnam University in Korea)
    Abstract: This study examines diverse production functions and total factor productivity (TFP) levels of 29 OECD countries by using regional data for the 2003-2013 period and related determinants. First, the relationship between TFP and capital and that between TFP and labor are negative (-). Second, communications equipment investment by type has a negative effect on TFP in which communications capital is considered by type, providing support for the productivity paradox. Third, imports have a negative (-) relationship with TFP, whereas the degree of openness has a positive (+) relationship. Finally, the Asian region has a positive effect on TFP, whereas the American region has the greatest negative effect.
    Keywords: TFP, Telecommunications Equipment Investment, Determinants, Random Coefficient Model
    JEL: D22 A10 D29
  9. By: Adelheid Holl
    Abstract: Using a micro level panel data set for Spanish manufacturing firms, I estimate the effect of access to highways on firm-level productivity. To estimate the causal relationship between firm level productivity and access to highways, I rely on different fixed effects specifications, instrumental variable estimation and controls for geography, geology and history. The results show that highways raise firm level productivity. Since highways also cause local density increases and density too affects productivity via agglomeration benefits, I also present estimations that control for local densities. This still yields a significant elasticity of productivity with respect to highway access of about 1.7%. The highway effect is robust to a variety of alternative specifications and estimation methods and shows that there is a significant positive direct effect of highways on productivity growth beyond the effect of density. Additional results show that benefits are unevenly distributed across sectors and space with evidence in support of important distributional effects of highway infrastructure.
    Keywords: firm-level productivity; highways; transport infrastructure; density
    JEL: D24 R12 R3 R4
    Date: 2015–10
  10. By: Papaioannou, Sotiris
    Abstract: This study estimates the impact of product market regulations on Total Factor Productivity (TFP) and distinguishes between its short run and long run effects. It also explores whether regulatory changes exert a nonlinear influence on TFP growth. The obtained empirical evidence reveals that in the long run lower regulations exert a significantly positive effect on TFP of OECD countries. Short run effects of regulation are not always statistically significant. The influence of regulatory changes is higher in countries with high levels of regulation. Also, the damaging effects of regulation are more intense in countries with low technology gaps. These results hold across a wide array of econometric specifications and variables that measure regulation and TFP.
    Keywords: Regulations; Total factor productivity; Lon run effects; Non linearities
    JEL: O30 O47 O50
    Date: 2015–10–30
  11. By: Kolentino Mpeta (North West University - Mafikeng Campus); Jabulani Monchwe (SAS Institute)
    Abstract: This paper uses data envelopment analysis (DEA) in order to determine the efficiency of five faculties of the North West University in South Africa. The study uses two input variables (credit hours and number of academic staff members) as well as two output variables (number of graduating students and research output). Two models, constant returns to scale (CRS) and variable returns to scale (VRS) are used to estimate the efficiency scores. The results reveal that four out of the five faculties are technically efficient according to the VRS approach and only three faculties are efficient when the CRS model is applied.
    Keywords: efficiency; data envelopment analysis; constant returns to scale (CRS); variable returns to scale (VRS).
    JEL: C44
  12. By: Johannes Kemp (Bureau for Economic Research, University of Stellenbosch); Ben Smit (Bureau for Economic Research, University of Stellenbosch)
    Abstract: Estimates of potential output growth in SA have declined from over 3% prior to the Global Financial Crisis (GFC) to just over 2% currently (Ehlers et al, 2013; Anvari et al, 2014; IMF, 2014; SARB MPC statement, March 2015; Kemp, 2015). A similar slowdown has been experienced in several other countries, including most members of the G20 (IMF, 2015). The purpose of this paper is to (i) estimate SA’s level of potential output growth both before and after the GFC using a multi-variate filter technique based on Blagrave et al (2015) and (ii) attempt to explain the apparent decline in the growth potential by investigating the underlying drivers of potential GDP growth using a Cobb-Douglas-type production function (similar to IMF, 2015). It is found that potential growth has declined to around 2.2% post-GFC. It is also determined that the biggest driver of the post-crisis decline in potential growth has been lower productivity growth.
    Keywords: Macroeconomic modelling, Potential output, Multivariate filter, Cobb-Douglas
    JEL: C51 E31 E52
    Date: 2015
  13. By: Victor Fernandez-Blanco (Departamento de Economia, Facultad de Economia y Empresa, Universidad de Oviedo); Ana Rodriguez-Alvarez (Departamento de Economia, Facultad de Economia y Empresa, Universidad de Oviedo)
    Abstract: Literature on Cultural Economics gives us some examples about how to measure technical efficiency. But there is a lack in the case of allocative efficiency analysis. Our aim is to fill this gap incorporating a methodology that analyzes both technical and allocative efficiency. We use the Shepard’s distance function, particularly suitable when we face non-profit firms or institutions that are not interested in cost minimization. As an empirical application, we analyze the efficiency of Fundación Princesa de Asturias (PAF), a Spanish non-governmental organization devoted to promote cultural, scientific and humanistic values of universal heritage, during the period 1988-2012. Our findings suggest that PAF could have use 7% less inputs to achieve the same level of outputs. On the other hand, there is no allocative efficiency. Other expenditures input has been over-utilized related both to labor and current assets inputs, and labor has been over-utilized related to current assets. Moreover, our results indicate that both technical and allocative efficiency have clearly improved during the analyzed period. In summary, our empirical application shows how distance function methodology can be successfully implemented to measure allocative efficiency in cultural firms and institutions.
    Keywords: technical and allocative efficiency, stochastic frontier analysis, input distance function, non-profit institutions
    JEL: L82 D24 Z10
    Date: 2015–10
  14. By: Daniel Camos-Daurella
    Abstract: This thesis focuses on the electricity sector in developing economies. This is an important sector given the well-documented contribution of high quality electricity services to economic growth and social welfare. Yet, today, 1.2 billion people worldwide lack access to electricity - half of them in sub-Saharan Africa. The sector is characterized by the high cost of electricity investments combined with the tight fiscal constraints often faced by developing countries' governments. In this context, many electricity utilities around the world either do not perform satisfactorily or operate under severe financial stress. In order to improve the performance of the electricity sector, policy makers need to prioritize among competing objectives and identify the most relevant tools. The first chapter is called "Procuring the right supervisors for infrastructure investments in developing countries". It fits into the set of challenges regarding access that regulatory choices available to policy makers can address. This chapter focuses on a possible way to increase the efficiency of infrastructure investments financed by international financial institutions (IFI) in poor governance countries that has been under studied in the past: the role of supervision consultants, who typically supervise the performance of a contractor firm building the actual infrastructure on behalf of a principal such as the Ministry of Works. I argue that the incentive remuneration of supervisors - understood as a combination of a threat of non-payment and reputation to obtain future contracts - is exogenous to the quality of governance of the country of work. I then apply this exogeneity to the classical Laffont-Tirole (1991) three-tier principal-agent with supervisor setting. I find that the induced contractor's power of incentives of their seminal model change: if the supervisor's incentive remuneration is high enough, effort is optimal; if it decreases, then the effort is sub-optimal but capture is avoided; and if the remuneration decreases even further, then the supervisor is always captured. I then suggest that IFIs could enhance efficiency of infrastructure invesmtents by (i) linking the resources allocated to monitor projects with the corruptibility of the country, and (ii) adding the corruptibility of the country in which the supervisor has successfully conducted previous assignments as a selection criteria when procuring new supervisors. The second chapter is called "Does size matter for performance? Evidence from Brazilian electricity distribution utilities". It fits into the set of challenges regarding affordability that market structure choices available to policy makers can address. In this chapter, I study the relationship between the size and the evolution of total factor productivity in 33 Brazilian electricity distribution utilities (both public and private) representing 97% of the market. This is of particular interest at this point in time given that the renewal of many concessions of utilities is set to start in 2015. I use an input distance function in a stochastic frontier analysis framework with 2 outputs (number of connections and electricity sold) and 3 inputs (operational expenses, length of the network, and capacity of transformers). I apply this methodology to a database spanning from 2003 to 2012 and then decompose the productivity into various components, paying a particular attention to the effect of firm size on productivity. I find that while large utilities are at the minimum efficient scale, the others are slowly moving towards that point. In addition, I find that, when grouping utilities according to size categories, the scale component of technical change explains an important part of the TFP changes. Brazilian policy makers and the regulator would lose an opportunity if they did not consider these findings in the imminent renewal of concessions. The third and last chapter is called "When and how does rural electrification increase labor supply?" and is co-authored with Christian Lehmann. It fits into the set of challenges regarding access and growth that technology choices available to policy makers can address. This chapter is motivated by the expanding empirical literature studying the effects of rural electrification in developing countries that has emerged in the last few years. It focuses on the effect of rural electrification on the labor markets. While the literature tends to agree that labor supply increases with electrification, the underlying mechanisms through which this happens are not well documented: while some authors argue that it is the external market labor supply that goes up, others claim that it is the in-house labor supply of marketable goods that increases. We develop a household model that provides a theoretical framework to integrate the results of most existing empirical studies and explain the theoretical mechanisms behind them. Our model has three types of goods to which the household can allocate its labor: a subsistence good, an informal good, and a formal good. We find that, depending on a number of parameters, electrification increases labor supply either through more labor provided to the market or through more labor devoted to home production of tradable goods. This result is in line with previous empirical work. We also find that the effect of electrification is heterogeneous across households and deduce a number of predictions that, to the best of our knowledge, have not been tested by the empirical literature yet.
    Keywords: labor market; rural electrification; infrastructure; efficiency; utilities; electricity; procurement; consultants
    Date: 2015–07–16
  15. By: David C Maré (Motu Economic and Public Policy Research); Dean R Hyslop (Motu Economic and Public Policy Research); Richard Fabling (Independent Researcher)
    Abstract: This paper examines the relationship between firm multifactor productivity growth (mfp) and changing skill levels of labour in New Zealand, over the period 2001-12, using longitudinal data from Statistics New Zealand’s Longitudinal Business Database (LBD) and Integrated Data Infrastructure (IDI). We estimate that the average skill of workers declined by 1.8% over the period, reflecting strong employment growth for workers with lower than average skill levels. The net decline was the combined effect of a 3.6% decline in unobserved skill outweighing a 1.8% increase in observed skill, resulting in 1.8% slower estimated skill-adjusted labour growth (13.3%) than the 15.0% growth in full-time equivalent (FTE) employment. Mirroring the skill-dilution, skill-adjusted mfp growth averaged 0.24% per annum over the period compared to 0.14% pa for unadjusted growth. The patterns were stronger over the pre-GFC period to 2008, during which adjusted and unadjusted mfp grew 0.57% pa and 0.42% pa respectively. Our analysis of the effect of changing skill on mfp growth finds that the impact of skill adjustment was almost entirely due to changing skill composition within continuing firms.
    Keywords: Productivity, reallocation, decomposition; LBD, Linked Employer-Employee Data, firm turnover.
    JEL: D24 J24
    Date: 2015–11
  16. By: Marcos Sanso-Navarro; Maria Vera-Cabello
    Abstract: This paper deals with the relationship between knowledge, innovation and regional growth. The study is carried out through the application of nonparametric estimation methods to European data at NUTS2 level. We provide evidence that the share of innovative ...firms plays a more relevant role in explaining regional growth than R&D expenditures. Further, inward FDI turns out to be a robust growth determinant. Our results also suggest that the effects induced by these variables are of a heterogeneous nature. As a byproduct of the analysis, we show that the estimation results from a local-linear kernel regression can be used for the identi...cation of spatial patterns. In this respect, we ...find a cluster of innovation-driven labour productivity growth in Germany.
    Keywords: Regional growth; knowledge; innovation; nonparametric methods; nonlinearities
    JEL: C14 C20 O18 R11
    Date: 2015–10
  17. By: Diego Restuccia (University of Toronto); Margarida Duarte (University of Toronto)
    Abstract: The relative price of services rises with development. A standard interpretation of this fact is that cross-country productivity differences are larger in manufacturing than in services. The service sector comprises heterogeneous categories. We document that the behavior of relative prices is markedly different across two broad classifications of services: traditional services, such as health and education, feature a rising relative price with development and non-traditional services, such as communication and transportation, feature a falling relative price with income. Using a standard model of structural transformation with an input-output structure, we find that cross-country productivity differences are much larger in non-traditional services (a factor of 106.5-fold between rich and poor countries) than in manufacturing (24.5-fold). Moreover, this relative productivity difference is reduced by more than half when abstracting from intermediate inputs. Development requires an emphasis on solving the productivity problem in non-traditional services in poor countries.
    Date: 2015
  18. By: Igone Porto Gomez; Jose Ramón Otegi; José Ricardo Lopez Robles
    Abstract: Introduction: Performance of regions is commonly based on the comparison of economic indicators. This may help to understand particular situations and identify optimization alternatives. In order to adopt the most effective technological research, development and innovation policies there is a need to measure the results that firms obtain and the impact of performed projects in regional economy. The results of R&D projects of the productive subsystem impact the productive subsystem itself and also other stakeholders in the region, including the knowledge subsystem. This paper contributes to the debate on how to measure regional R&D performance. Different research lines argue about choosing global regions´ measures or firms´ ones. In this analysis, we compare both alternatives. Methods: The study applies a Data Envelopment Analysis (DEA) to the evaluation of the Innovation, Research and Development efficiency of regions, by comparing the innovation results of the firms, with the economic results of the regions they are located in. A 2 stages analysis is proposed, focusing firstly on the productive subsystems´ efficiency and then on the comparison between the efficiency of the regions. The analysis is performed for Mexico federal regions, considering the ESIDET 2011 survey. This survey measures the behavior of Mexico as a whole, in R&D projects. The 2010 and 2011 edition of the survey include the results obtain in each region. Taking into account the variables analyzed in other R&D DEA studies, and keeping in mind the available indicators of the ESIDET survey, a Multivariate Analysis of Variance (MANOVA) will be performed, in order to identify the significant variables, which will turn into the DEA Input and Output variables. The objective of the analysis is to identify the most efficient federal region, according to the maximization or augmentation of the obtained benefits. The output DEA orientation aims to identify the factors that maximize the benefits of the R&D and innovation projects for the regions. Results: The main conclusion is that the most R&D involved regions - more R&D dedicated firms, higher R&D profits ? are not the more R&D efficient regions. Less R&D devoted regions result in more efficient ones eventually due to a better use of R&D resources by the few R&D firms located in those regions. Particular region analysis allow to identify how regions could maximize their results.
    Keywords: Efficiency; Data Envelopment Analysis (DEA); region; Innovation; R&D
    JEL: O31 O32
    Date: 2015–10
  19. By: Ricker-Gilbert, Jacob; Jayne, T.S.
    Abstract: Most studies of input subsidy programs confine their analysis to measuring contemporaneous program effects. This article estimates the potential longer run or enduring effects of fertilizer subsidy programs on commercial purchases of fertilizer and farmers’ maize production over time. We use four waves of panel data on 462 farm households in Malawi for whom fertilizer use can be tracked for eight consecutive seasons between 2003/04 and 2010/11. Panel estimation methods are used to control for potential endogeneity of subsidized fertilizer. Farmers acquiring subsidized fertilizer in three consecutive prior years are found to purchase slightly more commercial fertilizer in the next year. This suggests a small amount of crowding in of commercial fertilizer from the receipt of subsidized fertilizer in prior years. Acquiring subsidized fertilizer in one year has a modest positive impact on increasing maize output in the same year. However, acquiring subsidized fertilizer in prior years generates no statistically significant effect on maize output in the current year. The findings indicate that potential enduring effects of the Malawi fertilizer subsidy programs are limited. Additional interventions that increase soil fertility are needed to raise maize to fertilizer response rates. Doing so can make using inorganic fertilizer more profitable and sustainable for smallholders in sub-Saharan Africa, and increase the efficiency of input subsidy programs.
    Keywords: Malawi, input subsidies, enduring effects, International Development, Q12, Q18,
    Date: 2015–10–12
  20. By: Alicja Olejnik; Jakub Olejnik
    Abstract: This paper is an attempt to explain variations across EU regions in productivity growth and takes into consideration the important structure of the age-productivity relation of Human Capital. The study is fundamentally based on the theory of Fingleton?s model which analyses the spatial process of productivity growth on the on the foundations of the theory of New Economic Geography. The applied specification links manufacturing productivity growth to the growth of manufacturing output by the means of Verdoorn?s law. The model incorporates productivity-adjusted human capital understood as Total Human Capital Productivity corrected with age structure with the use of productivity as a function of age. Moreover, a new approach to defining the age-productivity curve has been introduced. Based on the previous studies found in the literature the age-productivity function has been interpolated by the means of Radial Basis Function method with thin-plate spline. The age-productivity function allows to describe how the work performance differs over the life period and thus allows for differences in age structure of employees in regions under research. This study covers 261 NUTS 2 regions of EU excluding some French, Portuguese and Spanish regions due to their isolated position and Croatia because of the lack of comparable data. All data used in the empirical part of this study are published by Eurostat and refer to the years 2000-2013. The regional productivity is explained by the quotient of regional GDP and the number of Economically Active Population. The productivity growth is approximated by the exponential change of regional productivity in these years to regional productivity in the year 2000. The regional GDP is expressed in millions of Euro in constant prices (year 2000), where Economically Active Population is in thousands of people 15 years or over. The Human capital is defined by the Employment in Technology and Knowledge-intensive Sectors as a percentage of Economically Active Population. The model has been tested through implemented methodology, namely a spatial panel model with fixed effects. The model presented provides evidence of the importance of increasing returns to scale for regional economic growth, which lead to divergence effects for EU regions. Similar implications can be observed in the case of regionally differentiated human capital. Furthermore, the country fixed effects turned out to be significant. The findings also suggest that productivity in jobs requiring problem solving and learning skills reaches a plateau for the 35-45 age bracket and has its peak around the age of 40. We suggest that the applied approach constitutes an innovation providing additional information hence a deeper analysis of the investigated problem.
    Keywords: spatial panel; productivity growth; Verdoorn?s law; age-productivity curve
    JEL: O40 J24 C21 C23
    Date: 2015–10
  21. By: Wouter Zant (Associated with VU University and a fellow of the Tinbergen Institute, both Amsterdam, The Netherlands)
    Abstract: We use both a panel of district data for a nearly 20 year period (1991-2008) and a panel of household survey data (2010 and 2013) of Malawi to investigate the contribution of water to productivity in rain-fed agriculture. Production function estimations suggest a larger contribution to production from rainfall than from chemical fertilizer. We supply evidence that (uncertainty of) supply of water is a key determinant of the crop choice of farmers, and more specifically, the choice between, on the one hand, low input staple foods / subsistence crops, and, on the other hand, high input and high value cash crops. We plan to claim additionally that chemical fertilizer use depends critically on crop choice, notably the choice for high value cash crops, and thereby on the availability of water. Finally, we provide evidence at household level that further supports these claims. Our work gives an alternative explanation of observed low uptake of chemical fertilizer by farmers and of the mechanism that drives fertilizer use in rain-fed SSA agriculture.
    Keywords: subsistence agriculture, input subsidies, productivity, growth, Malawi, Africa
    Date: 2015–09
  22. By: Grillitsch, Markus (CIRCLE, Lund University); Nilsson, Magnus (Dept. of Business Administration and CIRCLE, Lund University)
    Abstract: This paper challenges one of the fundamental propositions within economic geography; that location in knowledge regions contributes to firm performance in general and especially for knowledge intensive firms that compete on the basis of knowledge. Our analysis of Swedish micro-data on 32,535 firms from 2004-2011 provides evidence that knowledge intensive firms benefit less from local knowledge spillovers than firms with comparably low in-house knowledge. This suggests that firms with high internal competencies can compensate for a lack of local knowledge spillovers and that negative knowledge externalities may make location outside knowledge centers more beneficial for such firms.
    Keywords: periphery; firm performance; spillovers; agglomeration
    JEL: O30 R10 R11
    Date: 2015–10–23
  23. By: Pedro Bento (Texas A&M University, Department of Economics)
    Abstract: I develop a general equilibrium model in which patent protection affects sequential innovation, original innovation, and imitation. Protection increases the cost of working around existing patents, but imposes costs disproportionately for innovators and imitators. Depending on these relative costs, protection can in theory increase or decrease markups, imitation, long-run growth, and aggregate productivity. Using data from several different sources, I calibrate the model and quantitatively assess the effects of patent protection in practice. I find that weakening protection in the U.S. would lead to no change in markups and imitation, no change in long-run growth, a more than doubling of the number of firms, and an increase in aggregate productivity of 11 percent.
    Keywords: patent protection, firm size, productivity, innovation, imitation, competition
    JEL: O1 O3 O4
    Date: 2015–08–01
  24. By: Federico Biagi; Daniele Bondonio; Alberto Martini
    Abstract: The purpose of this paper is to offer empirical evidence on the impact generated by investment subsidies awarded to industrial firms on employment, sales, investments and labor productivity. The analysis is based on unique firm-level administrative data provided by the Italian National Statistical Agency on the universe of both treated- and non-treated applicant firms. For employment and sales outcomes such data derive directly from the National Social Security Agency of Italy and from the Internal Revenue Service Agency. The paper focuses on a decade (2000-2009) of subsidies awarded by a large-scale national Italian programme co-funded by the European Regional Development Fund and by the universe of smaller regional programmes available to all SMEs in the Northwestern Italian region (Piedmont). The analysis produces differential impacts based on different levels of the economic value of the incentives, different types of incentives (distinguishing between non-repayable grants, ?soft-loans? and ?interest rate grants?), different sizes and geographic location of the assisted firms. For the large scale national programme, the analysis exploit the existence of a natural experiment in the form of the existence of viable applicant firms that were denied the subsidy due to an exogenous, budget induced, cut-off point in the programme rankings of each wave of regional calls for applications. Impact estimates are then retrieved with a discontinuity designed within a difference in difference scheme that ensures exact matching of crucial firm characteristics. For the regional programmes, the analysis is implemented with a conditional difference in difference model that pre-processes the data based on a propensity score estimate to ensure common support between treated and non-treated firms. The results of our analysis show that: -Large non-repayable grants, particularly when given to large firms (and in underdeveloped regions), represent an ineffective way to stimulate additional private investment and to improve the performance of the subsidized firms; -Small grants given to small firms (not in the context of severely distressed socio-economic areas) have small impacts, but when all the dimensions are taken into account, they are more cost-effective; - Non-repayable grants are outperformed by repayable soft loans and interest rate subsidies as most effective tools for assistance; -For SMEs, soft-loans and interest rate grants are the most cost-effective form of support.
    Keywords: Counterfactual impact evaluation; enterprise support; capital grants; soft loans
    JEL: O1 R5 C23
    Date: 2015–10
  25. By: Alberto Díaz Dapena; Esteban Fernández Vázquez; Fernando Rubiera Morollón
    Abstract: In this paper we estimate agglomeration economies in Spain in 2009 basing on Ciccone?s (2002) model, which explains average labor productivity in one spatial unit on employment density and other controls. The novelty of our analysis is that the empirical model is estimated at a highly disaggregated spatial scale, oppositely to the convention of taking as unit of analysis NUTS-2 or NUTS-3 regions. Recent contributions to New Economic Geography (NEG) base their theoretical analysis on geographical units defined at a more disaggregated spatial scale than these administratively defined regions. Specifically, from a sample of income-taxpayers published by the Spanish Fiscal Studies Institute -Instituto de Estudios Fiscales- we derive figures on average wages by worker at the scale of Local Labor Markets (LLMs). The empirical analysis bases on several estimation strategies; namely, Ordinary Least Squares (OLS), Two-Stages Least Squares (2SLS), Quantile Regressions (QR) and Instrumental Variable Quantile Regressions (IVQR) estimators, all they finding a significantly positive effect of agglomeration in the conditional mean of labor productivity. Additionally, the QR and IVQR estimators find a progressively decreasing, but still positive, effect of employment density along the conditional distribution of labor productivity.
    Keywords: Agglomeration economies; labor productivity; density; local data and Spain
    JEL: D24 J31 R10 R12
    Date: 2015–10

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