nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒08‒06
ten papers chosen by

  1. Technical efficiency of dairy farms in Uruguay: a stochastic production frontier analysis By Gabriela Pérez Quesada
  2. Exporting and performance: evidence from Greek firms By Heather D Gibson; Georgia Pavlou
  3. Bank Consolidation and Efficiency: an Empirical Study from India By Kollapuri M
  4. Non-parametric methods applied in the efficiency analysis of European structural funding in Romania By Roman, Monica; Gotiu (Lucaciu), Liliana
  5. Performance of Hungarian firms: are apprentices an asset or a liability? Evidence from a unique matched employer-employee dataset By Sofie Cabus; Eszter Nagy
  6. Productivity Gaps and Vertical Technology Spillovers from Foreign Direct Investment: Evidence from Vietnam By Bin Ni; Hayato Kato
  7. Examining the Eco-Macroeconomic Performance Index of India: A Data Envelopment Analysis Approach. By Mohanty, Ranjan Kumar; Sahoo, Biresh K.
  8. An Empirical Evaluation of ‘Structure-Conduct-Performance’ and ‘Efficient-Structure’ Paradigms in the Banking Sector of Pakistan By Mahmood ul Hasan Khan; Muhammad Nadim Hanif
  9. Multi Product Firms, Import Competition, and the Evolution of Firm-product Technical Efficiencies By Emmanuel Dhyne; Amil Petrin; Valerie Smeets; Frederic Warzynski
  10. The Young, the Old and the Innovative: The Impact of R&D on Firm Performance in ICT versus Other Sectors By Koutroumpis, Pantelis; Leiponen, Aija; Thomas, Llewellyn D W

  1. By: Gabriela Pérez Quesada
    Abstract: The productivity of Uruguayan dairy farms has been consistently growing for the last 40 years. This process has implied the adoption of new technologies which have had significant effects on the production system. The efficiency with which available technologies are used influence output growth. Hence, assuring and enhancing dairy farms’ productivity and efficiency represent an important challenge to improve the competitiveness of the sector and achieve sustained economic growth. The overall objective of this study is to analyze the efficiency performance of dairy farms in Uruguay. Using a cross-sectional database, this study estimates a Cobb-Douglas stochastic production frontier and technical inefficiency model for dairy farms to determine the effect of each input on the production frontier and the principal factors that explain differences in farm efficiency. Results show that the number of milking cows has the highest effect on production, followed by the total consumption of feed, including concentrated feed, hay and silage. Although veterinary, agronomic and accounting assistance matter, the major determinants of efficiency differences are farmers’ specialization in dairy farming and the usage of artificial insemination. Overall, farm profiles indicate that those in the high efficiency group achieve a higher level of milk production than those less efficient; and they produce under a more intensive production system than farmers in low efficiency groups.
    Keywords: stochastic production frontier, Uruguayan dairy farms, technical efficiency, cross-sectional data
    JEL: Q10 Q19 D24
    Date: 2017–06
  2. By: Heather D Gibson (Bank of Greece); Georgia Pavlou (Bank of Greece)
    Abstract: This paper explores differences in performance between firms that export and those that do not. With only a few exceptions, exporters have characteristics which suggest “better” performance than non-exporters, controlling for observed and unobserved heterogeneity. This paper aims to provide evidence on the differences between exporters and non-exporters in terms of labour productivity and profitability across time, different sectors of economic activity and different size groups, using data from exporting and non-exporting firms incorporated in Greece for the period 2006-2014. The results suggest that the exporter productivity premium is around 14% for the whole sample, pointing to a significant productivity advantage for exporting firms which is even stronger in certain sectors of economic activity. There is also evidence in favour of higher productivity growth for always-exporting firms and starters, while there is a negative, though insignificant, effect for stoppers.
    Keywords: export premia; labour productivity; Greece; firm performance
    JEL: F14
    Date: 2017–06
  3. By: Kollapuri M (Jawaharlal Nehru University)
    Abstract: This paper tries to examine issues of bank consolidation and efficiency for 16 major consolidation deals in India during the period 1995-2013.Using data envelopment analysis (DEA) method of input-oriented efficiency measures and non-parametric median tests and Tobit regression analysis, we find that consolidation improved efficiency in majority of the cases only when pure technical efficiency scores are considered. For overall efficiency and scale efficiency, in majority of the cases there was no significant improvement post consolidation. Further consolidation was a significant determinant for pure technical efficiency but not for overall and scale efficiency. In majority of the cases, the acquirer banks were more efficient than target banks only for pure technical efficiency but not for overall and scale efficiency. Length: 33 pages
  4. By: Roman, Monica; Gotiu (Lucaciu), Liliana
    Abstract: One of the most widely used methods in assessing the efficiency of public policies and programs for a set of units is Data Envelopment Analysis (DEA). DEA is a non-parametric method which identifies an efficiency frontier on which only the efficient Decision Making Units (DMUs) are placed, by using linear programming techniques. By applying non-parametric techniques of frontier estimation, the efficiency of a DMU can be measured by comparing it with an identified efficiency frontier. In this paper we have used DEA for evaluating the efficiency of the European structural funds allocated to finance the educational infrastructure through the Regional Operational Program 2007-2013, implemented in Romania. The output variables measure the educational performance as well as the school drop-out rate, while the focal input variable is the value of European funds. Romanian counties are considered to be the decision making units (DMUs) and our results confirm the deep disparities existing between Romanian counties concerning the efficient use of European structural funds.
    Keywords: European structural funds, efficiency, Data envelopment analysis, infrastructure, regions
    JEL: C61 H83 R58
    Date: 2017–03–17
  5. By: Sofie Cabus (Maastricht University); Eszter Nagy (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences and ELTE University)
    Abstract: Hungarian legislation provides firms with financial incentives to train apprentices from vocational training schools. In line with these incentives, it is observed that firms increasingly train apprentices over the period 2003-2011, in particular, in the sectors manufacturing, construction, wholesale and retail and hotels and restaurants. However, at the same time, it is observed that firms decreasingly retain the trained apprentices in these four sectors. This finding leads to the hypothesis that apprentices are not profitable in the long run. The formulated hypothesis is known in the previous literature as the ‘substitution strategy’. This recruiting strategy is particularly observed among firms that replace their low-skilled labour with apprentices in order to reduce the cost of wages. For these firms it is not beneficial to hire an apprentice after accomplishing his training, because then he becomes a low-skilled worker paid at higher wages. This paper investigates the effect of the share of days worked by apprentices on productivity and gross profits of Hungarian firms by using a unique matched employer-employee dataset. Different approaches that allow us to estimate the effect are discussed among which fixed effects first-difference models and system GMM. The results indicate that apprentices decrease productivity and gross profits of Hungarian firms. These negative effects on firm performance were more prominent and robust before (2003-2007) than after the financial crisis (2008-2011).
    Keywords: apprenticeship training, firm performance, panel data
    JEL: I21 J24 L25
    Date: 2017–06
  6. By: Bin Ni (Faculty of Business Administration,Toyo University); Hayato Kato (Faculty of Economics, Keio University)
    Abstract: Developing countries are eager to attract foreign direct investment (FDI) to gain positive technology spillovers for their local firms. However, which type of foreign firm is desirable for a host country looking for beneficial spillovers? At first sight, foreign firms with higher productivity may seem of more benefit by transferring their advanced knowledge; however, their technological and managerial knowledge may be too advanced for local firms to learn. To address this question, we use firm-level panel data from Vietnam to investigate whether foreign Asian investors in downstream sectors affect the productivity of local Vietnamese firms in upstream sectors according to the foreign firms' differing productivity levels. Using the method of endogenous structural breaks, we divide Asian investors into low, middle, and high productivity groups.The results suggest that the middle group has the strongest and most significant positive impact on local suppliers' productivity.
    Keywords: Technology spillover, Productivity gap, Firm-level data, Vietnam
    JEL: D22 F21
    Date: 2017–07–15
  7. By: Mohanty, Ranjan Kumar (National Institute of Public Finance and Policy); Sahoo, Biresh K. (Xavier Institute of Management, Bhubaneswar)
    Abstract: The prime objective of the paper is to construct a robust macroeconomic performance (MEP) index of India using Data Envelopment Analysis (DEA) approach. Six major macro indicators, namely, economic growth, employment rate, terms of trade, inflation rate, fiscal deficit, and pollution are used to computeMEP and Eco-MEP index of the Indian economy from 1980-81 to 2015-16. Overall, both the MEP and Eco-MEP index scores have quite similar best performing years, worst performing years, and have also captured the major events that adversely affected the economy during the last 35 years. This shows that the trend in overall performance of Indian economy was better in the 1980s and the 1990s but has deteriorated after the 2000s. The ARDL Bounds Testing approaches to cointegration methods are used to test the robustness/utility of these indices. The estimated results find that MEP and Eco-MEP have a positive impact on private investment, negative effect on current account deficit (CAD), and positive impact on foreign investment inflows (FIIs) and foreign direct investment (FDI). Hence, the suggested composite MEP index is stable, robust and truly captures the economic performance of India.
    Keywords: Macroeconomic performance ; Eco-macroeconomic performance ; Data Envelopment Analysis ; Autoregressive Distributed Lag (ARDL) ; India.
    JEL: E60 C14 C32
    Date: 2017–07
  8. By: Mahmood ul Hasan Khan (State Bank of Pakistan); Muhammad Nadim Hanif (State Bank of Pakistan)
    Abstract: Based upon the indicators of market structure, this paper tests the relevance of Structure-Conduct-Performance (SCP), Relative Market Power (RMP), and the Efficient Structure (ES) paradigms for banking industry of Pakistan. We use a (balanced) panel data from 24 commercial banks of Pakistan from the year 1996 to 2015. Descriptive statistics and the formal tests suggest that: (a) there is a weak association between the indicators of market structure and banks’ performance in case of Pakistan; (b) the empirical evaluation results do not provide meaningful support to SCP or RMP paradigms; and (c) the ES paradigm is more relevant in case of Pakistan. At policy level, the findings of this paper suggest that the focus of policymakers should be to improve the efficiency of banking sector, as the excessive focus on indicators of market structure like concentration ratio to improve competition in the banking sector could be counterproductive.
    Keywords: Structure-Conduct-Performance, Efficient-Structure, Competition, Banking Sector
    JEL: D40 E50
    Date: 2017–07
  9. By: Emmanuel Dhyne; Amil Petrin; Valerie Smeets; Frederic Warzynski
    Abstract: We study how increased import competition affects the evolution of firm-product technical efficiencies in the small open economy of Belgium. We observe quarterly firm-product data at the 8-digit level on quantities sold and firm-level labor, capital, and intermediate inputs from 1997 to 2007, a period marked by stark declines in tariffs applied to Chinese goods. Using Diewert (1973) and Lau (1976) we show how to estimate firm-product quarterly technical efficiencies using a multi-product production (MPP) function that avoids using single-product (SP) production func- tion approximations to it. We find that a 0.01 increase in the import share leads to a 1.05% gain in technical efficiency. This elasticity translates into gains from com- petition over the sample period exceeding 1.2 billion euros, which is over 2.5% of the average annual value of manufacturing output in Belgium. Firms appear to be less technically efficient at producing goods the further they get from their ”core” good and firms respond to competition by focusing more on their core products. Instrumenting import share - while not important for the signs of the coefficients - is very important for the magnitudes as the effect of competition increases tenfold when one moves from OLS to IV. We close by testing the SP approximation to MPP and reject in eight of twelve industries.
    JEL: D24 F14
    Date: 2017–07
  10. By: Koutroumpis, Pantelis; Leiponen, Aija; Thomas, Llewellyn D W
    Abstract: Although innovation opportunities within the ICT industry are assumed high in comparison with other industries because of their rapidly evolving technological trajectory, little empirical research systematically investigates the distribution of returns to R&D investment across industries and types of firms. Building on the technological opportunity framework, we examine the effect of R&D on firm revenues in a large panel of European firms and study its variation with the age, size, and sub-sector of firms. We confirm that R&D investments in ICT firms have a larger effect on their revenue performance when compared to non-ICT firms and that the effect is higher for small firms and for firms in Internet services and ICT component manufacturing. At the firm level, our results suggest that smaller and, surprisingly, older ICT firms are technologically opportunistic and exhibit the flexibility and adaptability to both identify and respond to technological opportunities and develop innovative products and services. We highlight some implications for R&D investment and policy.
    Keywords: ICT, R&D, firm performance, technological opportunity, firm age, firm size
    JEL: O31 O32 D24
    Date: 2017–08–02

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