nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒04‒20
eighteen papers chosen by

  1. Semi-endogenous growth models with domestic and foreign private and public R&D linked to VECMs with evidence for five countries By Ziesemer, Thomas
  2. The Cost Efficiency of Cambodian Commercial Banks:A Stochastic Frontier Analysis By Hidenobu Okuda; Daiju Aiba
  3. Exploring Feedback Loops between Performance Measures. Energy and Environmental Efficiency under heterogeneous Eco-Innovation groups By Nikos Chatzistamoulou; Phoebe Koundouri
  4. The Impact of Foreign Technology & Embodied R&D On Productivity in Internationally-Oriented & High-Technology Industries in Egypt, 2006-2009 By Shimaa Elkony; Hilary Ingham; Robert Read
  5. Environmental Efficiency, Productive Performance and Spillover Effects under heterogeneous Environmental Awareness Regimes By Nikos Chatzistamoulou; Phoebe Koundouri
  6. More market, more efficiency? Water market impacts on water use efficiency in the Australian agricultural sector By Simon de Bonviller; Phu Nguyen-Van; Anne Rozan
  7. Productivity Dispersion and Persistence Among the World's Most Numerous Firms By Casey C. Maue; Marshall Burke; Kyle J. Emerick
  8. The Effects of Local Market Concentration and International Competition on Firm Productivity : Evidence from Mexico By Rodriguez Castelan,Carlos; Lopez-Calva,Luis-Felipe; Barriga Cabanillas,Oscar Eduardo
  9. On the Link between Trade Liberalization and Firm Productivity: Panel Data Evidence from Private Firms in Ghana. By Hoedoafia, Mabel Akosua
  10. The productivity impact of business visits across industries By Piva, Mariacristina; Tani, Massimiliano; Vivarelli, Marco
  11. Are the Operations of Microfinance Institutions Different Across Countries? A Comparative Analysis of Cambodia and the Philippines Using DEA and PCA By Hidenobu Okuda; Daiju Aiba
  12. Total factor productivity and the measurement of neutral technology By Moura, Alban
  13. The Effect of Firm Size, Profitability, Audit Committee, and Other Factors to Firm Value By Indra Arifin Djashan
  14. Immigration and Worker-Firm Matching By Gianluca Orefice; Giovanni Peri
  15. Robotisation, Employment and Industrial Growth Intertwined Across Global Value Chains By Mahdi Ghodsi; Oliver Reiter; Robert Stehrer; Roman Stöllinger
  16. Firm Age, Productivity, and Intangible Capital By HOSONO Kaoru; TAKIZAWA Miho; YAMANOUCHI Kenta
  17. Exploring the patterns of Eco-Innovation index and Competitiveness index in Europe By Nikos Chatzistamoulou; Phoebe Koundouri
  18. FDI, Ownership Structure, and Productivity By ITO Tadashi; TANAKA Ayumu

  1. By: Ziesemer, Thomas (UNU-MERIT, Maastricht University)
    Abstract: We present semi-endogenous growth models with productivity as functions of domestic and foreign private and public R&D. In a small country case with a Cobb-Douglas productivity production function, foreign R&D drives steady-state growth and the production function can be a long-term relation in a vector-error-correction model (VECM). Marginal productivity conditions can be long-term relations for a vector-error-correction model if the functional form is of a VES function generalising a CES function. Combining the marginal products of VES functions with recent evidence from VECMs for five countries shows that private and public R&D have a positive effect on productivity (except for France), and a negative R&D augmenting technical change. In case of a VES function, steady states with constant R&D/productivity ratios exist only for special cases of parameter restrictions, which are not supported by the evidence.
    Keywords: Productivity, endogenous (un)balanced growth, public R&D expenditure, foreign spillover
    JEL: O38 O40 O41 H54 H87
    Date: 2020–03–31
  2. By: Hidenobu Okuda; Daiju Aiba
    Abstract: Abstract Regulating a banking sector requires a deep understanding of the industry structure and behavior of banks, and their current market performance. The Cambodian banking sector has rapidly expanded in recent decades, in line with the Country’s sustained high economic growth. However, there are concerns about the performance of Cambodian banks and the country’s banking sector. The problem is that there is a paucity of empirical evidence to clarify the real issues in the banking sector, and this lack of evidence also makes it difficult to formulate effective policy measures to address any potential problems. In this study we provide empirical evidence on the behavior of Cambodian commercial banks by estimating the industry cost function and their cost efficiencies. Our study covers 34 commercial banks over the period from 2012 to 2015. We find that average cost efficiency scores range from 0.26 to 0.29 (depending on the output definition) for Cambodian commercial banks, suggesting that if they operated more efficiently they could cut costs by 71% to 74% while keeping the same output level. We also find that the Cambodian banking industry realizes economies of scale. Furthermore, by estimating the determinants of cost efficiency we find that expanding a branch network into local areas is inefficient for bank management. Secondly, holding excessive liquidity is associated with greater inefficiency, but diversification in bank business operations is positively associated with the improved cost efficiency of Cambodian commercial banks.
    Keywords: Cambodia, Cost Function, Efficiency, Banking, Stochastic Frontier Analysis
    Date: 2020–04
  3. By: Nikos Chatzistamoulou (AUEB); Phoebe Koundouri
    Abstract: By following a two-stage analysis, we explore whether resource efficiency measures are interconnected through feedback loops under heterogeneous eco-innovation regimes. In the first stage we adopt the bootstrap Data Envelopment Analysis and a Directional Distance Function approach to estimate productive performance, energy and environmental efficiency of each country under a metafrontier total factor productivity framework accounting for technological heterogeneity and input complementarities. In the second, we employ the potential of the identification through heteroskedasticity estimator to tackle endogeneity concerns surrounding performance measures, we seek the drivers of resource efficiency measures. We comprise a unique balanced panel for the EU-28 from 2010 through 2014 including the eco-innovation index and hand-collected data on the global competitiveness index. Findings indicate that resource efficiency measures despite those are interconnected through feedback loops, they act either as closely related measures i.e. blood brothers or as loosely related ones i.e. distant relatives. This is particularly relevant for policy design. In this line, findings indicate that there is not a one-size-fits-all policy as the eco-innovation group each country belongs to should be considered as well since the latter respond in an asymmetric manner to candidate drivers.
    Keywords: Resource Efficiency, Environmental & Energy Efficiency, Productive Performance, Eco-Innovation Index, Sustainability, Metafrontier & Heterogeneity, Feedback loop
    Date: 2020–04
  4. By: Shimaa Elkony; Hilary Ingham; Robert Read
    Abstract: This paper investigates the domestic productivity and spillover effects of foreign technology and embodied R&D on Egyptian manufacturing industries, 2003 to 2009. It also analyses the heterogeneous sectoral effects of technology transfer by focusing specifically on the productivity effects on highly internationalised and technology intensive industries. These are expected to have greater absorptive capacity with respect to foreign technology and therefore greater productivity effects because of their greater exposure to foreign competition and greater technological capacity respectively. The study is the first to analyse the efficiency effects of foreign technology by classifying industries in this manner. The study finds that foreign technology and embodied R&D have positive and significant industry-specific effects on domestic productivity and TFP in technology intensive industries but these are weaker in internationally-oriented industries. The findings suggest that only the technological intensive industries in Egypt have sufficient absorptive capacity to assimilate foreign technology effectively. The paper’s findings highlight the key role of foreign technology in domestic productivity growth, subject to the absorptive capacity of the domestic labour force, and the need for improved policies to promote the domestic benefits of technology transfer through the accumulation of local technological competences.
    Keywords: Foreign Technology, International R&D, Industrial Productivity, Trade
    JEL: D24 L60 O30
    Date: 2020
  5. By: Nikos Chatzistamoulou (AUEB); Phoebe Koundouri
    Abstract: In this paper we explore whether environmental efficiency at a global scale is affected by the existence of heterogeneous environmental awareness and implementation regimes. By adopting a first stage non parametric metafrontier framework to handle technological heterogeneity the bias corrected productive performance of each country economy as well as the environmental efficiency via the Directional Distance Functions approach are calculated for each of the 104 country economies considered from 2006 through 2014, on an annual basis. In the second stage, we employ a fractional probit model to investigate the variability of environmental efficiency. Findings indicate that productive performance appears to be a driver of environmental efficiency only for the environmentally aware country economies. Absorptive capacity seems to play a crucial role too. A rebound effect is also observed for the universal technology as well as for the environmentally aware country economies. The less environmentally aware country economies do not seem to respond the same way to the same set of factors, indicating that there exist mechanisms that cannot be captured by observed characteristics.
    Keywords: Environmental Efficiency, Sustainable Development Goals, Metafrontier & Heterogeneity, Productive Performance, Spillover Effects
    Date: 2020–04
  6. By: Simon de Bonviller; Phu Nguyen-Van; Anne Rozan
    Abstract: Water markets emerged as economic tools to deal with water scarcity. By reallocating existing water resources instead of using costly engineering projects to extend the existing supply, they are expected to increase the efficiency of water resources allocation. In this article we question empirically the impacts of water markets on the efficiency of agricultural production, as defined by a stochastic frontier approach. Using regional data on agricultural production and climatic factors, we analyze the link between the existence of water markets, the intensity of water trade and the efficiency of agricultural production in Australia, home to some of the most developed water markets in the world. We find that the existence of water markets in a region is associated with higher agricultural production efficiency, but no significant relationship is identified between the intensity of water trade and efficiency.
    Keywords: water markets; stochastic frontier; technical efficiency in agricultural production; Murray-Darling Basin.
    JEL: Q56 Q25 Q15
    Date: 2020
  7. By: Casey C. Maue; Marshall Burke; Kyle J. Emerick
    Abstract: A vast firm productivity literature finds that otherwise similar firms differ widely in their productivity and that these differences persist through time, with important implications for the broader macroeconomy. These stylized facts derive largely from studies of manufacturing firms in wealthy countries, and thus have unknown relevance for the world's most common firm type, the smallholder farm. We use detailed micro data from over 12,000 smallholder farms and nearly 100,000 agricultural plots across four countries in Africa to study the size, source, and persistence of productivity dispersion among smallholder farmers. Applying standard regression-based approaches to measuring productivity residuals, we find much larger dispersion but less persistence than benchmark estimates from manufacturing. We then show, using a novel framework that combines physical output measurement, estimates from satellites, and machine learning, that about half of this discrepancy can be accounted for by measurement error in output. After correcting for measurement error, productivity differences across firms and over time in our smallholder agricultural setting closely match benchmark estimates for non-agricultural firms. These results question some common implications of observed dispersion, such as the importance of misallocation of factors of production.
    JEL: O12 Q12
    Date: 2020–04
  8. By: Rodriguez Castelan,Carlos; Lopez-Calva,Luis-Felipe; Barriga Cabanillas,Oscar Eduardo
    Abstract: Although market concentration is one of the main impediments to productivity growth globally, data constraints have limited its analysis to developed countries or cross-country studies based on definitions of market concentration across nations and industries. This paper takes advantage of a database that is unusual by developing-country standards by means of leveraging the richness of five rounds of the Mexican Manufacturing Census between 1994 and 2014. The data allow estimation of the effects of local industry concentration on productivity. The main results show that a decline by 10 points in the Herfindahl-Hirschman index (on a 0-100 scale), a measure of market concentration, explains an increase by 1 percent in the total factor productivity of revenue. Local industry concentration also has heterogeneous effects on productivity across industries, while its impact on productivity varies by level of exposure to international markets. The results here show that the effect of greater exposure to trade offsets and, in most cases, reverses the negative effects of local concentration on productivity. These results are robust to specifications based on the estimation of firm productivity using the panels of establishment data from the 2009 and 2014 rounds of the economic census, to controlling for a proxy of markups, and to the use of alternate indicators of local industry concentration.
    Date: 2020–04–09
  9. By: Hoedoafia, Mabel Akosua
    Abstract: The private sector is deemed as an engine of growth. As such, many developing countries including Ghana have sought to develop the private sector to propel the growth of their economies. This notwithstanding, much has not been done to examine the effects of such efforts on the productivity of firms in relation to trade reforms in the context of the private sector. This paper contributes to the trade literature by examining how tariffs affect the productivity of manufacturing firms in Ghana’s private sector using firm-level data from 1991 to 2001. In the first step, productivity is estimated via the Levisohn-Petrin approach in order to correct for the well-known simultaneity and selection biases. In the second step, the effect of tariffs on the derived productivity is analysed. The findings suggest that lower tariffs are associated with a decline in the productivity of Ghanaian private firms in the manufacturing sector.
    Keywords: tariffs, productivity, trade liberalization, private sector, manufacturing
    JEL: D24 F10 F13 F14 F61 L25
    Date: 2020–03–31
  10. By: Piva, Mariacristina (Università Cattolica del Sacro Cuore, Piacenza); Tani, Massimiliano (UNSW Canberra, and IZA, Bonn); Vivarelli, Marco (UNU-MERIT, Maastricht University, Università Cattolica del Sacro Cuore, Milano, and IZA, Bonn)
    Abstract: This paper builds on and considerably extends Piva, Tani and Vivarelli (2018), confirming the key role of Business Visits as a productivity enhancing channel of technology transfer. Our analysis is based on a unique database on business visits sourced from the U.S. National Business Travel Association, merged with OECD and World Bank data and resulting in an unbalanced panel covering 33 sectors and 14 countries over the period 1998-2013 (3,574 longitudinal observations). We find evidence that BVs contribute to fostering labour productivity in a significant way. While this is consistent with what found by the previous (scant) empirical literature on the subject, we also find that short-term mobility exhibits decreasing returns, being more crucial in those sectors characterized by less mobility and by lower productivity performances.
    Keywords: Business visits, Labour mobility, Knowledge diffusion, R&D, Productivity
    JEL: J61 O33
    Date: 2020–03–24
  11. By: Hidenobu Okuda; Daiju Aiba
    Abstract: Abstract Of all the Southeast Asian countries, Cambodia and the Philippines have well-developed microfinance institutions (MFIs). However, the environments in which MFIs operate differ considerably between the two countries. Our study investigates the differences in management characteristics and efficiency of Cambodian and Philippine MFIs during the period of 2009-2015 using Data Envelopment Analysis (DEA) and Principal Component Analysis (PCA) and measures the key management characteristics and efficiency levels of local MFIs. Our study found that Cambodian MFIs tend to target sustainability (profitability) oriented management, and Philippine MFIs tend to target outreach (financial service to the poor) oriented management. Second, MFIs in the Philippines had a tendency to shift toward more outreach-orientated management over the period of our analysis. Third, while there are no clear differences in the capital-intensity of MFI operations between the two countries, over time capital-intensity improved in both. We further examined the relationship between country-specific factors, management characteristics and efficiency. We found that overall efficiency, outreach-orientation, and labor-intensive management were associated with the initial conditions of deposit-to-GDP ratio in the period of our analysis. This suggests that the development paths of MFIs are dependent on the development of traditional financial institutions in the early period of MFI development.
    Keywords: Cambodia, the Philippines, MFIs, Operational Characteristics, Data Envelopment Analysis, Principle Component Analysis
    Date: 2020–04
  12. By: Moura, Alban
    Abstract: TFP measures constructed from chain-aggregated output, such as those published by the Bureau of Labor Statistics or Fernald (2014), confound contributions from neutral and sector-specific technology. Therefore, they should not be used to infer the path of neutral technology in presence of investment-specific technical change. Two theory-consistent, utilization-adjusted measures of neutral technology at the quarterly frequency are proposed for the US business sector. Both indicate that neutral technology progress declined dramatically after the mid-1970s. In particular, its contribution to US growth fell from more than 85% before 1973 to less than 25% afterward. The associated welfare loss is enormous: if neutral technology had continued on its pre-1970s trend, 2017 US output would have been 70% higher.
    Keywords: total factor productivity, neutral technology, investment-specific technology, sources of growth
    JEL: E22 E23 E32 O41 O47
    Date: 2020–03
  13. By: Indra Arifin Djashan (STIE Trisakti, Jl. Kyai Tapa No. 20, Grogol, 11440, Jakarta, Indonesia Author-2-Name: Yosua Agustinus Author-2-Workplace-Name: STIE Trisakti, Jl. Kyai Tapa No. 20, Grogol, 11440, Jakarta, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - This study aims to identify the effect of firm size, profitability, audit committee and other factors on firm value.Methodology/Technique - The population in this study are all non-financial companies on the Indonesian Stock Exchange from 2015 to 2017. The research sample of 403 companies was selected using a purposive sampling method with certain criteria so that a total sample of 180 companies was obtained. Data testing techniques using multiple linear regression with a significance level of 5% alpha.Finding - The results show that firm size has a negative effect on firm value while company growth, profitability, liquidity, tangible fixed assets, audit committee and board size all have a significant effect on firm value. Simultaneously, all independent variables have a positive effect on firm value. The coefficient of determination shows that the effect of the independent variable on the dependent variable is 55.9% and the rest is influenced by other factors.Type of Paper - Empirical.
    Keywords: Audit Committee; Firm Value; Company Growth; Profitability; Liquidity; Board Size.
    JEL: M41 M42 M49
    Date: 2020–03–31
  14. By: Gianluca Orefice; Giovanni Peri
    Abstract: The process of matching between firms and workers is an important mechanism in determining the distribution of wages. In a labor market characterised by large dispersion of workers’ productivity and worker-firm complementarity, high quality firms have strong incentives to screen for the quality of workers. This process will increase the positive quality association of firm-worker matches known as positive assortative matching (PAM). Immigration in a local labor market, by increasing the variance of workers abilities, may drive stronger PAM between firms and workers. Using French matched employer-employee (DADS) data over the period 1995-2005 we document that positive supply-driven changes of immigrant workers in a district increased the strength of PAM. We then show that this association is consistent with causality, is quantitatively significant, and is associated with higher average productivity and firm profits, but also with higher wage dispersion. We also show that the increased degree of positive assortative matching is mainly reached by high-productive firms “losing” lower quality workers and “attracting” higher quality workers.
    Keywords: matching, workers, firms, immigration, productivity
    JEL: F16 J20 J61
    Date: 2020
  15. By: Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Oliver Reiter (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Roman Stöllinger (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: The global economy is currently experiencing a new wave of technological change involving new technologies, especially in the realm of artificial intelligence and robotics, but not limited to it. One key concern in this context is the consequences of these new technologies on the labour market. This paper provides a comprehensive analysis of the direct and indirect effects of the rise of industrial robots and productivity via international value chains on various industrial indicators, including employment and real value added. The paper thereby adds to the existing empirical work on the relationship between technological change, employment and industrial growth by adding data on industrial robots while controlling for other technological advancements measured by total factor productivity (TFP). The results indicate that the overall impact of the installation of new robots did not statistically affect the growth of industrial employment during the period 2000–2014 significantly, while the overall impact on the real value added growth of industries in the world was positive and significant. The methodology also allows for a differentiation between the impact of robots across various industries and countries based on two different perspectives of source and destination industries across global value chains. Disclaimer This is a background paper for the UNIDO Industrial Development Report 2020. Industrializing in the digital age.
    Keywords: Robotisation, digitalisation, global value chains, total factor productivity, industrial growth, employment, value added
    JEL: D57 J21 L16 O14
    Date: 2020–04
    Abstract: We examine the role of intangible capital investment in firm growth in sales and productivity over age. To this end, we first document how firm sales evolve with age using a large dataset from Japan covering the periods of 1991 and 1994-2015. Second, we construct a model to show the relationship between firm sales and the three parameters: markup, physical productivity (TFPQ), and factor price distortion, which vary across firms and over time. We estimate these parameters at the firm-year level using the dataset and quantify the impacts of each parameter on sales growth by simulating the hypothetical sales growth with each parameter fixed to the initial value for each firm. Third, we estimate the effects of intangible capital on sales through each parameter of sales. Our findings can be summarized as follows. First, firm sales grow with age up to about 30 years after entry. Second, TFPQ increases with firm age and has dominant effects on sales growth compared to markup and factor price distortion. Third, intangible capital has significant effects on sales growth through TFPQ. Among the three types of intangible capital, organizational capital accounts for a major portion of sales growth.
    Date: 2020–01
  17. By: Nikos Chatzistamoulou (AUEB); Phoebe Koundouri
    Abstract: In this technical report the interest is placed on two multi-faceted indices, the Eco-innovation index and the Global Competitiveness Index of the EU 28 member states. The former index is produced by the Eco-innovation Observatory under the DG Environment of the European Commission covering the period 2010-2018 while the latter is produced by the World Economic Forum and the period of interest is 2006-2017. Thus, we devise two unique panel datasets to explore the patterns of those indices in Europe. Findings indicate that Europe is characterized by technological and institutional heterogeneity despite the fact that countries are subject to the same policy directives. Results indicate that a pattern arises indeed. Specifically, south European countries outperform in almost every aspect of the indices examined while countries of the south and east of Europe appear to have the lowest performance on average. Findings indicate that in order to achieve higher performance a tailor made policy oriented to specific group of countries appears to be a plausible strategy in contrast to a one-size-fits-all policy.
    Keywords: Eco-Innovation Index, Global Competitiveness, Europe, Flagship Initiative, Europe 2020 Strategy
    Date: 2020–04
  18. By: ITO Tadashi; TANAKA Ayumu
    Abstract: The standard firm heterogeneity model of FDI considers the case of whole ownership of foreign affiliates. However, there exist many partially-owned foreign affiliates. This paper builds a model based on Helpman et al. (2004) to allow various ownership structures and posits some testable hypotheses on the relationship between productivity and ownership shares/structures. The empirical part corroborates these hypotheses, showing that high productivity firms have higher ownership share in their affiliates and lower productivity firms tend to opt for joint-ventures with wholesalers and/or local/3rd country partners.
    Date: 2020–03

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