nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2017‒10‒22
twelve papers chosen by

  1. Productivity divergence – Frontier firms vs. the others By Pajarinen, Mika; Rouvinen, Petri; Ylhäinen, Ilkka
  2. Industrial Espionage and Productivity By Albrecht Glitz; Erik Meyersson
  3. Technical Efficiency Analysis of Wheat Farms in the Punjab, Pakistan: DEA Approach By Muhammad Aamir, Shahzad; Waqar, Akram; Muhammad, Khan
  4. Are There Too Many Farms in the World? Labor-Market Transaction Costs, Machine Capacities and Optimal Farm Size By Andrew D. Foster; Mark R. Rosenzweig
  5. Understanding productivity dynamics:a task taxonomy approach By Tiago Fonseca; Francisco Lima; Sonia C. Pereira
  6. Intramural and external R&D: Evidence for complementary or substitutability By Dolores Añón Higón; Juan A. Mañez; Juan A. Sanchis
  7. Productivité du travail et croissance économique dans une économie dépendante des hydrocarbures : le cas algérien, 1984-2014 By Serge REY; Sofiane HAZEM
  8. Manufacturing the future: is the manufacturing sector a driver of R&D, exports and productivity growth? By Alex Coad; Antonio Vezzani
  9. What's good for the goose ain't good for the gander: cock-eyed counterfactuals and the performance effects of R&D By Alex Coad; Nanditha Mathew; Emanuele Pugliese
  11. The Effect of Regional Competition and Company-sponsored Training on the Productivity-Wage Wedge By Hinz, Tina; Mohrenweiser, Jens
  12. Firm Heterogeneity and Exports in The Netherlands: Identifying Export Potential By Steven Brakman; Harry Garretsen; Raoul van Maarseveen; Peter Zwaneveld

  1. By: Pajarinen, Mika; Rouvinen, Petri; Ylhäinen, Ilkka
    Abstract: International literature suggests that productivity growth of the global frontier firms – those in the best five percent – has diverged from the others during the 2000s (Andrews et al. 2016). We study this issue using Finnish firm-level data. We find that the productivity of the Finnish frontier firms does not diverge from the others to such a degree as in the international comparisons. The findings do not provide clear evidence of a slowdown in the diffusion process. We also analyze whether frontier firms are associated with characteristics related to digitalization – and do not find clear evidence of that either. This might be related to the fact that the employed measures are related to technology adoption – not to the creativity or efficiency of its use.
    Keywords: Productivity, divergence, diffusion, digitalization, Finland
    JEL: D22 O30 O40
    Date: 2017–10–13
  2. By: Albrecht Glitz; Erik Meyersson
    Abstract: In this paper, we investigate the economic returns to industrial espionage by linking information from East Germany’s foreign intelligence service to sector-specific gaps in total factor productivity (TFP) between West and East Germany. Based on a dataset that comprises the entire flow of information provided by East German informants over the period 1970-1989, we document a significant narrowing of sectoral West-to-East TFP gaps as a result of East Germany’s industrial espionage. This central finding holds across a wide range of specifications and is robust to the inclusion of several alternative proxies for technology transfer. We further demonstrate that the economic returns to industrial espionage are primarily driven by relatively few high quality pieces of information and particularly strong in sectors that were closer to the West German technological frontier. Based on our findings, we estimate that the average TFP gap between West and East Germany at the end of the Cold War would have been 6.3 percentage points larger had the East not engaged in industrial espionage.
    Keywords: espionage, productivity, R&D, technology diffusion
    JEL: D24 F52 N34 N44 O30 O47 P26
    Date: 2017
  3. By: Muhammad Aamir, Shahzad; Waqar, Akram; Muhammad, Khan
    Abstract: The wheat productivity in the Punjab is less than the potential maximum due to technical farm and management issues. The farm level panel survey data was used for the said purpose comprising 17 districts of the province of the Punjab from the period 2005-06 to 2007-08. The technical efficiency of wheat farms was analyzed using Data Envelopment Analysis (DEA) approach. Subsequently, the same was calculated by analyzing the socioeconomic factors responsible for (in) efficiency using Tobit Regression Model. The DEA didn’t accommodate statistical noise such as random shocks which were beyond the control of farmers. However, the technical efficiency of wheat farms was estimated using the DEA approach. The mean technical efficiency estimated through variable return to scale (VRS) was 60.13 percent and constant return to scale (CRS) was 56.61 percent. The results of analyses were supported by the literature. The technical efficiency could be improved by educating the young farmers, building road infrastructure and providing access to essential inputs to farmers. The study undertaken supports the argument that technically wheat farmers are less efficient in the Punjab, Pakistan.
    Keywords: Data Envelopment Analysis, Variable Return to Scale, Constant Return to Scale.
    JEL: Q12 Q18
    Date: 2016–10–01
  4. By: Andrew D. Foster; Mark R. Rosenzweig
    Abstract: This paper seeks to explain the U-shaped relationship between farm productivity and farm scale - the initial fall in productivity as farm size increases from its lowest levels and the continuous upward trajectory as scale increases after a threshold - observed across the world and in low-income countries. We show that the existence of labor-market transaction costs can explain why the smallest farms are most efficient, slightly larger farms least efficient and larger farms as efficient as the smallest farms. We show that to explain the rising upper tail of the U characteristic of high-income countries requires there be economies of scale in the ability of machines to accomplish tasks at lower costs at greater operational scales. Using data from the India ICRISAT VLS panel survey we find evidence consistent with these conditions, suggesting that there are too many farms, at scales insufficient to exploit locally-available equipment-capacity scale-economies.
    JEL: O13
    Date: 2017–10
  5. By: Tiago Fonseca (World Maritime University; CEG-IST, Instituto Superior Técnico, Universidade de Lisboa); Francisco Lima (CEG-IST, Instituto Superior Técnico, Universidade de Lisboa); Sonia C. Pereira (Barnard College, Columbia University and Columbia School of Social Work)
    Abstract: As job markets have been polarizing, firms have been changing their labor inputs.By using matched employer-employee data for Portugal, we examine whether labor market polarization has occurred within or across firms and how labor input upgrades have contributed to overall productivity growth. We develop a firm taxonomy based on worker’s occupational data. Firms can be focused on one task – Abstract, Manual or Routine – on a combination of tasks, or none. Results show that Abstract firms are the most productive and their share has increased over time. Manual firms, the least productive, have had a stable share throughout the period. Routine firms have seen their share decline over time. The dynamic decomposition of the estimated productivity reveal that productivity growth is propelled by increased market shares of the most productive incumbents and exiting of the least productive, especially for Abstract firms. Notwithstanding these productivity growth drivers, they fail to avert the productivity stagnation observed in Portugal between 2004 and 2009 due to the overall decline in productivity of incumbent firms, especially Routine. We discuss the policy implications of our results which are relevant to other European economies also lagging behind in terms of knowledge and innovation capabilities.
    Keywords: Taxonomy, productivity, routinization, technological change, polarization
    JEL: D24 L23 O33
    Date: 2017–09
  6. By: Dolores Añón Higón (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Juan A. Mañez (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Juan A. Sanchis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: The aim of this study is to ascertain the impact of two firm innovation strategies – namely, intramural R&D and external R&D, including either contracted R&D and import of technology, upon total factor productivity (TFP). In order to evaluate these effects we consider robust estimates of TFP through a GMM approach where we account for the diverse innovation strategies carried out by firms (intramural only, external only or both). Using data for Spanish manufacturing firms drawn from the Encuesta de Estrategias Empresariales (ESEE), over the period 1991-2014, our results suggest that inhouse R&D and external R&D are complementary strategies only for large fims in high tech sectors. For the rest of firms, both strategies turn out to be substitutive.
    Keywords: intramural R&D, external R&D, complementarity, substitutability, TFP
    Date: 2017–06
  7. By: Serge REY; Sofiane HAZEM
    Abstract: On s’intéresse à l’impact de la productivité sur la dynamique de la croissance économique en Algérie sur la période 1984-2015. Le premier objectif de cet article a été de mesurer cette productivité à la fois pour l’ensemble de l’économie et pour différents secteurs. On a ensuite procédé à des estimations originales du stock de capital en s’appuyant sur la méthode de l’inventaire permanent, ce qui a permis de déduire les évolutions de la productivité globale des facteurs. A partir de ces estimations, on montre que si globalement l’économie algérienne a connu d’assez bonnes performances en matière de croissance économique, cela a été plus le résultat d’une augmentation des facteurs de productions, essentiellement de la main d’oeuvre, que de la croissance de la productivité du travail qui a été très limitée. Ce résultat reflète en partie les faibles performances du secteur des hydrocarbures qui a connu une diminution de la productivité du travail depuis le début des années 2000, tandis que d’autres secteurs comme l’agriculture ont connu à l’inverse de forts gains de productivité. This paper addresses the empirical question of whether the productivity can help explain economic growth dynamics in Algeria over the 1984-2015 period. The first objective of this article is to measure productivity for both the economy as a whole and for different sectors. Then original estimates of the capital stock are made using the permanent inventory method, which led to inferring evolutions in total factor productivity. On the basis of these estimates, it is shown that while the Algerian economy as a whole has performed fairly well in terms of economic growth, this was more the result of an increase in production factors, i.e. labor force, than of labor productivity growth, which was very limited. This partly reflects the weak performance of the hydrocarbons sector, which has experienced a decline in labor productivity since the early 2000s, while other sectors such as agriculture have experienced strong productivity gains.
    Keywords: Growth rate, Algeria, hydrocarbons, labor productivity, TFP
    JEL: D24 O14
    Date: 2017–09
  8. By: Alex Coad (CENTRUM Católica Graduate Business School, Pontificia Universidad Católica del Perú, Lima, Perú); Antonio Vezzani (European Commission - JRC)
    Abstract: Many industrialized countries in Europe and North America have experienced a steady decline in the manufacturing sector over the last few decades. Amid growing concerns that outsourcing and offshoring have destabilized European economies, policymakers have suggested that a large manufacturing sector can: i) boost R&D, ii) encourage exporting, and iii) raise productivity. We examine these claims. Non-parametric plots and regressions show a robust positive association between the manufacturing sector and Business R&D expenditures (BERD), while the relationship between manufacturing and exports or productivity is more elusive. Finally, we explore whether a manufacturing sector target of 20% of value-added will help reach a BERD target of 3% of GDP.
    Keywords: Manufacturing sector, R&D, exporting, productivity, industrial policy, industrial renaissance
    Date: 2017–09
  9. By: Alex Coad; Nanditha Mathew; Emanuele Pugliese
    Abstract: We investigate the effects of R&D investment on performance outcomes (sales growth and relative profitability) for Indian manufacturing firms. Previous research shows contradictory results - while some studies find a positive effect of R&D on firm performance, some find that firms investing in R&D do not perform significantly better, in some cases, even perform worse than their non-investing counterparts. We claim that the effects of R&D on performance are often mis-specified: The contradictory results are likely due to 1) inverse causality, i.e., firms invest in R&D as a function of sales growth and/or 2) a bias caused by censored data (i.e. R&D investment has a lower bound at zero). We apply endogenous switching regression to tackle the issue of selection and censored data, and the results we observe are sharp: firms investing in R&D would have had less growth and less relative profitability if they had not done so. Interestingly, firms that did not invest in R&D would not have benefited had they done so.
    Keywords: R&D investment, Firm performance, Endogenous switching
    Date: 2017–09–09
  10. By: Andersson, Åke E. (Jönköping International Business School (JIBS)); Johansson, Börje (Jönköping International Business School (JIBS), Royal Institute of Technology (KTH), & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: Production theory has remained substantially unchanged since the publication of the Theory of Production by Ragnar Frisch, (1928, 1965). The theory is based on the idea of a firm deciding on the possible input and output combinations of a single unit of production. His theory was substantially copied in contributions by Sune Carlsson (1939) and Erich Schneider (1947), and later by practically all textbooks in microeconomics. The idea is to model the firm as a “black box” in which a finite number of externally purchased inputs are transformed into a finite number of outputs to be sold in the market(s). Most of the time, the prices are externally determined. Often, the production process is summarized by some simplified production function as for example in the form of a CES function. Another and conceptually richer approach is the formulation of an activity analysis model. In the latter case, simple internal interdependencies can be included. In this paper, we indicate how internal interdependencies can also be modeled within a special CES framework. In recent decades, there has been a remarkable growth in the number of production units of firms like IKEA, Walmart and Apple to name a few such global networking firms. Most of the analysis of these network firms has been modeled by logistics and other operations-research analysts and to a limited extent by researchers in business administration schools. Very little has been done in economics. We propose a modelling approach consistent with microeconomic theory.
    Keywords: Multilocation firm; management of network firm; collaborative advantages; economies of scale and scope
    JEL: D21 D23 D24 D51 D85 F23 L23 R12
    Date: 2017–10–10
  11. By: Hinz, Tina; Mohrenweiser, Jens
    Abstract: The new training literature argues that imperfect labour market competition drives a wedge between productivity and wage increases in skills. We apply recent advancements in the estimation of production and wage functions to show a compressed wage structure in Germany. We also use regional and industry variation in labour market competitiveness and show that there is a premium on productivity and wages,but the productivity-wage wedge does not diminish in labour markets that are more competitive.
    JEL: J24 M53 R23
    Date: 2017
  12. By: Steven Brakman; Harry Garretsen; Raoul van Maarseveen; Peter Zwaneveld
    Abstract: Stimulating firms to become exporters is of interest to policy makers, as exporters are in general more productive than non-exporters. However, selecting high export potentials is difficult in practice. The contribution of this paper is to characterize and identify these (high) export potentials. According to the Melitz (2003) model, potential exporters have to be productive enough to overcome the entry costs of foreign markets. Once firms pass this productivity threshold, they all export. Empirical evidence, however, indicates that a substantial share of high-productive firms does not export. In this paper, we focus specifically on this group of high-productive non-exporters. We employ a large micro-dataset for Dutch firms both in services and manufacturing for 2010-2014. Our findings are threefold. First, high productivity is an important, but not a sufficient condition for exporting. Firm size (substitute for productivity), import status, and foreign ownership are also important. Second, firm location is crucial. A location in peripheral areas prevents high productive firms from exporting; especially a location in the Northern part of the Netherlands reduces the probability to export. Third, the manufacturing sector differs from the services sector. Given that the median exporter in our sample is a services firm; this sector should be included in export research.
    Keywords: firm heterogeneity, export behavior, location
    JEL: F12 F14
    Date: 2017

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