nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2021‒07‒26
eleven papers chosen by
Angelo Zago
Università degli Studi di Verona

  1. The Impact of Trade Liberalization on the Mexican Automobile Industry: Evidence from the First 20 Years of NAFTA By Gabriela López Noria
  2. Financing Structure, Micro and Small Enterprises’ Performance, and Woman Entrepreneurship in Indonesia By Zeinab Elbeltagy; Zenathan Hasannudin
  3. Digital technology and productivity of informal enterprises: Empirical evidence from Nigeria By Michael Danquah; Solomon Owusu
  4. Why Does Productivity Matter? By Cuong Le Van; Ngoc-Sang Pham
  5. COVID-19, Productivity and Reallocation: Timely evidence from three OECD countries By Dan Andrews; Andrew Charlton; Angus Moore
  6. Adoption of digital and ICT technologies and firms’ productivity By Zoran Aralica; Bruno Skrinjaric
  7. The COVID-19 Shock and Productivity-Enhancing Reallocation in Australia: Real-time evidence from Single Touch Payroll By Dan Andrews; Jonathan Hambur; Elif Bahar
  8. Intra-Africa agricultural trade, governance quality and agricultural total factor productivity: Evidence from a panel vector autoregressive model By Espoir, Delphin Kamanda; Bannor, Frank; Sunge, Regret
  9. Board director reputation capital and financial performance of listed firms in Nigeria By Peter Ehizokhale Okpamen; Sunday Oseiweh Ogbeide
  10. Seeds, water, and markets to increase wheat productivity in Bihar, India By Kishore, Avinash; Singh, Vartika
  11. Genetic Diversity and Performance: Evidence from Fooball Data By Michel Beine; Silvia Peracchi; Skerdilajda Zanaj

  1. By: Gabriela López Noria
    Abstract: This paper examines the impact of trade liberalization under NAFTA on the productivity of the Mexican automobile industry. Using a panel of establishments for the period 1994-2014, in a first stage a Cobb-Douglas production function is estimated by the Levinsohn and Petrin's (2003) method (in an alternative exercise by that of Ackerberg, Caves and Frazer, 2015) to obtain a productivity measure. In a second stage, a model is estimated by System GMM to analyze the effect of trade openness on the estimated productivity. The main results indicate that there exists a positive association between trade liberalization and productivity for medium size establishments, but not for small or large establishments. This finding is consistent with that of other authors, who find that trade liberalization results in higher productivity for some firms, but not for all of them (e.g. Lileeva and Trefler, 2010; Bustos, 2011).
    JEL: F13 L62 D24
    Date: 2021–07
  2. By: Zeinab Elbeltagy (Intern, Macroeconomic and Financing for Development Division, UNESCAP); Zenathan Hasannudin (Macroeconomic Policy and Financing for Development Division, UNESCAP)
    Abstract: Access to finance has been found crucial in influencing firms’ real activities and economic performance.This paper investigates the relationship between the financing structure and firm performance by explor-ing a unique panel dataset of 59,968 Micro and Small Enterprises (MSEs) operating in the manufacturingsector in Indonesia over the 2010-2015 period. We collected a rich set of information about source ofloans to assess the firm performance using yearly total factor productivity (TFP) and labor productivityof each firm. We then examined whether more financing options available to women entrepreneurshipimproves firm performance. Our results show that financial factors are highly decisive to firms’ TFPand labor productivity. The MSEs which have access to external formal financing directly improvesproductivity at the firm level. Moreover, the study finds a significant underperformance of firms ownedby women entrepreneurs compared to those owned by men entrepreneurs. Nevertheless, we found thatwomen entrepreneurs who have access to formal financing improve their firm’s performance. The effectsof finance on productivity are also linked to the firm’s ownership, education, size and age. Our resultsare robust as demonstrated through the use of different approaches. These results provide support forpolicymakers to alleviate credit constraints to enhance productivity of micro and small enterprises andespecially woman entrepreneurship in Indonesia.
    Keywords: Total factor productivity, inclusive financing, woman entrepreneurship
    JEL: G21 J16 L25 L26 N65
    Date: 2020–09
  3. By: Michael Danquah; Solomon Owusu
    Abstract: The lingering policy dilemma facing many governments in sub-Saharan Africa in recent years is what can be done in the short to medium term to boost the output and incomes of individuals and enterprises in the informal sector, given the size and persistence of the sector in the region. In this paper we examine the structural impact of access and usage of digital technology by informal enterprises on labour productivity. Using a sample of non-farm informal enterprises in Nigeria, we employ IV LASSO techniques to carry out our analysis.
    Keywords: Information technology, Informal sector, Productivity, Instrumental variable, Regression analysis, Nigeria
    Date: 2021
  4. By: Cuong Le Van (CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, IPAG Business School); Ngoc-Sang Pham (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)
    Abstract: Productivity is a key concept in economics and crucial for economic growth. By using different theoretical models, we show the role of several kinds of productivity, including total factor productivity (TFP) and labor productivity.
    Keywords: labor productivity,TFP,Productivity,competitiveness,growth
    Date: 2021–02–11
  5. By: Dan Andrews; Andrew Charlton; Angus Moore
    Abstract: The longer run consequences of the pandemic will partly hinge on its impact on high productivity firms, and the ongoing process of labour reallocation from low to high productivity firms. While Schumpeter (1939) proposed that recessions can accelerate this process, the nature of the COVID-19 shock coupled with a policy response that prioritised preservation (over reallocation) raises questions about whether job reallocation remained productivity-enhancing. Using novel, near-real-time data for Australia, New Zealand and the United Kingdom, this paper shows that while labour turnover fell in response to the pandemic, job reallocation remained connected to firm productivity – that is, high productivity firms were more likely to expand and low productivity firms were more likely to contract. The pandemic coincided with a temporary strengthening of the reallocation-productivity link in Australia – but a weakening in New Zealand – which appears related to the design of job retention schemes. Finally, firms that intensively used Apps to manage their business were more resilient, even after controlling for productivity. Thus, while policy partly suppressed creative destruction, the nature of the shock – i.e. one where being online and able to operate remotely were key – favoured high productivity and tech-savvy firms, resulting in a reallocation of labour to such firms. The use of timely, novel data to investigate the allocative effects of the pandemic marks a significant advance, given that the seminal paper on productivity-enhancing reallocation during the Great Recession arrived some six years after Lehman Brothers collapsed.
    Keywords: COVID-19, productivity, reallocation, recessions
    JEL: E24 E32 J63 O4
    Date: 2021–07–22
  6. By: Zoran Aralica (The Institute of Economics, Zagreb); Bruno Skrinjaric (The Institute of Economics, Zagreb)
    Abstract: This paper has two main goals. First, it aims to answer the question on how the usage of ICT and digital technologies affects firm productivity. Second, it aims to analyze how change in the share of the manufacturing sector and/or the service sector in a given region direct changes in firm productivity. The analysis was carried out using a financial dataset of Croatian enterprises in the period from 2009 to 2019 and Eurostats’ Digital Economy and Society data, based on “Community survey on ICT usage and ecommerce in enterprises”. The data were analyzed using principal component analysis and panel data methods. The results indicate a positive relationship between adoption of ICT technologies and firm productivity, and a negative correlation between adoption of digital technologies and firm productivity. Furthermore, the results show a high degree of deindustrialization of certain regions and a positive correlation between industry intensity in certain regions and firm productivity. Finally, there seems to be a positive premium on productivity for larger-sized firms, firms participating in international trade, companies situated near to key international markets (i.e., located in counties bordering with the City of Zagreb).
    Keywords: ICT, digital technologies, economy structure, productivity, Croatia
    JEL: O14 O33
    Date: 2021–04
  7. By: Dan Andrews; Jonathan Hambur; Elif Bahar
    Abstract: The consequences of the pandemic for potential output will partly hinge on its impact on high productivity firms, and more generally the ongoing process of productivity-enhancing reallocation – the rate at which scarce resources are reallocated from less productive to more productive firms. While Schumpeter (1939) originally proposed that recessions can accelerate this process, the more ‘random’ nature of the COVID-19 shock coupled with a policy response that prioritised preservation (over reallocation) raises questions about whether job reallocation remained productivity-enhancing over the course of the pandemic. Despite these headwinds, our analysis based on novel high-frequency employment data for Australia shows that job reallocation (and firm exit) remained solidly connected to firm productivity over 2020. The greater resilience of high productivity firms is significant, given that an indiscriminate shakeout of such firms – and the associated destruction of firm-specific intangible capital – would have imparted significant scarring effects. As it turns out, the temporary nature of Australia’s job retention scheme (JobKeeper) made an important (and surprising) positive contribution to this process, with material consequences for aggregate productivity. But the scheme appears to have become more distortive over time, justifying its timely withdraw – on productivity grounds at least.
    Keywords: COVID-19, productivity, reallocation, recessions
    JEL: E24 E32 J63 O4
    Date: 2021–07–22
  8. By: Espoir, Delphin Kamanda; Bannor, Frank; Sunge, Regret
    Abstract: The African Continental Free Trade Area (AfCFTA) agreement was signed by at least 54 African countries and has the potential of lifting up to 30 million Africans out of extreme poverty, according to the World Bank (2020). The agricultural sector is regarded as a fertile ground for achieving the AfCFTA ambitions. However, agricultural productivity in Africa is low and falling. It is argued that intra-Africa trade and good governance can help increase agricultural productivity. Nonetheless, both are low, casting doubt on their ability to enhance agricultural productivity. This study attempts for the first time to examine the causal relationship between the intra-Africa agricultural trade, governance quality, and the agricultural total factor productivity (ATFP) for 47 countries over the period 1995–2018. We extend the analysis to regional economic communities (RECs) to understand the diversity in this relationship within the continent. Using the panel VAR model in the generalized method of moment (GMM) estimation approach, our results suggest a long-run equilibrium relationship between the three variables. Specifically, the results indicate that at the African level, intra-Africa agricultural trade has a statistically positive effect on governance quality and ATFP. In contrast, good governance has positive and negative impacts on ATFP and trade, respectively. We also find that ATFP positively influences intra-Africa agricultural trade and governance. At the RECs level, our estimations show significant heterogeneity in the three variables’ impacts. Based on our findings, we recommend a rapid implementation of the AfCFTA agreement. However, we suggest that the implementation should be idiosyncratic to each region’s structural economies. Furthermore, we encourage the promotion of good governance, particularly in agriculture policy implementation.
    Keywords: Agricultural trade,agricultural total factor productivity,governance,PVAR
    JEL: C23 G38 O47 Q17
    Date: 2021
  9. By: Peter Ehizokhale Okpamen (Elizade University); Sunday Oseiweh Ogbeide (Ambrose Alli University)
    Abstract: This study examined the impact of board director reputation capital on financial performance of listed firms in Nigeria. The population of the study consists of all the listed non-financial firms in Nigeria. A sample of fifty (50) firms was selected and data were collected over the period 2007 to 2018. Descriptive statistics and system general method of moment estimation methods were used to undertake the data analysis. Findings reveal that board director reputational capital exerted a positive and significant impact on financial performance of the firms. Board size and firm size were negative on firm financial performance in the reference period. The study concludes that board reputational capital is a significant driver of corporate financial performance in Nigeria irrespective of the size of the board. Based on the empirical findings, it is recommended that there is need for regulators to design a framework to efficiently and effectively monitor the reputation of executive board directors and managers in firms. This will assist to check mate agency costs, demonstration of opportunistic behavior capable of destroying the firm value, There is need for firms to encourage adequate interlocking members who have diverse professional training, high social net worth and experience (experience hypothesis) to positively influence effective management and financial performance of listed firms in Nigeria.
    Keywords: board reputational capital,board size,firm size,financial performance,Nigeria
    Date: 2020–12–30
  10. By: Kishore, Avinash; Singh, Vartika
    Abstract: Low and variable yields of wheat in the rice--wheat cropping systems of lower Indo-Gangetic Plains (IGP) of South Asia, covering Bihar and Eastern Uttar Pradesh (EUP) in India and the Terai region of Nepal, are a matter of significant concern for this densely populated region (Chatrath et al., 2007). Increasing the productivity and profitability of wheat is important for Bihar and E U P both for the income security of farmers and the food security of households (Keil et al., 2015). It is the second-largest crop in the region after rice in terms of area, production, and output value. Farmers in Bihar cultivate wheat on more than 2 million ha of land and produce 5--6 million tonnes of it every year. Wheat occupies 28% of the gross cropped area of Bihar and 70% of the sown area in the Rabi season. Despite its importance to the state’s agrarian economy and food security, wheat yields and the gross value of output per hectare are the lowest in Bihar among all major wheat-producing states of India while the cost of production (INR/tonne) is high (INR 10,630/tonne vs. INR 9,600/tonne for India); the net profit (INR per hectare) from wheat cultivation is also the lowest (Commission for Agricultural Costs and Prices (CACP), 2020). In this brief, we analyze the four major factors that contribute to low wheat yields in Bihar.
    Keywords: INDIA, SOUTH ASIA, ASIA, seed, water, wheat, food productivity, yields, irrigation, farmers, markets, wheat productivity
    Date: 2021
  11. By: Michel Beine; Silvia Peracchi; Skerdilajda Zanaj
    Abstract: The theoretical impact of genetic diversity is ambiguous since it leads to costs and benefits at the collective level. In this paper, we assess empirically the connection between genetic diversity and the performance of sport teams. Focusing on football (soccer), we built a novel dataset of national teams of European countries that have participated in the European and the World Championships since 1970. Determining the genetic diversity of national teams is based on the distance between the genetic scores of every players’ origins in the team. Genetic endowments for each player are recovered using a matching algorithm based on family names. Performance is measured at both the unilateral and bilateral level. Identification of the causal link relies on an instrumental variable strategy that is based on past immigration at the country level about one generation before. Our findings indicate a positive causal link between genetic diversity and teams’ performance. We find a substantial effect, a one-standard increase in diversity leading to ranking changes of two to three positions after each stage of a championship.
    Keywords: genetic diversity, football, sports team, performance, family names, migration
    JEL: F22 F66 O15 O47 Z22
    Date: 2021

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