nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2016‒02‒23
nine papers chosen by

  1. The heterogeneity of FDI in Sub-Saharan Africa: How do the horizontal productivity effects of emerging investors differ from those of traditional players? By Pfeiffer, Birte; Görg, Holger; Perez-Villar, Lucia
  2. Misallocation and Productivity in the Lead Up to the Eurozone Crisis By Dias, Daniel A.; Marques, Carlos Robalo; Richmond, Christine
  3. The UK productivity puzzle 2008-13: evidence from British businesses By Riley, Rebecca; Rosazza-Bondibene, Chiara; Young, Garry
  4. Efficiency measures of the Chinese commercial banking system using an additive two-stage DEA By Ke Wang; Wei Huang; Jie Wu; Ying-Nan Liu
  5. Indian Manufacturing Sector: Competitiveness at Stake By Sapovadia, Vrajlal
  6. China¡¯s regional energy efficiency: Results based on three-stage DEA model By Bin Lu; Ke Wang; Zhiqiang Xu
  7. International Evidence on Time-Variation in Trend Labor Productivity Growth By Philipp Wegmueller
  8. An Empirical Investigation of Cost Efficiency in the Banking Sector Pakistan By Muhammad Sadiq Ansari
  9. The impacts of the EU ETS on Norwegian plants' environmental and economic performance By Klemetsen, Marit E.; Rosendahl, Knut Einar; Lund Jakobsen, Anja

  1. By: Pfeiffer, Birte; Görg, Holger; Perez-Villar, Lucia
    Abstract: This paper analyzes the horizontal productivity effects of foreign direct investment (FDI) from industrialized and developing countries in 10 sub-Saharan African countries. We establish a unique data set by combining data from the World Bank Enterprise Surveys that allow us to distinguish between foreign investors from sub-Saharan Africa, Asia, Europe, the Middle East, and North Africa. We find strong evidence of horizontal productivity spillovers to domestic firms derived from foreign-firm presence. However, these effects are clearly dependent on domestic firms' absorptive capacity. The largest productivity effects seem to be driven by investors from sub-Saharan Africa. Our analysis also shows that productivity effects differ according to the income level of host countries. Overall, the strongest productivity effects seem to materialize in lower-middle-income countries. These key findings emphasize the increasing importance of emerging investors, beyond the traditional players from industrialized countries, in sub-Saharan Africa.
    Keywords: foreign direct investment,productivity,South-South firms,spillovers,sub-Saharan Africa
    JEL: F23
    Date: 2015
  2. By: Dias, Daniel A. (Board of Governors of the Federal Reserve System (U.S.)); Marques, Carlos Robalo (Banco de Portugal); Richmond, Christine (International Monetary Fund)
    Abstract: We use Portuguese firm-level data to investigate whether changes in resource misallocation may have contributed to the poor economic performance of some southern and peripheral European countries leading up to the Eurozone crisis. We extend Hsieh and Klenow's (2009) methodology to include intermediate inputs and consider all sectors of the economy (agriculture, manufacturing, and services). We find that within-industry misallocation almost doubled between 1996 and 2011. Equalizing total factor revenue productivity across firms within an industry could have boosted valued-added 48 percent and 79 percent above actual levels in 1996 and 2011, respectively. This implies that deteriorating allocative efficiency may have shaved around 1.3 percentage points off the annual GDP growth during the 1996-2011 period. Allocative efficiency deterioration, despite being a widespread phenomenon, is significantly higher in the service sector, with 5 industries accounting for 72 percent of the total variation. Capital distortions are the most important source of potential value-added efficiency gains, especially in the service sector, with a relative contribution increasing over time.
    Keywords: Misallocation; wedges; productivity; firm-level data; financial integration
    JEL: D24 O11 O41 O47
    Date: 2015–09–23
  3. By: Riley, Rebecca (Natioinal Institute of Economic and Social Research and Centre for Macroeconomics); Rosazza-Bondibene, Chiara (Natioinal Institute of Economic and Social Research and Centre for Macroeconomics); Young, Garry (Bank of England)
    Abstract: In many larger advanced economies labour productivity growth slowed sharply and remained subdued for years after the credit crisis of 2007/08. Nowhere was this more obvious than in the United Kingdom. We examine the dynamics of productivity among British businesses that lie behind this stagnation. The most striking feature is the widespread weakness in total factor productivity within firms, pointing to the importance of a common factor in explaining productivity weakness. In addition,we find that the positive correlation between surviving firms’ employment growth and their relative productivity ranking broke down after 2007/08, as would be expected if an adverse credit supply shock had caused inefficiencies in resource allocation across firms. Indeed, during the immediate recession years 2008/09, this shift was most apparent in sectors with many small and bank dependent businesses. But subsequently, while the contribution of external reallocation to aggregate productivity growth in 2010/13 was smaller than in previous years, this was not obviously associated with sectoral bank dependence. We illustrate the sensitivity of these findings to the choice of decomposition method.
    Keywords: Productivity growth; productivity decomposition; resource allocation; credit shock; Great Recession; Great Stagnation.
    JEL: L11 O47
    Date: 2015–06–23
  4. By: Ke Wang; Wei Huang; Jie Wu; Ying-Nan Liu
    Abstract: Measuring and improving the efficiency of the Chinese commercial banking system has recently attracted increasing interest. Few studies, however, have adopted the two-stage network DEA to explore this issue in the Chinese context. Because the entire operational process of the banking system could be divided into two sub-processes (deposit producing and profit earning), the evaluation of the sub-process efficiencies could be used to assist in identifying the sources of the inefficiency of the entire banking system. In this study, we utilize the network DEA approach to disaggregate, evaluate and test the efficiencies of 16 major Chinese commercial banks during the third round of the Chinese banking reform period (2003-2011) with the variable returns to scale setting and the consideration of undesirable/bad output. The main findings of this study are as follows: i) the two-stage DEA model is more effective than the conventional black box DEA model in identifying the inefficiency of banking system, and the inefficiency of the Chinese banking system primarily results from the inefficiency of its deposit producing sub-process; ii) the overall efficiency of the Chinese banking system improves over the study period because of the reform; iii) the state-owned commercial banks (SOBs) appear to be more overall efficient than the joint-stock commercial banks (JSBs) only in the pre-reform period, and the efficiency difference between the SOBs and the JSBs is reduced over the post-reform period; iv) the disposal of non-performing loans (NPLs) from the Chinese banking system in general explains its efficiency improvement, and the joint-equity reform of the SOBs specifically increases their efficiencies.
    Keywords: Chinese commercial banks, Data envelopment analysis (DEA), Efficiency decomposition, Two-stage DEA
    JEL: Q40 Q58
    Date: 2014–08–26
  5. By: Sapovadia, Vrajlal
    Abstract: Productivity is a matter of survival for any business. Higher productivity is sine-qua-non for “survival and growth” of business prospects. India’s series of economic reforms since 1991 have accelerated economic growth but not productivity. India’s productivity remained low compared to global but peers as well. High productivity is good for business, consumers and economy. Higher the productivity, higher the profit, lower the price. Productivity in manufacturing sector in the last two decades remains stagnant, but nobody sincerely has bothered to measure and improve. India’s various global indices, ranking and score relevant to measure productivity, including manufacturing productivity remains poor. This paper attempts to identify role and lacuna by manufacturing sector in productivity.
    Keywords: Productivity, Indian Manufacturing Sector, Entrepreneurship
    JEL: A1 A11 M0 M2
    Date: 2015
  6. By: Bin Lu; Ke Wang; Zhiqiang Xu
    Abstract: Traditional DEA models ignore the influence of environmental variables and statistical noise which may result in biased efficiency estimates. To solve this problem, three-stage DEA model was proposed and has been widely applied in many areas. This study evaluates China¡¯s regional energy efficiency by using three-stage DEA model based on the statistical data of 2010, and discusses the divergence of three different efficiency assessment methods. The empirical results show that the environmental factors indeed influence the regional energy efficiency performance. After the adjustment of environmental variables, the national average technical efficiency by adopting three-stage DEA model decreased significantly than by using traditional DEA model, but the influences to regions are different due to diverse features, some regions were overestimated by using BCC-DEA model, and some regions were underestimated. Three-stage DEA model is able to reflect the true efficiency by eliminating environmental effects compared with other methods.
    Keywords: Evaluation; Three-stage DEA Model; SFA; Environmental Influence; Regional Energy Efficiency
    JEL: Q54 Q40
    Date: 2016–02–05
  7. By: Philipp Wegmueller
    Abstract: This paper provides international evidence on time-variation in trend productivity growth, based on the dataset for hours worked constructed by Ohanian & Raffo (2012). Applying both the endogenous break tests of Bai & Perron (1998, 2003) and the Stock & Watson (1996, 1998) TVP-MUB methodology, substantial evidence of time-variation in trend productivity growth is detected for most countries. For either Japan, or countries belonging to the Eurozone, evidence points towards a significant growth decline over the last several decades. Weaker evidence is reported for the United States, for which the 1990’s productivity acceleration is estimated to have been overall mild, and of a temporary nature.
    Keywords: Labor productivity; structural break tests; time-varying parameters; median-unbiased estimation; bootstrapping; Monte Carlo integration
    JEL: E30
    Date: 2015–02
  8. By: Muhammad Sadiq Ansari (State Bank of Pakistan)
    Abstract: This study uses the distribution free approach to estimate levels of cost efficiency of individual banks operating in Pakistan. Furthermore, these levels of efficiency are analyzed under CAMELS indicators to provide micro insights of their financial standings to justify their prevailing positions. The results show that banks are significantly distinct at different efficiency levels ranging from 87 percent to 49 percent. Technology has played a significant role in reducing the cost of banking industry. However, the banking industry is still operating under diseconomies of scale. Moreover, non-performing loans have adversely impacted the cost structure of banking industry. CAMELS ratios indicate that the most efficient banks are those with lesser amount of non-performing loans, high capital adequacy, and lesser non-interest expenditure which leads to high profitability. Overall, there is great room in the banking industry to minimize cost by eliminating the inefficiency elements.
    Keywords: Cost efficiency, CAMELS indicators, financial soundness
    JEL: D61 G20 G21
  9. By: Klemetsen, Marit E. (University of Oslo/Statistics Norway); Rosendahl, Knut Einar (School of Economics and Business, Norwegian University of Life Sciences); Lund Jakobsen, Anja (School of Economics and Business, Norwegian University of Life Sciences)
    Abstract: This paper examines the impacts of the EU Emissions Trading System (ETS) on the envi- ronmental and economic performance of Norwegian plants. The EU ETS is regarded as the cornerstone climate policy both in the EU and in Norway, but there has been considerable de- bate regarding its eects due to low quota prices and substantial allocation of free allowances to the manufacturing industry. Both quota prices and allocation rules have changed signicantly between the three phases of the ETS. The rich data allow us to investigate potential eects of the ETS on several important aspects of plant behavior. The results indicate a weak tendency of emissions reductions among Norwegian plants in the second phase of the ETS, but not in the other phases. We nd no signicant eects on emissions intensity in any of the phases, but positive eects on value added and productivity in the second phase. Positive eects on value added and productivity may be due to the large amounts of free allowances, and that plants may have passed on the additional marginal costs to consumers.
    Keywords: Tradable emissions quotas; emissions intensity; productivity; propensity score matching; dierence-in-dierences
    JEL: C23 C54 D22 Q54 Q58
    Date: 2016–02–10

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