nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2016‒03‒06
seventeen papers chosen by

  1. The effect of international competition on firm productivity and market power By De Loecker, Jan; Van Biesebroeck, Johannes
  2. Mobile and more productive? Firm-level evidence on the productivity effects of mobile internet use By Bertschek, Irene; Niebel, Thomas
  3. Productivity distributions in New Zealand: The dangers of international comparison By Richard Fabling; Lynda Sanderson
  4. Robust data envelopment analysis based MCDM with the consideration of uncertain data By Ke Wang; Fajie Wei
  5. Productivity spillovers from foreign multinationals and trade policy: firm-level analysis of Vietnamese manufacturing By Thuyen, Truong Thi Ngoc; Jongwanich, Juthathip; Ramstetter, Eric D.
  6. Positive employment effects of increasing material efficiency By Sartorius, Christian
  8. Land Productivity and Economic Development: Caloric Suitability vs. Agricultural Suitability By Oded Galor; Ömer Özak
  9. TFP and Intelligence: a cross-national empirical evidence By Evgeniya, Gorlova
  10. Knowledge Spillovers, absorptive capacity and growth: An Industry-level Analysis for OECD Countries By Ioannis Bournakis; Dimitris Christopoulos; Sushanta Mallick
  11. Catching up of emerging economies: The role of capital goods imports, FDI inflows, domestic investment and absorptive capacity By Glas, Alexander; Hübler, Michael; Nunnenkamp, Peter
  12. Markups and misallocation with trade and heterogeneous firms By Weinberger, Ariel
  13. The Link between R&D, Innovation and Productivity: Are Micro Firms Different? By Julian Baumann; Alexander S. Kritikos
  14. FDI and Heterogeneous Firms: Evidence from BRIC Countries By Valeria, Gattai; Rajssa, Mechelli; Piergiovanna, Natale
  15. Forecast future production of municipal waste on the basis of a panel data model in Algeria By Djemaci, Brahim
  16. Financial intermediaries, capital markets, and economic growth: empirical evidence from six countries By Odhiambo, Nicholas M.; Nyasha, Sheilla
  17. The Comparative Economics of Catch-Up in Output per worker, total factor productivity and technological gain in Sub-Saharan Africa By Ssozi, John; Asongu, Simplice A

  1. By: De Loecker, Jan; Van Biesebroeck, Johannes
    Abstract: We propose a framework to evaluate the potential impact of international competition on firm performance and highlight two points. First, it is important to consider effects on productive efficiency and market power in an integrated framework. The popular concept of (revenue) TFP combines both effects which can lead to problems of estimation and interpretation. Second, greater international competition enlarges the relevant market and can affect both the number and the type of competitors a firm faces, as well as the nature of competition. While it is possible that firms respond by adjusting their production operations, pricing adjustments are all but guaranteed. We contrast three estimation approaches that start, respectively, from the demand side, the product extensive margin, and the production side. We conclude with a few avenues for future research.
    Keywords: competition; firm performance; trade liberalization
    JEL: F10 L1 O30
    Date: 2016–02
  2. By: Bertschek, Irene; Niebel, Thomas
    Abstract: Mobile internet access allows for flexibility with respect to working time and working place. We analyse whether employees' use of mobile internet access improves firms' labour productivity. Our data set contains 2143 German firms and refers to the year 2014, when high-speed mobile internet was still at a relatively early stage of diffusion within firms. The econometric analysis shows that firms' labour productivity significantly increases with the share of employees with mobile internet access. Our instrumental variables approach reveals that mobile internet use does cause higher labour productivity.
    Keywords: Mobile Internet,Labour Productivity,Firm-Level Data
    JEL: D22 L20 O33
    Date: 2015
  3. By: Richard Fabling (Motu Economic and Public Policy Research); Lynda Sanderson (The Treasury)
    Abstract: Recent discussions of New Zealand's relative economic performance have drawn a link between firm-level productivity dispersion and a lack of competitive pressure. This note describes a simple example using New Zealand firm-level data which casts doubt on the assertion that New Zealand has a “long tail” of low productivity firms relative to other countries.
    Keywords: Multifactor productivity (MFP), Dispersion
    JEL: D24
    Date: 2014–12
  4. By: Ke Wang; Fajie Wei
    Abstract: The application of data envelopment analysis (DEA) as a multiple criteria decision making (MCDM) technique has been gaining more and more attention in recent research. In the practice of applying DEA approach, the appearance of uncertainties on input and output data of decision making unit (DMU) might make the nominal solution infeasible and lead to the efficiency scores meaningless from practical view. In this paper, we analyze the impact of data uncertainty on the evaluation results of DEA, and propose several robust DEA models based on the adaptation of recently developed robust optimization approaches, which would be immune against input and output data uncertainties. The robust DEA models we developed are based on input-oriented and output-oriented CCR model, respectively, when the uncertainties appear in output data and input data separately. Furthermore, our robust DEA models could deal with random symmetric uncertainty and unknown-but-bounded uncertainty, in both of which the distributions of the random data entries are permitted to be unknown. We implement the robust DEA models in a numerical example and the efficiency scores and rankings of these models are compared. The results indicate that the robust DEA approach could be a more reliable method for efficiency evaluation and ranking in MCDM problems.
    Keywords: data envelopment analysis (DEA), multiple criteria decision making (MCDM), robust optimization, uncertain data, efficiency, ranking
    JEL: Q54 Q40
    Date: 2016–02–01
  5. By: Thuyen, Truong Thi Ngoc; Jongwanich, Juthathip; Ramstetter, Eric D.
    Abstract: This article examines how the presence of foreign multinational enterprises (MNEs) affects productivity in local firms in Vietnamese manufacturing in 2005-2010. The paper also emphasizes how import protection has affected these productivity spillovers and how spillovers from wholly-foreign MNEs and joint ventures differ. The most consistent result suggests wholly-foreign MNEs impart negative spillovers while joint ventures generate positive spillovers. Theory and random effects estimates also indicate that import protection reduces local firm productivity and weakens the effect of spillovers from all MNEs, but this result is not obtained when a fixed effects estimator is used. Results are similar in samples of labour-intensive industries, which include close to three-fourths of all sample firms, but differ markedly for more capital-intensive groups.
    Keywords: Multinational enterprise, spillover, tradepolicy, manufacturing, Vietnam, Multinational enterprise, spillover, tradepolicy, manufacturing, Vietnam
    JEL: F23 L60 O24 O53
    Date: 2014–06
  6. By: Sartorius, Christian
    Abstract: As raw and processed materials constitute a major share of the cost of inputs to industrial production in all developed countries and since the raw material crisis in 2009 revealed the criticality of the raw material supply worldwide, the increasingly efficient use of material resources has become an important point on the political agenda. One way to promote this increase is funding of research in efficiency-increasing technology innovations. Data describing the physical and economic effects of sixteen such innovations are used to model on the basis of input-output analysis the employment effect of these technologies once their full application potential in Germany would be exploited. It turns out that the employment effect is positive and its strong robustness is based on the combination of three promoting factors, each of which alone increases the likelihood of increasing employment. These factors refer to the profitability of efficiency-increasing technologies and to the import of foreign value added and the change in labour productivity characterizing many instances of material efficiency increase.
    Date: 2015
  7. By: Anant Sudarshan (Department of Economics, University of Chicago and Energy Policy Institute at Chicago); E. Somanathan (Economics and Planning Unit, Indian Statistical Institute); Rohini Somanathan (Departments of Economics, Delhi School of Economics, University of Delhi, India); Meenu Tewari (University of North Carolina, Chapel Hill)
    Abstract: Cross-country studies have found that hotter years are associated with lower output in poor countries. Using high-frequency micro-data from manufacturing firms in India, we show that worker heat stress can substantially explain this correlation. Ambient temperatures have non-linear effects on worker productivity, with declines on hot days of 4 to 9 percent per degree rise in temperature. Sustained heat also increases absenteeism. Similar temperature induced productivity declines are replicated in annual plant output from a national panel. Our estimates imply that warming between 1971 and 2009 may have decreased manufacturing output in India by at least 3 percent relative to a no-warming counterfactual.
    Keywords: temperature, heat stress, worker productivity, climate change
    JEL: Q54 Q56 J22 J24
    Date: 2015–06
  8. By: Oded Galor (Brown University); Ömer Özak (Southern Methodist University)
    Abstract: This paper establishes that the Caloric Suitability Index (CSI) dominates the commonly used measure of agricultural suitability in the examination of the effect of land productivity on comparative economic development. The analysis demonstrates that the agricultural suitability index does not capture the large variation in the potential caloric yield across equally suitable land, reflecting the fact that land suitable for agriculture is not necessarily suitable for the most caloric-intensive crops. Hence, in light of the instrumental role played by caloric yield in sustaining and supporting population growth, and given importance of pre-industrial population density for the subsequent course of economic development, the Caloric Suitability Index dominates the conventional measure in capturing the effect of land productivity on pre-colonial population density and the subsequent course of economic development.
    Keywords: Caloric Suitability, Agricultural Suitability, Agricultural Productivity, Land Productivity, Economic Development, Population Density.
    JEL: O10 O40 Q10
    Date: 2015–06
  9. By: Evgeniya, Gorlova
    Abstract: We investigate the effect of intelligence on total factor productivity (TFP) using cross section data for 108 countries over the period 2000-2011. We find that intelligence, measured by national IQ scores, increases average level of each country’s TFP value relative to U.S.
    Keywords: TFP, intelligence, IQ, cross-country, human capital
    JEL: F0
    Date: 2016
  10. By: Ioannis Bournakis; Dimitris Christopoulos; Sushanta Mallick
    Abstract: Given the decline in growth momentum in the manufacturing sector in many OECD countries, the role of knowledge-based capital has emerged as a key driver for sustained growth. While empirical studies on estimating knowledge spillovers have usually been undertaken at the country level, the spillover effects can be more definitive only if the analysis is conducted at the industry-level. The effectiveness of international spillovers is conditional on recipient country’s absorptive capacity and this is an important component of the spillover mechanism that has not attracted significant attention so far. This paper therefore assesses the effect of spillovers in driving per capita output growth taking into account the role of absorptive capacity. Our main findings are first, that there is evidence for a robust positive relationship between human capital and output growth across these countries at industry level. Second, the potential of international spillover gains is greater in countries with higher human capital and a more protective environment as far as intellectual property rights are concerned. Countries that improve their absorptive capacity can potentially increase gains from spillovers either via trade or FDI (including vertical FDI). Finally, significant heterogeneity is found between high and low-tech industries with high-tech group displaying greater knowledge spillovers, suggesting that low-tech industries need to be more innovative in order to absorb the technological advancements of domestic and international rivals.
    Keywords: Growth; R&D; Knowledge Spillovers; Absorptive Capacity; Human Capital; Intellectual Property Rights.
    JEL: E24 F1 O3 O4
    Date: 2015–04
  11. By: Glas, Alexander; Hübler, Michael; Nunnenkamp, Peter
    Abstract: We assess the role of capital goods imports and inflows of foreign direct investment (FDI) as transmission channels through which major emerging economies (BRICs, i.e., Brazil, Russian Federation, India and China) could catch up with advanced source countries in terms of total factor productivity (TFP). We find that the importance of these transmission mechanisms depends on the BRICs' local capacity to absorb superior technologies and on domestic investment.
    Keywords: total factor productivity,imports,foreign direct investment,absorptive capacity,BRICs
    JEL: F14 F21 O47
    Date: 2015
  12. By: Weinberger, Ariel (University of Oklahoma)
    Abstract: With non-homothetic preferences, a monopolistic competition equilibrium is inefficient in the way inputs are allocated towards production. This paper quantifies a gains from trade component that is present only when reallocation is properly measured in a setting with heterogeneous firms that charge variable markups. Due to variable markups, reallocations initiated by aggregate shocks impact allocative efficiency depending on the adjustment of the market power distribution. My measurement compares real income growth with the hypothetical case of no misallocation in quantities. Using firm and industry-level data from Chile during a period with large terms of trade gains, I find that cost reductions are associated with losses in allocative efficiency because firms pass-through measured productivity gains into markups. From industry-year variation, there is also evidence that industries that import a larger share of their inputs become more misallocated as a result of exchange rate appreciations compared to open sectors whose output competition becomes fiercer.
    JEL: F12 F14 F43 L11 O47
    Date: 2015–09–01
  13. By: Julian Baumann; Alexander S. Kritikos
    Abstract: We analyze the link between R&D, innovation, and productivity in MSMEs with a special focus on micro firms with fewer than 10 employees; usually constituting the majority of firms in industrialized economies. Using the German KfW SME panel, we examine to what extent micro firms are different from other firms in terms of innovativeness. We find that while firms engage in innovative activities with smaller probability, the smaller they are, for those firms that do make such investment, R&D intensity is larger the smaller firms are. For all MSMEs, the predicted R&D intensity is positively correlated with the probability of reporting innovation, with a larger effect size for product than for process innovations. Moreover, micro firms benefit in a comparable way from innovation processes as larger firms, as they are similarly able to increase their labor productivity. Overall, the link between R&D, innovation, and productivity in micro firms does not largely differ from their larger counterparts.
    Keywords: MSMEs, R&D, Innovation, Productivity
    JEL: L25 L60 O31 O33
    Date: 2016
  14. By: Valeria, Gattai; Rajssa, Mechelli; Piergiovanna, Natale
    Abstract: This paper investigates the link between Outward Direct Investment (ODI) and the performance of BRIC firms. Drawing on firm-level data, we introduce a rich taxonomy of ODI that accounts for the decision to invest and the number, destination and ownership structure of foreign affiliates. Through different econometric models and specifications, we consistently demonstrate that BRIC firms engaged in ODI are in the minority, but they outperform domestic enterprises. Moreover, firms selecting less preferred ODI types outperform firms undertaking other ODI strategies.
    Keywords: ODI, FDI, Performance, BRIC, Firm-Level Data
    JEL: F23 L25 O57
    Date: 2016–01–18
  15. By: Djemaci, Brahim
    Abstract: This study analyses the factors that influenced the production of municipal waste in Algeria. It carries an estimate of future quantities of waste on the basis of data from 48 departments from 1997 to 2008. We use econometric projection of the waste to determine the factors that influence the production of waste. The analysis shows that the production of municipal waste in Algeria is related to several factors: population density, the retail trade. The projection of future municipal waste amount achieves the 28 million tons in 2025.
    Keywords: municipal waste, forecast waste, attractiveness of the territory, panel data, Algeria.
    JEL: C33 C53 F18 Q53
    Date: 2016–01–16
  16. By: Odhiambo, Nicholas M.; Nyasha, Sheilla
    Abstract: AbstractThis paper investigates the dynamic causal relationship between financial systems and economic growth in three developing countries ??? South Africa, Brazil and Kenya ??? and three developed countries ??? the United States of America, the United Kingdom and Australia ??? during the period from 1980 to 2012. The study includes both bank-based and market-based financial systems. The study includes savings as an intermittent variable ??? thereby creating a trivariate Granger-causality model. The method of means-removed average is employed to construct bank- and market-based financial development indices. Using the ARDL bounds testing approach, the empirical results of this study reveal that the causality between financial systems and economic growth is indistinct; and it varies widely across countries and over time. Overall, the study finds that there is a long-run causal flow from bank-based financial development to economic growth in the UK and Australia; a distinct feedback loop in the case of Brazil; and a neutrality relationship in the case of Kenya, South Africa and the USA. For market-based financial development, the study finds evidence of bidirectional causality in the case of Kenya; a demand-following hypothesis in South Africa and Brazil; and a neutrality relationship in the case of Australia and the UK. The study, therefore, repudiates the traditional argument, which contends that the finance-growth nexus follows a supply-leading phenomenon
    Keywords: Bank-Based Financial Development, Market-Based Financial Development, Stock Market, Banks, Economic Growth, Granger-Causality, USA, UK, Australia, South Africa, Brazil, Kenya
    Date: 2016–01
  17. By: Ssozi, John; Asongu, Simplice A
    Abstract: After investigating the effect of external financial flows on total factor productivity and technological gain, we use the beta catch-up and sigma convergence to compare dispersions in output per worker, total factor productivity and technological gain in Sub-Saharan Africa (SSA) for the years 1980-2010. The comparative evidence is articulated with income levels, years of schooling, and health factors. We find; first, a positive association between foreign direct investment, trade openness, foreign aid, remittances and total factor productivity. However, when foreign direct investment is interacted with schooling, it is direct effect becomes negative on total factor productivity. Second, beta catch-up is between19.22% and 19.70% per annum with corresponding time to full catch-up of 25.38 years and 26.01 years respectively. Third, we find sigma-convergence among low-income nations and upper-middle income nations separately, but not for the entire sample together. Fourth, schooling in SSA is not yet a significant source of technology, but it can make external financial inflows more effective. Policies to induce external financial flows are not enough for development if absorptive capacity is low. More policy implications are discussed.
    Keywords: External capital flows, Human capital, Total Factor Productivity, Convergence, and Sub-Saharan Africa
    JEL: E23 F21 O11 O33 O55
    Date: 2015–09

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