nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒06‒21
twenty-six papers chosen by

  1. Environmental and Technical Efficiency in Large Gold Mines in Developing Countries By Magambo, Isaiah; Dikgang, Johane; Gelo, Dambala; Tregenna, Fiona
  2. High-Technology Zones, Misallocation of Resources among Cities and Aggregate Productivity: Evidence from China By Laiqun Jin; Xiuyan Liu; Sam Hak Kan Tang
  3. Aggregate productivity slowdown in Europe: New evidence from corporate balance sheets By Maurin, Laurent; Wolski, Marcin
  4. The Effect of Client Appraisal on the Efficiency of Micro Finance Bank By Esther Yusuf Enoch; Usman Abubakar Arabo; Abubakar Mahmud Digil
  5. Impact of The Labour Productivity on Farm Income in Poland By Pawłowska, Aleksandra; Jaroszewska, Joanna
  6. How does market competition affect firm innovation incentives in emerging countries? Evidence from Latin American firms. By Benavente, Jose Miguel; Zuniga, Pluvia
  7. How different are necessity and opportunity firms? Evidence from a quantile analysis of the Colombian microenterprise sector By Rodriguez Torres, Omar
  8. The Productivity Performance of New Brunswick Manufacturing: A Detailed Analysis, 1997-2019 By Andrew Sharpe
  9. Are Applying for and Receiving Subsidy Worth for Small Enterprises? Evidence from the Government Support Program in Japan By HASHIMOTO Yuki; TAKAHASHI Kohei
  10. Influence of Scale Size on The Profitability of Cow’s Milk Production By Skarżyńska, Aldona
  11. Can You Teach an Old Dog New Tricks? New Evidence on the Impact of Tenure on Productivity By Nicola Gagliardi; Elena Grinza; François Rycx
  12. Modelling cost function approach under panel data framework to estimate total factor productivity growth for the Indian manufacturing industries By Das, Narasingha; Bera, Pinki
  13. Fiscal decentralization and efficiency of public services delivery by local governments in Ghana By Isaac Otoo; Michael Danquah
  14. Ranking with a Euclidean Common Set of Weights in Data Envelopment Analysis: With Application to the Eurozone Banking Sector By Helmi Hammami; Thanh Ngo; Dinh-Tri Vo; David Trip
  15. Delays at the Border: Court Efficiency and Delays in Public Contracts By Decarolis, Francesco; Mattera, Gianpiero; Menon, Carlo
  16. Powering structural transformation and productivity gains in Africa: The role of global value chains and resource endowments By Owusu, Solomon
  17. The Impact of IT on Firm TFP Growth and Resource Reallocation within Firms (Japanese) By KIM YoungGak; INUI Tomohiko
  18. The Impact of AI and Robot Technology on Firm Productivity and Employment (Japanese) By KIM YoungGak; INUI Tomohiko
  19. Enhancing Team Productivity through Shorter Working Hours: Evidence from the Great Recession By Ruo SHANGGUAN; Jed DEVARO; OWAN Hideo
  20. Foreign R&D spillovers to the USA and strategic reactions By Ziesemer, Thomas
  21. Business Dynamism and Productivity Growth under Abenomics: An Empirical Analysis Based on Micro Data from Japan's Economic Census for Business Activity (Japanese) By FUKAO Kyoji; KIM YoungGak; KWON Hyeog Ug; IKEUCHI Kenta
  22. The impact of temperature on productivity and labor supply: Evidence from Indian manufacturing By Somanathan, E.; Somanathan, Rohini; Sudarshan, Anant; Tewari, Meenu
  23. Zombie Credit and (Dis-)Inflation: Evidence from Europe By Acharya, Viral V.; Crosignani, Matteo; Eisert, Tim; Eufinger, Christian
  24. Female managers and firm performance: Evidence from the Caribbean countries By Inmaculada Martínez-Zarzoso; Maria C. Lo Bue
  25. Organisation Capital, Knowledge Spillover and Firm Performance: Evidence from Chinese Manufacturing Sector By Qing Li; Yanrui Wu
  26. Indian buyers in global markets: Quality, prices, and productivity By M.A. Anderson; M.H. Davies; J.E. Signoret; S.L.S. Smith

  1. By: Magambo, Isaiah; Dikgang, Johane; Gelo, Dambala; Tregenna, Fiona
    Abstract: Given the increasing importance of the mining sector in developing countries, an understanding of their level of environmental efficiency is useful, both to the industry itself and to policymakers. Environmental problems introduced by the sector are attracting extensive attention, so comprehensive analysis of their environmental performance has become increasingly important. This study evaluates the environmental performance of large gold-mining operations by applying a by-production model that specifies emission-generating technology, while incorporating a four-way error approach that captures mine-size heterogeneity, transient and persistent technical efficiency, and random errors. We applied a true random effects model (TREM), and a simulated maximum likelihood estimator (SMLE) based on the generalised true random effects model (GTREM). The former approach was estimated as a benchmark, while the latter was employed to estimate a four-component panel data stochastic frontier model. The four-components estimate separates firm heterogeneity from persistent and time-varying inefficiencies, thus providing more robust efficiency estimates and policy insights. Firm-level data from 2009 to 2018 were used; the results show the presence of environmental and technical inefficiencies. Moreover, each inefficiency was decomposed into transient and persistent inefficiencies. The GTREM predicts the average inefficiency to amount to 34% environmental (interaction between 19% transient and 18% persistent) and 30% technical (interaction between 4.4% transient and 27% persistent). The transient component of technical efficiency does not change over time, which may imply that the mines’ managerial approaches are static. The presence of technical inefficiency implies that more than the minimal amounts of inputs are used to produce a given level of desirable output, which could be due to moral hazards and asymmetric information such as principal-agent problems. The presence of (environmental) inefficiency in the by-production model means that more than a minimal amount of the undesirable output is produced. The overall environmental performance of the mines in developing countries is low (66%) compared to other sectors, which indicates that there could be structural rigidities, poor environmental policies and regulations, poor enforcement, or any combination of the three. We also found robust empirical evidence that between 2009 and 2018, on average, gold-mining firms neither strongly increased nor strongly decreased their transient or their persistent technical and environmental efficiency. Besides, firms with high technical efficiency simultaneously have high environmental efficiency, which suggests that promoting high environmental efficiency will also promote high technical efficiency.
    Keywords: Environmental efficiency, technical efficiency, persistent and transient efficiency, gold mine.
    JEL: D24 Q5 Q53 Q55
    Date: 2021–05
  2. By: Laiqun Jin (School of Business, Ningbo University); Xiuyan Liu (School of Economics and Management, Southeast University); Sam Hak Kan Tang (Business School, The University of Western Australia)
    Abstract: Recent literature has been debating the performance of high-technology zones (HTZs) in developing countries. This paper contributes to this debate by examining how national HTZs in China affect the allocative efficiency of resources among Chinese cities as well as China’s total factor productivity (TFP) growth. This paper has two key findings: Firstly, results show that resource misallocation among cities reduces China’s TFP growth by 4.5%. In the absence of national HTZs, China’s TFP loss would have been higher by about 1.5%. Secondly, we find that China’s national HTZs improve the allocative efficiency of capital among cities by channelling capital to where there is a shortage. Interestingly, we find little evidence of productivity growth driven by technical efficiency following the establishment of HTZs. The positive effect of national HTZs on allocative efficiency can be found in cities located in the Eastern and Central regions and cities without an administrative designation.
    Keywords: High-technology zones, Misallocation of resources, Total factor productivity, China
    JEL: O11 O53
    Date: 2021
  3. By: Maurin, Laurent; Wolski, Marcin
    Abstract: Capitalising on the productivity decomposition proposed by Olley and Pakes (1996), we analyse the role of financial factors behind the relatively muted post-crisis rebound in productivity compared to previous upturns in Europe. Firstly, we provide an OLS-consistent framework to decompose sector-level productivity into trend and allocative efficiency components. We then extend our approach to estimate the contribution of firm-level confounders to the sector-level allocative component. Secondly, we find that financial leverage played an important role in explaining the change in aggregate productivity growth in Europe between 2004 and 2017. Thirdly, focusing on Northern and Western Europe, we show that the productivity potential could not be fully exploited due to access to credit conditions. Specifically, reducing collateral bottlenecks could more than double the effectiveness of financial leverage in spurring productivity growth in this region between 2014-17.
    Date: 2021
  4. By: Esther Yusuf Enoch; Usman Abubakar Arabo; Abubakar Mahmud Digil
    Abstract: One of the major problems confronting financial institutions most especially microfinance institutions is the increasing incidence of loan defaults and consequence loan losses which manifested in their financial performance with huge uncollectible loans and advances. This study assessed the effects of credit management on financial performance on microfinance institutions in Adamawa State, Nigeria. Specifically, we examine the effect of client appraisal on the efficiency of microfinance banks in Adamawa State. The methodology employed in this study is the survey method in which both primary and secondary sources were used in the collection of data. A multi-stage sampling method was adopted in selecting a sample of 21 respondents from a total population of 52 credit officers. Questionnaires were used in the due collection of data from the respondents. Descriptive statistics (simple percentage) and inferential statistics (regression analysis) were used to analyze the data collected and in testing the hypotheses. The study showed that client appraisal has a positive effect on efficiency and productivity.
    Date: 2021–06
  5. By: Pawłowska, Aleksandra; Jaroszewska, Joanna
    Abstract: In the case of all farms, the issue of profitability achieved is crucial. The effectiveness of production factors involved, including labour, shapes income in agriculture to a large extent. Thus, the increase in the productivity of the labour factor determines the increase in the labour profitability. On the grounds of classical microeconomic relationships, it can be pointed out that the increase in farm income, which is the remuneration of the labour factor, can take place, ceteris paribus, with the increase in production. Assuming the permanence of labour factor inputs in the long term, the source of production growth should, in turn, be the increase in the labour productivity. The objective of the paper is to identify differences in the impact of labour productivity on farm income, with the dominance of family labour force and on farms with a dominance of paid labour force in Poland. The results presented may serve as a basis for concluding on the income situation of farms depending on the type of labour factor involved. The study will use the FADN data from 2009-2015 for Polish farms. The impact of labour productivity on farm income will be analysed using the propensity score matching method
    Keywords: Agricultural and Food Policy, Labor and Human Capital
    Date: 2020
  6. By: Benavente, Jose Miguel (Inter-American Development Bank (IADB)); Zuniga, Pluvia (UNU-MERIT)
    Abstract: The role of market competition on firm innovation remains a controversial policy question, especially in the context of developing countries. This paper presents new empirical evidence about the impact of market competition on firm innovation engagement in Colombian and Chilean manufacturing industries. We correct for the endogeneity of market competition using instruments proxying entry costs and policy interventions (i.e. competition decisions and entry law reforms), our results are like those of developed countries. Market competition increases firm propensity to invest in innovation in manufacturing enterprises and this relationship is linear in Chilean while in Colombian industries it takes the form of an inversed-U shape relation. The impact of competition is decreasing with the level of sector asymmetry -as preconised in the literature, while the impact of firm distance to the frontier affects firm innovation engagement differently in the two countries. In Chile, competition raises innovation incentives for the third and fourth productivity quartiles while no impact is found for firms in the first (bottom) two quartiles. In contrast, in Colombia market competition raises innovation engagement across regardless their firm productivity position but effects are stronger in the medium range (second and third quartiles). Our main results are robust to controlling for past innovation engagement, import competition and business dynamics.
    Keywords: Market Competition, Innovation, Technology Purchasing, Productivity, Latin American Firms
    JEL: O32 D41 O47 D24
    Date: 2021–05–19
  7. By: Rodriguez Torres, Omar (UNU-MERIT)
    Abstract: This paper explores the relationship between start-up motivation and business performance, by looking into the extent to which start-up motivation (necessity vs. opportunity) influences several business performance indicators. Using the Colombian Small and Microenterprise sector public dataset, we analyse the factors associated with microenterprise performance using a quantile regression approach to model the distribution of different measures of business performance. Among the findings, we present evidence of statistically significant differences among quantiles confirming the heterogeneity of start-up motivation and other firm characteristics of the firms operating in the sector. The results show that start-up motivation is a factor that explains the difference in the distribution of the business performance indicators under study. This findings contributes to the debate around the connection between entrepreneurship and growth in the context of developing economies. Even though firms motivated by necessity show a lower level of profit, in particular for the firms that perform relatively poorly, this is not necessarily associated with null or diminishing growth rates. Necessity is not necessarily a deterrent for growth. It needs to be understood as a means to support families that otherwise would have no income-generating opportunities.
    Keywords: Firm performance, entrepreneurship, public policy, new firms, enterprise policy
    JEL: L25 L26 J48 M13 L53 O25
    Date: 2021–04–28
  8. By: Andrew Sharpe
    Abstract: This report provides a detailed analysis of the productivity performance of the manufacturing sector in New Brunswick. Part one of the report provides a detailed overview of the manufacturing productivity in New Brunswick from 1997 to 2019. This part identifies a major turning point in the province's manufacturing productivity performance in 2004, after which output per hour of manufacturing plummetted from 109 percent of the national average to 75 per cent of the national average. Part two of the report attempts to shed light on this important development from different angles, namely, a growth accounting perspective, an industry perspective, a labour perspective along with a fourth section which examines additional explanations.
    Keywords: Productivity, New Brunswick, Manufacturing, Canada, AIPR, Policy
    JEL: D63 I38 I31 J18 J24 J15 J6 K37
    Date: 2021–06
    Abstract: This paper examines the effects of the Business Sustainable Subsidy (BSS) on small enterprises' productivity. The BSS aims productivity improvement and sustainable development of small enterprises by aiding a part of expenses for their business activities. We use rich firm data which contains the attributes and the accounting information of both applied and non-applied firms and examine the effects of receiving and applying for the subsidies. We employ sharp regression discontinuity design for the effects of reception and difference in differences design for that of application. Our empirical results show that significant differences in small enterprises' performance improvement were not evident between receiving the subsidies and not. On the other hand, we found that applicant small enterprises perform higher productivity and sales growth than not-applicant firms. We also robustly obtain the positive results of application impacts by difference in differences model with propensity score matching, controlling for preintervention levels and trends in the outcome. Our findings imply that application in itself promotes firms' voluntarily activities to their own business issues through external support, and leads to improve their productivity.
    Date: 2021–05
  10. By: Skarżyńska, Aldona
    Abstract: The issue of profitability of the agricultural production is often discussed within the framework of the problems of agricultural economics. The study showed a diversification in the profitability of the milk production depending on the cow herd’s size and identified the main determinants of positive economic results. The studies were conducted on commodity farms, which have been grouped according to the production scale, the criterion of scale was the number of dairy cows in the herd. Three scale ranges have been identified, i.e. small, medium and large. The data of 2014 and 2017 was used for the analysis. What was examined was the effectiveness of feeding cows in the identified farm groups and the technical and economic efficiency of the milk production. The full costs of the milk production (i.e. economic costs) were assessed and income from management activity was calculated. The results of the analyses show that as the number of cows in the herd increases, their milk yield and the price of milk are increasing. Farms with a large number of cows in the herd incurred the lowest full costs of the milk production, while obtaining the highest income from management activity per 1 cow and per 1 litre of milk. The measure of the milk production’s economic efficiency was the profitability index (revenues-to-economic costs ratio), the highest was recorded for the large-scale milk production, for the small scale this index did not exceed the profitability threshold.
    Keywords: Agricultural and Food Policy
    Date: 2020
  11. By: Nicola Gagliardi; Elena Grinza; François Rycx
    Abstract: In this paper, we explore the impact of workers’ tenure on firm productivity, using rich longitudinal matched employer-employee data on private Belgian firms. We estimate a production function augmented with a firm-level measure of tenure. We deal with endogeneity, which arises from unobserved firm heterogeneity and reverse causality, by applying a modified version of Ackerberg et al.’s (2015) control function method, which explicitly removes firm fixed effects. Consistently with recent theoretical predictions, we find that tenure exhibits an inverted-U-shaped relationship with respect to productivity. The existence of decreasing marginal returns to tenure is corroborated in our analysis on the tenure composition of the workforce. We also find that the impact of tenure differs widely across workforce and firm dimensions. Tenure is particularly beneficial for productivity in contexts characterized by a certain degree of routineness and lower job complexity. Along the same lines, our findings indicate that tenure exerts stronger (positive) impacts in industrial and high capital-intensive firms, as well as in firms less reliant on knowledge- and ICT-intensive processes.
    Keywords: Tenure; Firm productivity; Semiparametric methods to estimate production functions; Longitudinal matched employer-employee data
    JEL: D24 M59 Q15
    Date: 2021–06–07
  12. By: Das, Narasingha; Bera, Pinki
    Abstract: The current investigation is an endeavour to assess the total factor productivity growth (TFPG) and its components through cost-function approach for some selected organised manufacturing industries in India by utilizing the cost function approach in panel data framework throughout the year 1980-81 to 2016-17. We have found that very few studies have estimated the TFPG from cost function approach. In the recent year, no significant work has been done using panel data. In our study, we have framed a panel time-series approach to estimate the TFPG via cost-function. Our examination shows a declining trend in TFPG throughout the three decades and then the turn-around hypothesis occurs. Consequently, it might be presuming that, reforms measure adversely affects TFPG for the Indian manufacturing industries. Growth of inputs, output and Cost of all Selected Manufacturing Industries are certain throughout the decades suggested that the underutilization of existing capacity.
    Keywords: TFPG, Dual Cost function, Trans-log Cost function, Fixed Effect Modelling
    JEL: C23 C52 D24
    Date: 2020–08–10
  13. By: Isaac Otoo; Michael Danquah
    Abstract: In this paper, we estimate the efficiency of Metropolitan, Municipal, and District Assemblies (MMDAs) in Ghana, and investigate the impact of fiscal decentralization on the efficiency of local public goods and services delivery by MMDAs. Using data from composite budgets of all 216 MMDAs, we employ both nonparametric and parametric frontier methods to carry out the study.
    Keywords: Fiscal decentralization, Efficiency, Local government, Frontier methods, Ghana
    Date: 2021
  14. By: Helmi Hammami; Thanh Ngo; Dinh-Tri Vo; David Trip
    Abstract: Purpose - This paper provides a new method to define an Euclidean common set of weights (ECSW) in data developme+E58nt analysis (DEA) that (i) allows ranking both efficient and inefficient firms, (ii) is more realistic in terms of weight determination, and (iii) generates rankings consistent with the credit ratings system. Design/methodology/approach - We first use DEA to determine the efficient frontier and then estimate a common set of weights that can minimize the Euclidean distance between the firms and that frontier. This process is illustrated by a simple numerical example and is also extended to a real life situation using the Eurozone banking sector. Findings - Our ECSW approach outperforms other common set of weights approaches in both numerical and real life examples. Additionally, the ECSW also outperforms the others in terms of providing consistent rankings to the credit ratings system. Research limitations/implications ? We did not examine the variable returns to scale assumption in DEA nor analyze productivity changes over time (e.g., the Malmquist index approach). It would be also interesting to extend the real life sample (e.g., U.S. banks or Asian banks) to test the robustness and stability of our ECSW approach. Practical implications - The paper suggests a new approach to banks' ranking alternates to the credit ratings system. Originality/value - The paper provides a more realistic approach to estimate the common set of weight in DEA that also can be an alternative for the credit ratings system.
    Keywords: Data envelopment analysis; Common set of weights, Euclidean distance, Banking system, Eurozone
    Date: 2020–01–01
  15. By: Decarolis, Francesco; Mattera, Gianpiero; Menon, Carlo
    Abstract: The inefficiency of the judicial system might affect the extent of delays in the execution of public contracts. We leverage on the large variation in the average length of civil proceedings across Italian jurisdictions and a granular dataset of public contracts to apply a border-discontinuity design strategy. Using a quantile regression approach, we uncover a non-linear, causal effect of court inefficiency: slower courts decrease delays at the lowest two deciles of the delay distribution, and increase delays in the top three deciles of the distribution. These findings fit a framework where contract enforcement is a key driver of contract performance.
    Keywords: Court efficiency; public procurement; Quantile regression; spatial discontinuity
    JEL: H11 H57 K41
    Date: 2020–06
  16. By: Owusu, Solomon (UNU-MERIT, Maastricht University)
    Abstract: Sixty years ago, many countries in Africa implemented various industrial policies to promote structural transformation and industrialization, all aimed at generating productivity gains. Today, the consensus seems to be that the region has since recorded moderate productivity gains and industrialization remains elusive. Participation in global value chains (GVC) has recently been highlighted as a pathway to fast-track development in terms of productivity gains and structural change in the region. This paper builds on these arguments and investigates how participation in GVC affects aggregate labour productivity growth and its two sub-components: within and structural change. It further examines how this relationship differs with the extent of country’s natural resource endowments. The results show that participation in GVCs has a significant positive effect on productivity growth in Africa. This gain is largely through backward participation and is stronger for countries that are further from the productivity frontier. The analysis using the sub-components of productivity growth also shows that GVC participation has a positive and significant effect on productivity growth by inducing an efficient reallocation of resources within sectors (intra-sector reallocation) but not across sectors (inter-sector reallocation). Moreover, these benefits arise mostly in non-resource intensive and non-oil resource intensive countries. Overall, the results indicate that GVC participation matters for productivity growth in Africa but highlights differences in the channel of impact across countries with different natural resource endowments.
    Keywords: Global value chains, structural change, productivity, resource endowment, Africa
    JEL: C67 F15 O11 O13 O14 O47 O55
    Date: 2021–05–17
  17. By: KIM YoungGak; INUI Tomohiko
    Abstract: This paper examines the relationship between firm's IT adaptation and its TFP improvement by using Japanese firms and establishment level data. Our estimation results indicate that the rate of TFP growth is higher in firms and their manufacturing establishments (in the manufacturing industry) when the firms advance the IT adaptation. Our estimation results also show that there is a positive relationship between firm's IT adaptation and the expansion of its overseas activity, such as international trade between headquarters and its overseas affiliates, the number of employees, and R&D activities in the overseas affiliates. In addition, our results suggest that higher IT adaptation of a firm leads to the increased production of domestic high-productivity manufacturing establishments, and conversely decreases the production of low-productivity establishments. These estimation results imply that firms with greater IT adaptation improves its TFP through reorganizing domestic and overseas production.
    Date: 2021–03
  18. By: KIM YoungGak; INUI Tomohiko
    Abstract: This paper examines the effect of the development of AI and robot technology in a firm on its productivity and the number of employees. By matching the patent application data with firm data, we determined the application status of AI and robot technology in each firm. In addition, each patent application is weighted by the number of citations, and this value is regarded as an indicator of technological development in the firm. The results of the analysis are as follows. The progress of AI technology in the firm leads to improve its firm total factor productivity (TFP). It was also found that the progress in AI technology has a negative impact on the number of employees in the manufacturing sector but has a positive impact on the number of employees in the service sector. It was confirmed that progress in robot technology also has the effect of boosting the productivity of the firm. As with AI technology progress, no significant impact was found on overall employment, while the introduction and increase in robotic technology significantly reduced the number of employees in the manufacturing and sales sectors. This may be because the increase in the number of employees in the service sector cancels out the negative impact on manufacturing and sales sectors employment. Our results are similar to those in Ni and Obashi (2021) and Adachi, Kawaguchi, and Saito (2020), the results show that robots and employment are complementary as a whole in Japan. The progress in AI and robot technology brings about changes in firm domestic and overseas production systems. The technological progress related to AI and robots reduces the number of existing domestic manufacturing establishments, increases the probability of exit, and at the same time increases the creation of new manufacturing establishments, thereby improving the efficiency of resource allocation between business units within the firm. The progress in AI and robot technology enhances international competitiveness and thus promotes overseas production as a whole, but has a negative effect on the overseas affiliates' production activities in low-income countries.
    Date: 2021–03
  19. By: Ruo SHANGGUAN; Jed DEVARO; OWAN Hideo
    Abstract: When output demand drops during recessions, employers decrease labor inputs by cutting workers and/or hours. If pre-recession hours were excessive, cutting hours might increase labor productivity, given an inverted-U-shaped hours-productivity profile. When total hours decrease in team settings, labor reallocation causes hours to be concentrated among top performers. The adjustment process is examined using single-firm Japanese data on construction design projects. A theoretical model is proposed and calibrated to analyze within-team labor allocation. We find that in response to the decrease in hours resulting from the 2008-2009 global financial crisis: (1) total productivity improves by more than the increase in individual productivity, the labor share becomes more concentrated, and team size decreases; (2) the productivity improvement is greater for larger teams and less productive teams; (3) larger teams exhibit lower average productivity because weaker workers join teams when more hours are needed than the top performers can handle.
    Date: 2021–05
  20. By: Ziesemer, Thomas (UNU-MERIT, Maastricht University)
    Abstract: We re-consider the traditional result of zero or negative foreign R&D spillovers or strategic reactions to the USA using accumulated shocks in a vector-error-correction model (VECM) for the period 1963-2017. Foreign private and public R&D stocks have a positive and statistically significant effect on US public R&D and labour-augmenting technical change (LATC). US private R&D reacts positively to foreign private R&D and negatively to foreign public R&D shocks. Foreign public and private R&D react positively to US public R&D. All variables react positively to US private R&D. From the time profile of the simulated VECM, we calculate the sum of discounted (at 4%) net gains for (i) additional private and public US R&D, and (ii) for policies reacting to foreign private and public R&D shocks with additional domestic private and public R&D. Additional private and public US R&D expenditures have very high internal rates of return. R&D investments in reaction to shocks from foreign R&D are profitable. All LATC reactions are transitional suggesting semi-endogenous growth for the USA.
    Keywords: Growth, productivity, R&D, reaction functions, spillovers, CVAR
    JEL: C51 O30 O38 O47 O51
    Date: 2021–03–26
  21. By: FUKAO Kyoji; KIM YoungGak; KWON Hyeog Ug; IKEUCHI Kenta
    Abstract: What was the state of business dynamism in the first half of Abenomics, when productivity increased relatively well? This paper analyzes this issue by conducting a productivity dynamics analysis of labor productivity and TFP using questionnaire information from the Economic Census for Business Activity for 2011 and 2015. In addition, we investigated what category of firm was the main drivers of productivity growth. The main source of productivity growth during this period was productivity growth within firms (within effect) for labor productivity, but for TFP growth, it was not the within effect but the reallocation effect (the covariance effect due to the increase in the market share by firms with higher productivity growth rates, the between effect in which firms with higher productivity increased their market share, and the entry of new firms with higher productivity). Although the exit effect was negative because firms with high productivity exited the market, it can be said that the driving force behind productivity growth during this period was the reallocation of resources across firms. The reallocation effect was particularly prevalent in the larger group of firms and in the non-manufacturing sector rather than in the manufacturing sector. The observations on the relationship between the firm size, firm age and productivity growth within firms showed that TFP growth rate was highest for the second-largest group of firms in the non-manufacturing sector, which were 20-30 years old, and highest for the smallest group of firms in the manufacturing sector, which were less than 10 years old. On the other hand, the productivity gap between firms widened, and market concentration (as measured by the Herfindahl-Hirschman Index, HHI) fell, while the average mark-up ratio (sales divided by total costs) rose. The increase in mark-up was not due to increased market share by firms with high mark-up rates. The increases occurred mainly within individual firms, and regardless of firm size or age. The mark-up rate increased especially in the manufacturing sector with a high ratio of exports, which may be due to the depreciation of the yen.
    Date: 2021–03
  22. By: Somanathan, E.; Somanathan, Rohini; Sudarshan, Anant; Tewari, Meenu
    Abstract: Hotter years are associated with lower economic output in developing countries. We show that the effect of temperature on labor is an important part of the explanation. Using microdata from selected firms in India, we estimate reduced worker productivity and increased absenteeism on hot days. Climate control significantly mitigates productivity losses. In a national panel of Indian factories, annual plant output falls by about 2% per degree Celsius. This response appears to be driven by a reduction in the output elasticity of labor. Our estimates are large enough to explain previously observed output losses in cross-country panels.
    Keywords: Temperature,warming,labor productivity,labor supply
    JEL: Q54 Q56 J22 J24
    Date: 2021
  23. By: Acharya, Viral V.; Crosignani, Matteo; Eisert, Tim; Eufinger, Christian
    Abstract: We show that cheap credit to impaired firms has a disinflationary effect. By helping distressed firms to stay afloat, "zombie credit" can create excess production capacity, and in turn, put downward pressure on markups and prices. We test this mechanism exploiting granular inflation and firm-level data from twelve European countries. In the cross-section of industries and countries, we find that a rise of zombie credit is associated with a decrease in firm defaults and entries, firm markups and product prices; lower productivity; and, an increase in aggregate sales as well as material and labor cost. These results hold at the firm-level, where we document spillover effects to healthy firms in markets with high zombie credit. Our partial equilibrium estimates suggest that without a rise in ...
    Keywords: Disinflation; eurozone crisis; Firm productivity; Under-capitalized Banks; zombie lending
    JEL: E31 E44 G21
    Date: 2020–06
  24. By: Inmaculada Martínez-Zarzoso; Maria C. Lo Bue
    Abstract: This paper investigates whether firm performance differs significantly when comparing firms with female and male top managers in the Caribbean region. We use survey data with detailed information on gender for firms in 13 Caribbean countries. Our methodology is based on Blinder-Oaxaca decomposition and propensity score matching econometric techniques.
    Keywords: The Caribbean, Firm performance, Gender gap, Propensity score matching
    Date: 2021
  25. By: Qing Li (Qing Li, SHU-UTS SILC Business School, Shanghai University); Yanrui Wu (Business School, The University of Western Australia)
    Abstract: This study explores organisation capital and its spillover effects among Chinese manufacturing firms. By linking patent data with China’s annual survey of industrial enterprises database, we examine technological proximity as one potential channel for organisational spillover but find weak evidence. This result is consistent with previous findings from developed countries. In contrast, organisation capital is found to generate positive spillover in China when geographical proximity is considered. In other words, it is found that spillover from organisation capital is likely among Chinese firms due to geographical proximity rather than technological proximity.
    Keywords: Organisation capital; knowledge spillover; intangible capital; patent portfolio; Chinese firms
    JEL: D21 D24 L22
    Date: 2021
  26. By: M.A. Anderson; M.H. Davies; J.E. Signoret; S.L.S. Smith
    Abstract: We examine import prices paid by direct-sourcing Indian manufacturing firms in the early 2000s using a unique data set that matches firm characteristics with product and source-country trade data, offering a theoretical and empirical extension of Halpern and Koren (2007). We find that import prices are positively associated with firm productivity, distance from source-country, and source-country GDP per capita, and negatively associated with source-country remoteness, an effect we attribute to the higher scope for quality differentiation in less remote locations. Further, we find that source-country characteristics matter more, and cost factors less, for differentiated than for non-differentiated goods.
    Keywords: Importers, Firm-level data, Pricing, Input quality, productivity, India
    JEL: F1 F10 F12 F14
    Date: 2021–04

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.