nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒05‒18
fifteen papers chosen by

  1. Privatization and Enterprise Performance in Nigeria: Case Study of Some Privatized Enterprises By Afeikhena Jerome
  2. Knowledge-Based Capital and Productivity Divergence By Marie Le Mouel; Alexander Schiersch
  3. Maximum Likelihood Estimation of Stochastic Frontier Models with Endogeneity By Samuele Centorrino; Mar\'ia P\'erez-Urdiales
  4. Impacts of Extreme Climate Events on Technical Efficiency in Vietnamese Agriculture By Etienne ESPAGNE; Yoro DIALLO
  5. Antecedents of Social Funds Productivity of Islamic Banks in Indonesia By Andriyani, Lilik; Usman, Nurodin; Pambuko, Zulfikar Bagus
  6. Productivity, structural change, and skills dynamics: Evidence from a half-century analysis By Gunes Asik; Ulas Karakoc; Mohamed Ali Marouani; Michelle Marshalian
  7. Beyond the "Inverse Relationship": Area Mismeasurement Affects Actual Productivity, Not Just How We Understand It By William J. Burke; Stephen Morgan; Thelma Namonje; Milu Muyanga; Nicole M. Mason
  8. Agricultural Productivity and Rural Household Incomes: Micro-Level Evidence From Zambia By Jason Snyder; Thomas Jayne; Nicole Mason; Paul Samboko
  9. Short-Run Johansen Frontier-Based Industry Models: Methodological Refinements and Empirical Illustration on Fisheries By Kristiaan KERSTENS; Jafar SADEGHI; Ignace VAN DE WOESTYNE; John WALDEN
  10. The Effects of Public Expenditures on Labour Productivity in Europe By Igor Fedotenkov; Rangan Gupta
  11. Worker mobility and productivity spillovers: An emerging market perspective By Ayanda Hlatshwayo; C. Friedrich Kreuser; Carol Newman; John Rand
  12. Can Agricultural Productivity Growth Shape The Development of the Non- Farm Rural Economy? Geographically Localized Evidence from Zambia By Jason Snyder; Thomas Jayne; Jordan Chamberlin; Paul Samboko; Nicole Mason
  13. ‘To be or not to be’ located in a cluster? A descriptive meta-analysis of the firm-specific cluster effect By Nils Grashof; Dirk Fornahl
  14. The Darwinian Returns to Scale By David Baqaee; Emmanuel Farhi
  15. Determinants of small enterprise efficiency By Agnieszka Parkitna

  1. By: Afeikhena Jerome (Department of Economics University of Ibadan Ibadan, Nigeria)
    Abstract: Despite an impressive level of privatization activity across Africa and the upsurge in research on the operating performance of privatized firms in both developed and developing economies, our empirical knowledge of the privatization programme in Africa is limited. This study appraises the post-privatization performance of some privatized enterprises in Nigeria. The specific indicators examined are profitability, productive efficiency, employment, capital investment, output, prices and taxes. The study measures the change in any given indicator of performance by comparing its average value five years before and five years after privatization. Data envelopment analysis (DEA) is also deployed to assess changes in the level of technical efficiency in the selected enterprises. The results, albeit mixed, show significant increases in these indicators. Privatization is also associated with increase in technical efficiency in the affected enterprises. Reduction of politically motivated resource allocation has unquestionably been the principal benefit of privatization in Nigeria.
  2. By: Marie Le Mouel; Alexander Schiersch
    Abstract: Understanding the causes of the slowdown in aggregate productivity growth is key to maintaining the competitiveness of advanced economies and ensuring long-term economic prosperity. This paper is the first to provide evidence that investment in Knowledge-Based Capital (KBC), despite having a positive effect on productivity at the micro level, is a driver of the weak productivity performance at the aggregate level, by accentuating divergence between a group of “frontier” firms and the rest of the economy. Using detailed firm-level administrative data for Germany, we find evidence that the effect of KBC on productivity is heterogeneous across firms within industries: this effect is 3 times larger for firms in the top quintile of the KBC distribution compared to firms in the bottom quintile of the KBC distribution. We document the existence of divergence in productivity growth between top KBC users and the rest of firms at the industry level, and find that industries where this gap is larger are also those industries where the heterogeneity in the effect of KBC is highest and where average productivity growth was lower. The evidence hence supports the view that the use of KBC plays a role in explaining weak productivity growth, by accentuating differences between firms.
    Keywords: Knowledge-Based Capital, firm dynamics, productivity divergence
    JEL: D24 L25 O14 O30 O47
    Date: 2020
  3. By: Samuele Centorrino; Mar\'ia P\'erez-Urdiales
    Abstract: We provide a closed-form maximum likelihood estimation of stochastic frontier models with endogeneity. We consider cross-section data when both components of the composite error term may be correlated with inputs and environmental variables. Under appropriate restrictions, we show that the conditional distribution of the stochastic inefficiency term is a folded normal distribution. The latter reduces to the half-normal distribution when both inputs and environmental variables are independent of the stochastic inefficiency term. Our framework is thus a natural generalization of the normal half-normal stochastic frontier model with endogeneity. Among other things, this allows us to provide a generalization of the Battese-Coelli estimator of technical efficiency. Our maximum likelihood estimator is computationally fast and easy to implement. We showcase its finite sample properties in monte-carlo simulations and an empirical application to farmers in Nepal.
    Date: 2020–04
  4. By: Etienne ESPAGNE; Yoro DIALLO
    Abstract: The aim of this study is to examine farm household-level impacts of weather extreme events on Vietnamese rice technical efficiency. Vietnam is considered among the most vulnerable countries to climate change, and the Vietnamese economy is highly dependent on rice production that is strongly affected by climate change. A stochastic frontier analysis is applied with census panel data and weather data from 2010 to 2014 to estimate these impacts while controlling for both adaptation strategy and household characteristics. Also, this study combines these estimated marginal effects with future climate scenarios (Representative Concentration Pathways 4.5 and 8.5) to project the potential impact of hot temperatures in 2050 on rice technical efficiency. We find that weather shocks measured by the occurrence of floods, typhoons and droughts negatively affect technical efficiency. Also, additional days with a temperature above 31°C dampen technical efficiency and the negative effect is increasing with temperature. For instance, a one day increase in the bin [33°C-34°C] ([35°C and more[) lessen technical efficiency between 6.84 (2.82) and 8.05 (3.42) percentage points during the dry (wet) season.
    Keywords: Vietnam
    JEL: Q
    Date: 2019–03–28
  5. By: Andriyani, Lilik; Usman, Nurodin; Pambuko, Zulfikar Bagus
    Abstract: Purpose: The study aims to analyse the social funds’ productivity of Islamic banks in Indonesia and the antecedents of it. The study will measure the social fund productivity followed by the investigation about the variable which can determine the Islamic bank productivity. Methodology: The study conducted at nine Islamic banks Indonesia. Two stages of the Malmquist productivity index were applied to annual data from 2012-2018. The variables which are tested its effect on social funds’ productivity return on asset, operational efficiency, inflation, OPEC oil price, and economic growth. Main Findings: social funds’ productivity of Islamic banks in Indonesia has experienced progress during the observation period. It is supported by the progress on technological change and efficiency change. The antecedents of social funds’ productivity return on asset and operational efficiency, while macroeconomics conditions have no significant effect on social funds’ productivity. Applications of this study: This study enriches the research on Islamic banks and gives the recommendation for policymakers to supervise better and for banks’ managers to improve the social funds’ productivity. Novelty/Originality of this study: This research is the preliminary study on the determinant of social funds’ productivity in Islamic banks.
    Date: 2020–04–06
  6. By: Gunes Asik; Ulas Karakoc; Mohamed Ali Marouani; Michelle Marshalian
    Abstract: This paper explores the contribution of structural change and the skill upgrading of the labour force to productivity. Our growth decomposition based on an original database we built for Tunisia and Turkey shows that productivity is mainly explained by intra-industry changes during the import substitution period. Second, we show that this productivity increase has been driven by the reallocation of higher-educated labour between sectors rather than the absorption of highly educated workers within sectors.
    Keywords: MENA, Productivity, Skills, structural change, Tunisia, Turkey
    Date: 2020
  7. By: William J. Burke; Stephen Morgan; Thelma Namonje; Milu Muyanga; Nicole M. Mason
    Abstract: Although measurement error in agricultural field area and productivity data for developing countries is widely acknowledged, there is still a shortage of evidence on what the errors imply for researchers, and even less evidence on what the implications may be for farmers. In this study we investigate field size measurement errors on Zambian maize fields to examine the nature of these errors and the implications they have for: 1) our ability to understand productivity, 2) actual productivity, and 3) our broader understanding of total land use. Using a nationally representative dataset on Zambian smallholder maize plots, we compare self-reported (SR) and global positioning system (GPS) measures of land area on a farm’s largest maize plot to assess how measurement error might affect productivity estimates and farmer input use. Consistent with other studies, we find strong evidence that the land area of relatively smaller fields is overstated, and relatively larger fields is understated. However, correcting for this measurement error using GPS measurements appears to strengthen the evidence of an inverse relationship between field size and productivity. Additionally, we find strong evidence to suggest farmers themselves believe the area figures they report to enumerators and that their input use is more closely aligned with the reported field sizes than actual field sizes. Based on these results and insights from semi-structured interviews with farmers and extension agents, we argue that measurement error may affect real productivity in addition to productivity estimates. Strengthening extension efforts to improve farmer understanding of land area measurements may be an important and affordable way to improve productivity. Moreover, improving the accuracy of datacollection for area seems feasible and will improve researchers’ understanding of productivity.
    Keywords: Food Security and Poverty, International Development
    Date: 2019–12–12
  8. By: Jason Snyder; Thomas Jayne; Nicole Mason; Paul Samboko
    Abstract: It is widely accepted that agricultural productivity growth generates important multiplier effects on the rest of the economy through indirect linkages. However, most of this evidence comes from Asia and Latin America. Micro-level evidence in support of this hypothesis in Sub-Saharan Africa is actually quite thin. This study estimates a reduced-form relationship between multi-year lagged district-level summaries of crop productivity and total, own-farm, and off-farm income in Zambia. We use nationally representative household survey data to analyze this relationship; the nature of these data is unique to Zambia. Findings show a strong link between district-level productivity and household own-farm income. A doubling of multi-year lagged median district crop productivity per hectare translates into a 25-33% increase in own-farm income after controlling for household and community factors. There is some evidence of a positive link between district-level productivity and total household income, but the relationship between district crop productivity and off-farm income is sensitive to the model specification and imprecisely measured, suggesting that some of the critiques of the multiplier hypothesis for contemporary Africa may be valid. However, when the lagged crop productivity measures are confined to small farms cultivating less than 2 hectares, we find some evidence of a positive contribution of increases in lagged district-level productivity to off farm income – a doubling of productivity leading to a 34% increase in off-farm income.
    Keywords: Food Security and Poverty, International Development
    Date: 2019–09–26
  9. By: Kristiaan KERSTENS (IESEG School of Management and LEM-UMR 9221); Jafar SADEGHI (IESEG School of Management and Ivey Business School); Ignace VAN DE WOESTYNE (KU Leuven); John WALDEN (NOAA/NMFS)
    Abstract: This contribution focuses on extending the current state of the art in the short-run Johansen industry model in two ways. First, instead of only considering output-oriented plant capacity, we allow for alternative plant capacity concepts. In particular, we introduce an input-oriented plant capacity concept, and an alternative attainable outputoriented plant capacity concept that corrects a major empirical issue in the traditional output-oriented plant capacity notion. Second, we correct a long-standing issue of the correct choice of weight variables on the capacity distribution by guaranteeing that these weights determine production combinations that belong to the production technology on which the plant capacity estimates are based in the first place. These double methodological refinements are illustrated with a data set on U.S. fishing vessels by developing a planning model to curb overfishing.
    Keywords: : Technology; Plant Capacity; Attainability; Planning
    JEL: D24 L52 O21
    Date: 2020–05
  10. By: Igor Fedotenkov (Joint Research Center, European Commission, Rue du Champ de Mars, 21, 1050 Brussels, Belgium); Rangan Gupta (Department of Economics, University of Pretoria, Pretoria, 0002, South Africa)
    Abstract: In this paper, we analyse the effects of public expenditures and their structure on productivity growth in industry and services in the European Union (EU) countries. We also control for the share of expenditures made by central governments. We find that productivity growth in industry decreases with government expenditures on environmental protection and increases with the decentralisation of government expenditures on recreation, culture and religion. As for services, productivity growth declines with military expenditures and increases with the centralisation of expenditures on public order and safety, and with the decentralisation of expenditures on economic affairs. The former two effects are mainly noted in Eastern European countries, while the latter is stronger in Western Europe. Lower corruption increases productivity growth. Furthermore, our estimates suggest that there is a convergence in productivities across EU member states, with convergence faster in the service sector than in the industrial sector. These findings carry important policy implications.
    Keywords: Labour productivity, government expenditures, decentralisation, services
    JEL: E24 E62 H50 H76 O14
    Date: 2020–05
  11. By: Ayanda Hlatshwayo; C. Friedrich Kreuser; Carol Newman; John Rand
    Abstract: This paper uses matched employer-employee data from South Africa to examine the extent to which technology transfers between firms through the hiring of workers. Allowing for differential spillovers based on observable technology differences between sending and receiving firms, we find strong evidence for positive productivity spillovers through worker mobility. In contrast to previous studies set in more advanced economies, our results suggest that negative spillovers can occur.
    Keywords: Technology transfer, Job mobility, Linked employer-employee data, Spillovers
    Date: 2019
  12. By: Jason Snyder; Thomas Jayne; Jordan Chamberlin; Paul Samboko; Nicole Mason
    Abstract: There is a general consensus in the economics literature that growth in agricultural productivity is an engine of economic structural transformation in low income countries via indirect linkages and multiplier effects. However, the empirical support for this hypothesis in the Africa is very limited, and criticisms have been raised as to its applicability in the African context. In this study, we estimate the strength of possible ‘labor linkages’ among small farmers in Zambia, helping to provide a much-needed empirical micro-foundation in the African context. In particular, we use nationally representative surveys to estimate the relationship between multiple years of lagged district level crop productivity and small farm household non-farm labor participation. We find that a doubling of average district crop productivity leads to a 13%-17% increase in non-farm labor participation among farm households. Moreover, this effect is most pronounced among smaller farms; a doubling of median district crop productivity among farms under two hectares cultivated leads to a 24%-31% increase in in non-farm labor participation among non-farm households. The results lend some credibility to the structural transformation hypothesis, and in particular, the idea of labor linkages, in the African setting.
    Keywords: Food Security and Poverty, International Development
    Date: 2019–12–11
  13. By: Nils Grashof (University of Bremen); Dirk Fornahl (University of Bremen)
    Abstract: In the 21st century clusters can be observed in most developed economies. However, the scientific results regarding the effect of clusters on firm performance are highly contradictive. This inconsistency in the empirical results makes it difficult to infer general conclusions about the firm-specific cluster effect, referring to the effect from being located in a cluster on firm performance, e.g. derived through the externalities within clusters. Therefore, this paper aims to reconcile the contradictory empirical findings. It investigates whether the still prevalent assumption that clusters are a beneficial location for firms is unconditionally true or whether doubts about the alleged positive effect of clusters on firm performance are justified. By conducting a descriptive meta-analysis of the empirical literature, based on four different performance variables from four separate publication databases, the study investigates the actual effect direction as well as possible moderating influences. We find evidence for a rather positive firm-specific cluster effect. However, we identify several variables from the micro-, meso- and macro-level that directly or interactively moderate the relationship between clusters and firm success. The corresponding results demonstrate, for example, that a negative firm-specific cluster effect occurs more frequently in low-tech industries than in high-tech industries. ‘To be or not to be’ located in a cluster is therefore not the question, but it rather depends on the specific conditions.
    Keywords: : meta-analysis, cluster effect, firm performance
    Date: 2020–03
  14. By: David Baqaee; Emmanuel Farhi
    Abstract: How does an increase in the size of the market due to fertility, immigration, or trade integration, affect welfare and real GDP? We study this question using a model with heterogeneous firms, fixed costs, and monopolistic competition. We decompose the change in welfare into changes in technical and allocative efficiency due to reallocation. We non-parametrically identify residual demand curves with firm-level data and, using these estimates, quantify our theoretical results. We find that somewhere between 70% to 90% of the aggregate returns to scale are due to changes in allocative efficiency. In bigger markets, competition endogenously toughens and triggers Darwinian reallocations: big firms expand, small firms shrink and exit, and new firms enter. However, important as they are, the improvements in allocative efficiency are not driven by oft-emphasized reductions in markups or deaths of unproductive firms. Instead, they are caused by a composition effect that reallocates resources from low-markup to high-markup firms. Our analysis implies that the aggregate return to scale is an endogenous outcome shaped by frictions and market structure and likely varies with time, place, and policy. Furthermore, even mild increasing returns to scale at the micro level can give rise to large increasing returns to scale at the macro level.
    JEL: E0 E1 E23 O24 O4 O41
    Date: 2020–05
  15. By: Agnieszka Parkitna
    Abstract: The theoretical bases for the efficiency of small enterprises, which are the substrate for building the model. It presents measures to assess the efficiency of these enterprises. The factors shaping the efficiency of small enterprises are distinguished and described, and an attempt is made to determine their typology and aggregation in various systems. Business objectives are presented as the overriding basis for building the efficiency of a small organisation. The issue of the economic efficiency of small enterprises is presented. The dilemmas concerning their growth and development were discussed, treating growth as a measure of manufacturing efficiency and development as a measure of effectiveness. The issue of efficiency management in a small enterprise is presented from the perspective of results, growth and development. This book contains detailed model solutions related to the adopted methodology of research on the efficiency of small enterprises. The book also contains the final conclusions of the study. As a whole, it is a statistical statement and model validation.
    Keywords: SME; Efficiency; Managament
    JEL: L11 G32 D24 D22 R32 Q1 M13 P42
    Date: 2020–07–10

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