nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2020‒08‒24
fifteen papers chosen by

  1. Measuring Energy Efficiency: An Application of Data Envelopment Analysis to Power Sector in Kerala By Pillai N., Vijayamohanan
  2. Technological Diffusion through Foreign Direct Investment: A Firm-level Analysis of Indian Manufacturing Industries By Azusa Fujimori; Manabu Furuta; Takahiro Sato
  3. Does Disappointing European Productivity Growth Reflect a Slowing Trend? Weighing the Evidence and Assessing the Future By John G. Fernald; Robert Inklaar
  4. Productivity trends and drivers in global agriculture: could the UK match up in a post Brexit world? By Revell, Brian
  5. Going Revolutionary: The Impact of 4IR Technology Development on Firm Performance By Mario Benassi; Elena Grinza; Francesco Rentocchini; Laura Rondi
  6. Exploring the distribution of conditional quantiles estimation ranges: an application to the estimation of specific costs of production of pig in the European Union By Dominique Desbois
  7. On the Simultaneous Openness Hypothesis: FDI, Trade and TFP Dynamics in Sub-Saharan Africa By Simplice A. Asongu; Joseph Nnanna; Paul N. Acha-Anyi
  8. Agricultural productivity, inter-sectoral labor shift, and economic growth in India By Balaji, S. J.; Babu, Suresh Chandra
  9. The Effects of EU-Funded Enterprise Grants on Firms and Workers By Muraközy, Balázs; Telegdy, Álmos
  10. The Cost Efficiency of Hotels and Japanese-Style Inns in Kyushu: Relationship to E-Commerce or Individual Business Activities (Japanese) By GOKAN Toshitaka
  11. Working Paper 340 - Innovation and Productivity in Developing Economies By Hanan Morsy; Amira El-Shal
  12. The Age Distribution of Business Firms By Flavio Calvino; Daniele Giachini; Mattia Guerini
  13. Effects of dynamic capability and marketing strategy on the organizational performance of the banking sector in Makassar, Indonesia By Akhmad Muhammadin; Rashila Ramli; Syamsul Ridjal; Muhlis Kanto; Syamsul Alam; Hamzah Idris
  14. Court efficiency and aggregate productivity: the credit channel By Guzmán González-Torres; Giacomo Rodano
  15. From 8,000 to 1,000? Rationalization and governance of Italian Government-owned enterprises By Sauro Mocetti; Giacomo Roma

  1. By: Pillai N., Vijayamohanan
    Abstract: Traditionally, there are two basically reciprocal energy efficiency Indicators: one, in terms of energy intensity, that is, energy use per unit of activity output, and the other, in terms of energy productivity, that is, activity output per unit of energy use. The enquiry that has proceeded from the problems associated with this method of a single energy input factor in terms of productivity has led to multi-factor productivity analysis. We have here two approaches: parametric and non-parametric. Parametric approach famously includes two methods: the erstwhile popular total factor energy productivity analysis and the currently fanciful stochastic frontier production function analysis; The non-parametric approach is popularly represented by data envelopment analysis. The present paper is an attempt to measure efficiency in electrical energy consumption in Kerala, India. We apply the non-parametric mathematical programming method of data envelopment analysis of the multi-factor productivity approach, and estimate the efficiency measures under the two scale assumptions of constant returns to scale (CRS) and variable returns to scale (VRS); the latter includes both increasing (IRS) and decreasing returns to scale (DRS). Scale efficiency measures are also given to find out whether a firm is operating at its optimal size or not, implying degrees of capacity utilization.
    Keywords: Energy efficiency, Kerala, Power sector, Data envelopment, Technical efficiency.
    JEL: C13 C51 Q4
    Date: 2019–08
  2. By: Azusa Fujimori (Department of Management, Osaka Seikei University, Japan); Manabu Furuta (Department of Economics, Aichi Gakuin University, Japan); Takahiro Sato (Research Institute for Economics and Business Administration, Kobe University, Japan)
    Abstract: This study examines technology diffusion resulting from foreign direct investment (FDI) in the domestic manufacturing sector in India. We employ unit-level panel data (where a unit refers to an enterprise within the manufacturing sector) from 2000 to 2007, covering all medium- and large-size manufacturing enterprises in India, obtained from India's Central Statistics Office. We attempt to empirically capture evidence of FDI technology spillover effects through two key mechanisms: horizontal spillover (technology diffusion within the same industry) and vertical spillover (technology diffusion between foreign firms and their customer or suppliers). Vertical spillover effects can be further divided into backward linkages (technology diffusion from foreign firms to upstream industries), and forward linkages (technology diffusion from foreign firms to downstream industries). In addition, technology diffusion can be the result of both short- and long-term spillover effects. The results of the empirical analyses highlight the presence of short- and long-term horizontal spillover effects, both of which negatively affect the total factor productivity performance of domestic manufacturers. Moreover, we find an inverse relationship between the growth of FDI and total factor productivity in upstream industries in the short term; however, this changes to a positive relationship in the long term. Furthermore, the results show no evidence of FDI spillover effects to downstream sectors.
    Keywords: Technology diffusion; Foreign direct investment; Total factor productivity; Backward spillover effect; Manufacturing industries; Unit-Level data
    JEL: C81 F21 O53
    Date: 2020–03
  3. By: John G. Fernald; Robert Inklaar
    Abstract: In the years since the Great Recession, many observers have highlighted the slow pace of labor and total factor productivity (TFP) growth in advanced economies. This paper focuses on the European experience, where we highlight that trend TFP growth was already low in the runup to the Global Financial Crisis (GFC). This suggests that it is important to consider factors other than just the deep crisis itself or policy changes since the crisis. After the mid-1990s, European economies stopped converging, or even began diverging, from the U.S. level of TFP. That said, in contrast to the United States, there is some macroeconomic evidence for some northern European countries that the GFC had a further adverse impact on TFP growth. Still, the challenges for economic policy look surprisingly similar to the ones discussed prior to the Great Recession, even if the policy implications seem less clear.
    Keywords: Productivity Growth; Great Recession; Convergence
    JEL: D24 E23 E44 F45 O47
    Date: 2020–06–12
  4. By: Revell, Brian
    Abstract: The analysis in the paper focuses on global trends in total factor productivity (TFP) growth and some of its key components and drivers. The relative performance of the UK in relation to many key countries with globally important agri-food sectors, either or both as exporters and or importers of agricultural products, and as potential targets of its future UK post-Brexit strategy are examined. Two approaches are explored in order to gain some insights into productivity growth and its measurement: the decomposition output growth through the contributions of growth in land, labour, capital, material inputs and TFP, and modelling output growth to identify the significant contributing variables. Finally, the challenges that the agricultural sector of the might face as a consequence of its proposed UK post Brexit agricultural policy (if and when it might happen) for its productivity are considered and some conclusions regarding the relevance to future agri-technology developments are outlined.
    Keywords: Agricultural and Food Policy, International Relations/Trade
    Date: 2019–10–21
  5. By: Mario Benassi (Department of Economics, Management, and Quantitative Methods, University of Milan); Elena Grinza (Department of Management and Production Engineering, Politecnico di Torino); Francesco Rentocchini (Department of Economics, Management, and Quantitative Methods, University of Milan); Laura Rondi (Department of Management and Production Engineering, Politecnico di Torino)
    Abstract: Drawing on the knowledge-based view of the firm, we investigate whether firm performance is related to the accumulated stock of technological knowledge associated with the Fourth Industrial Revolution (4IR), and what contextual factors affect this relationship. We test our research questions on a longitudinal matched patent-firm data set on large firms filing 4IR patents at the European Patent Office (EPO). Our results, which control for a large number of patent- and firmlevel variables as well as firm fixed unobserved heterogeneity, show a significant and economically relevant positive association between the development of 4IR technologies and firm productivity. However, no significant relationship with firm profitability is detected, thereby suggesting that the returns from 4IR technological developments are slow to cash in. We also find that late innovators benefit more from the development of 4IR technological capabilities than early innovators and experience a substantial “boost effect”. We provide empirical support to an explanation of these findings in terms of the ability of late innovators to (i) manage the inherent complexity of the bundle of technologies comprising the 4IR and (ii) exploit profitable downstream applications of the 4IR.
    Keywords: Fourth Industrial Revolution (4IR); patenting; technology development; firm performance; longitudinal matched patent-firm data
    JEL: O33 D24 J24
    Date: 2020–06
  6. By: Dominique Desbois (ECO-PUB - Economie Publique - AgroParisTech - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: This communication uses symbolic data analysis tools to visualize conditional quantile estimation intervals, applying it to the problem of cost allocation in agriculture. After recalling the conceptual framework of the estimation of agricultural production costs, the first part presents the empirical model, the quantile regression approach and the interval data processing techniques used as symbolic data analysis tools. The second part presents the comparative analysis of the econometric results of pig between twelve European Member States, using the principal components analysis and the hierarchical grouping of the estimation intervals, by discussing the relevance of the exploratory graphs obtained for the international comparisons.
    Abstract: Cette communication utilise des outils d'analyse de données symboliques pour visualiser les intervalles d'estimation des quantiles conditionnels, en les appliquant au problème de l'allocation des coûts dans l'agriculture. Après avoir rappelé le cadre conceptuel de l'estimation des coûts de production agricole, la première partie présente le modèle empirique, l'approche de régression par quantile et les techniques de traitement des données d'intervalle utilisées comme outils d'analyse des données symboliques. La deuxième partie présente l'analyse comparative des résultats économétriques du porc entre douze États membres européens, en utilisant l'analyse en composantes principales et la classification hiérarchique des intervalles d'estimation, en discutant de la pertinence des graphiques exploratoires obtenus pour les comparaisons internationales.
    Keywords: quantile regression,micro-economics,pig,agricultural production cost,input-output model,factor analysis,hierarchic clustering,interval estimates,Porc,Production agricole,Analyse microéconomique,Régression quantile,Coût de production
    Date: 2019–06–11
  7. By: Simplice A. Asongu (Yaounde, Cameroon); Joseph Nnanna (The Development Bank of Nigeria, Abuja, Nigeria); Paul N. Acha-Anyi (Walter Sisulu University, South Africa)
    Abstract: This study assesses the simultaneous openness hypothesis that trade modulates foreign direct investment (FDI) to induce positive net effects on total factor productivity (TFP) dynamics. Twenty-five countries in Sub-Saharan Africa and data for the period 1980 to 2014 are used. The empirical evidence is based on the Generalised Method of Moments. First, trade imports modulate FDI to overwhelmingly induce positive net effects on TFP, real TFP growth, welfare TFP and real welfare TFP. Second, with exceptions on TFP and welfare TFP where net effects are both positive and negative, trade exports modulate FDI to overwhelmingly induce positive net effects on real TFP growth and welfare real TFP. In summary, the tested hypothesis is valid for the most part. Policy implications are discussed.
    Keywords: Productivity; Foreign Investment; Sub-Saharan Africa
    JEL: E23 F21 F30 L96 O55
    Date: 2020–01
  8. By: Balaji, S. J.; Babu, Suresh Chandra
    Abstract: In this paper, we study the transformation process Indian agriculture exhibited in the recent past, studying its policy implications. Between the years 2005-06 and 2015-16, more than 52 million workers left agriculture, which did not have any effect on agricultural output due to productivity improvements. We estimate the contribution of productivity growth and structural change in agriculture to national productivity growth during 1981-2016. We estimate differentials in agricultural productivity and in their ability to contribute to the structural change process for 21 major states of India. Using revised employment estimates, we trace major changes during the pre-reforms (before 1991) and post-reforms periods. Results show that in the pre-reforms period, the impact of productivity improvements in agriculture on agricultural output was equated by the new workforce entering into this sector, leading to a stagnant labor productivity trend. The labor-shift from agriculture during the early years of the post-reforms period, which increased further in the next decade, has led to a consistent rise in agricultural productivity. In the absence of reforms and the associated labor shift, the productivity growth in Indian agriculture would have been much lower. A similar labor shift during the last decade has not affected agricultural output, which has risen more rapidly. This result holds true for almost all states studied. There exists a positive relation between labor-shift and agricultural output in a cluster of states. Decomposition results indicate ‘within-sector’ productivity growth is the major source of overall growth, with a rising contribution of ‘structural change’. Studying the sources of growth across states offers new scope to achieve inter-sectoral productivity convergence.
    Keywords: INDIA; SOUTHEAST ASIA; ASIA; agriculture; agricultural productivity; labour; economic growth; productivity; structural change; degradation; agricultural growth; labor productivity
    Date: 2020
  9. By: Muraközy, Balázs (University of Liverpool); Telegdy, Álmos (Corvinus University of Budapest)
    Abstract: This paper investigates the effects of non-repayable enterprise grants financed from the European Union's Structural and Cohesion Funds on firm outcomes in Hungary using firm- and worker-level information on all rejected and successful grant applications between 2004-2014. In our model, after paying the fixed cost of applying, firms can purchase capital at a reduced marginal cost and they share the rent generated from the grant with their workers. In line with the model's predictions, larger than average, more productive and faster growing firms are more likely to apply for a grant. We combine panel regression methods with matching techniques to estimate the effect of grants by comparing successful and unsuccessful applicants' outcomes. Subsidized firms increase their employment, sales, capital-to-labor ratio and labor productivity, but not total factor productivity. The skill composition of workers is not affected by the grant but wages grow, especially for skilled workers. Firms winning multiple grans benefit more already from the first grant and successive grants have even larger effects. According to our simple calculations, each year's subsidy program created jobs in grant winning firms equivalent to 0.3-0.5 percent of total SME employment and contributed by 0.3-0.7 percentage points to aggregate SME productivity growth – with an annual cost often in excess of 1 percent of total SME value added. These results suggest that these grants promote firm growth, but do not lead firms to introduce new forms of production or upgrade technology.
    Keywords: enterprise grants, EU grants, worker effects, matched employer-employee data, Hungary
    JEL: H25 D22 O16 J21
    Date: 2020–06
  10. By: GOKAN Toshitaka
    Abstract: An initiative was implemented to improve the productivity of the accommodation industry in Kyushu. This study analyzes the impacts of e-commerce and individual business activities on changes in the cost efficiency of hotels and Japanese-style inns. The results reveal that changes in the cost efficiency of hotels and Japanese-style inns that are only engaged in the lodging business were related to e-commerce in Kyushu and Japan. However, another result is that changes in the cost efficiency of hotels and Japanese-style inns that are engaged in consumer business other than lodgings seem unrelated to e-commerce in Kyushu and Japan. The choice of some individual business activities is found to have more impact on cost efficiency than e-commerce. A further finding is that the relationships between cost efficiency and individual business activities vary across individual business activities, which corresponds to another finding that changes in the total number of individual business activities in a hotel or a Japanese-style inn seem unrelated to changes in cost efficiency.
    Date: 2020–06
  11. By: Hanan Morsy (Research Department, African Development Bank); Amira El-Shal (Research Department, African Development Bank)
    Abstract: We examine the determinants of innovation and its effect on productivity across 52 emerging and developing economies, comparing African firms to their counterparts elsewhere. We use a generalized structural equation model (GSEM) to estimate the causal links while accounting for endogeneity. Our estimates show that access to finance has the strongest effect on firms' decisions to invest in research and development (R&D) in all countries. And while the drivers of innovation are remarkably similar in developed economies, the keys for African firms are access to external knowledge - largely via information and communications technology (ICT)- and skills development via on-the-job training. Only in Africa is the stand-alone effect of ICT adoption on innovation almost as strong as that of R&D; and the combined effect of firms' access to external knowledge through ICT and foreign-technology adoption and training is more than double that of R&D. Regardless of its content, the effect of employee training on innovation in Africa is double that in emerging markets. Finally, innovation is the key determinant of productivity in all countries, but the evidence is much stronger for product innovation by African firms.
    Keywords: Innovation, productivity, R&D, ICT, training, GSEM, latent variable, developing countries, Africa JEL classification: C30, D24, J24, M53, O3, O5
    Date: 2020–06–26
  12. By: Flavio Calvino (OECD Directorate for Science, Technology and Innovation); Daniele Giachini (Sant’Anna School of Advanced Studies); Mattia Guerini (Université Côte d'Azur, CNRS, GREDEG, France; Sant’Anna School of Advanced Studies; Sciences Po., OFCE)
    Abstract: We investigate upon the shape and the determinants of the age distribution of business firms. By employing a novel dataset covering the population of French businesses, we highlight that a geometric law provides a reasonable approximation for the age distribution. However, relevant systematic deviations and sectoral heterogeneity appear. We develop a stochastic model of firm dynamics to explain the mechanisms behind this evidence and relate them to business dynamism. Results reveal a long-term decline in entry rates and lower survival probabilities of young firms. Our findings bear important implications for aggregate outcomes, notably employment growth.
    Keywords: Firm demographics, age distribution, business dynamism
    JEL: L11 L22 M13 M21
    Date: 2020–08
  13. By: Akhmad Muhammadin; Rashila Ramli; Syamsul Ridjal; Muhlis Kanto; Syamsul Alam; Hamzah Idris
    Abstract: The dynamic capability and marketing strategy are challenges to the banking sector in Indonesia. This study uses a survey method solving 39 banks in Makassar. Data collection was conducted of questionnaires. The results show that, the dynamic capability has a positive yet insignificant impact on the organizational performance, the marketing strategy has a positive and significant effect on organizational performance and, dynamic capability and marketing strategy have a positive and significant effect on the organization's performance in the banking sector in Makassar. Keywords : dynamic capability, marketing strategy, organizational performance, banking
    Date: 2020–07
  14. By: Guzmán González-Torres (Bank of Italy); Giacomo Rodano (Bank of Italy)
    Abstract: Credit contract enforcement influences financial market allocations and prices. Well-functioning credit markets enable firms to finance their operations. Can greater judicial efficiency therefore help to improve credit market allocations, by increasing firm dynamism and boosting aggregate productivity? We build a dynamic model of heterogeneous firms with short-term liquidity needs, in which two key features of enforcing credit contract proceedings, case resolution time and the expected recovery rate, directly affect credit supply. Once calibrated to replicate Italian firm dynamics, we use the model to analyze the extent to which court efficiency determines aggregate outcomes through the credit channel. In our economy, either increasing the average recovery rate on defaulted loans from 62 to 80 per cent, or reducing case resolution time from 9 to 5 years, raises average firm productivity by about 2 per cent. These gains are attained through a substantial improvement in the allocation of resources across firms.
    Keywords: financial markets, civil law, contracts, aggregate productivity, intertemporal firm choice
    JEL: E44 K12 O47
    Date: 2020–07
  15. By: Sauro Mocetti (Bank of Italy); Giacomo Roma (Bank of Italy)
    Abstract: Government-owned enterprises at state and local level represent a significant share of the Italian economy. These companies operate in various sectors and throughout the national territory, even though their number decreased between 2011 and 2018. A number of reforms have contributed to this change, including the Consolidated Law of 2016, which reorganized the applicable laws. The objectives of the rationalization, however, have been largely disregarded, both because of application difficulties and because the initial design has been weakened by subsequent interventions. Limited progress has also been made in aligning governance to international best practices. The professional skills of the directors and the quality of local public administrations are significantly correlated to the efficiency and performance of these companies.
    Keywords: government-owned enterprises, state-owned enterprises, local public enterprises, public utilities, governance
    JEL: H11 L32
    Date: 2020–07

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