nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2024‒01‒01
nine papers chosen by

  1. Green total factor productivity mismeasurement without considering intangibles: Evidence from China By Qing Li; Kexing Yu; Yanrui Wu
  2. Where has all the dynamism gone? Productivity growth in China's manufacturing sector, 1998-2013 By Brandt, Loren; Van Biesebroeck, Johannes; Wang, Luhang; Zhang, Yifan
  3. A State-Level Resource Allocation Model for Emission Reduction and Efficiency Improvement in Thermal Power Plants By Subhash C. Ray; Shilpa Sethia
  4. Structural Changes and the Impact of FDI on Singapore's Manufacturing Activities By Shandre Mugan Thangavelu
  5. Foreign Direct Investment, Agglomeration, and Production Networks in Indonesian Manufacturing By Dionisius A. Narjoko
  6. Capital Cost, Technology Choice, and Demand for Skills in Industries in Viet Nam By Diep Phan; Ian Coxhead
  7. Growth with Mismatch - Theory and Evidence from TFP Estimates By Gries, Thomas; Fritz, Marlon; Wiechers, Lukas
  8. Demand and Supply Side Linkages in Exporting Multiproduct Firms By Carsten Eckel; Lisandra Flach; Ning Meng

  1. By: Qing Li (Department of Economics and Finance, SILC Business School, Shanghai University); Kexing Yu (Department of Economics and Finance, SILC Business School, Shanghai University); Yanrui Wu (Business School, The University of Western Australia)
    Abstract: This paper aims to re-estimate green total factor productivity (GTFP) with the consideration of intangible capital in Chinese provinces during 2003 and 2017. Intangible capital is broadly defined and categorised into computerised information, innovative property and economic competency property. The finding suggests that the conventional GTFP is underestimated especially during the post-financial crisis period in China. It is also found that technical efficiency, which shows the trend of deterioration without capitalising intangibles, improves steadily and jointly with technological progress contributes to the improvement of productivity. The mismeasurement of GTFP is more severe in developed regions in China where intangible investment is more emphasised. Furthermore, regional GTFP shows the trend of convergence after intangible capital is incorporated and the rate of convergence turns to be faster in coastal regions than that in the interior.
    Keywords: Green total factor productivity, intangible capital, data envelopment analysis, China
    JEL: O47 O34 R11
    Date: 2023
  2. By: Brandt, Loren; Van Biesebroeck, Johannes; Wang, Luhang; Zhang, Yifan
    Abstract: China's manufacturing sector has been a key source of the economy's dynamism. Analysis after 2007 however is hampered by problems in the key data source for empirical analysis, the National Bureau of Statistics' (NBS) annual survey of industrial firms. Issues include missing information on value added and intermediate inputs, and concerns of over-reporting. The annual survey of firms conducted by China's State Taxation Administration (STA) provides a reliable, alternative source of firm-level data for years from 2007 to 2013. Since the sample is not representative and the precise sampling scheme is not known, the data cannot be used directly to draw inferences on China's manufacturing sector. By comparing the joint distribution of key variables for which both surveys provide reasonably reliable information, we recover the sampling scheme of the STA survey and use it to simulate samples for 2007 to 2013 that are comparable to the NBS sample in earlier years. Our estimates reveal a marked slowdown in revenue-based total factor productivity growth that cuts across all industries, ownership types, and regions. The loss of dynamism in the private sector, and the reduced contribution of firm entry to aggregate productivity growth are especially prominent.
    Keywords: TFP, Industrial development, Economic growth
    JEL: D24 O14
    Date: 2023
  3. By: Subhash C. Ray (University of Connecticut); Shilpa Sethia (University of Connecticut, National Grid USA Service Company Inc.)
    Abstract: This paper develops a framework for centralized allocation of resources and production targets among firms that produce a bad output side-by-side with a good output. The production technology is specifically defined for thermal power generation sector that produces one good output (electricity) and one bad output (stack emissions) with one polluting input (coal) and two neutral inputs (installed capacity of power plants and labor). The undesirable output is modeled as an incidental by-product resulting from use of the polluting input. We use a modified Directional Distance Function of Aparicio, Pastor, and Ray (2013), formulated with non-parametric Data Envelopment Analysis, to determine the extent by which good output can be increased in each region while minimizing the use of polluting inputs and the level of bad output, by increasing efficiency through reallocation. For empirical illustration, we use data from major coal-fired power plants in India for fiscal year 2005-06 through 2014-15. Each stte within India is treated as a regional jurisdiction within which inputs (only coal and labor) and outputs are reallocated under alternative structural assumptions. Our findings reveal that the thermal power sector is sub-optimal, leaving a scope for emission reduction and increase in power generation in different states of India.
    Date: 2023–12
  4. By: Shandre Mugan Thangavelu (Jeffrey Cheah Institute for Southeast Asia, Sunway University and Institute for International Trade, University of Adelaide)
    Abstract: This chapter examines the investment and foreign direct investment (FDI) policy of Singapore's economy in terms of the structural transformation of the economy from 1998 to 2018. The study also examines the impact of FDI on the productivity of the Singapore manufacturing industries in a panel framework from 2017 to 2019. The results indicate that FDI activities have a positive impact on labour productivity. The export activities of multinational businesses have a positive impact on labour productivity. We also observe agglomeration effects from FDI activities (average FDI activities over 3 years) in Singapore's manufacturing industries. However, we observe a negative impact of outsourcing labour productivity. The study also derives policy implications for forwardlooking policies in terms of the position of Singapore in the global production value chain.
    Keywords: Structural Transformation, FDI Policy
    Date: 2023–06–09
  5. By: Dionisius A. Narjoko (Economic Research Institute for ASEAN and East Asia)
    Abstract: This study examines the importance of globalisation - defined by international production networks - in determining foreign direct investment (FDI) flows into Indonesian manufacturing since 2000. It is motivated by the fact that the extent of connection between the Indonesian and the global economy had increased after the 1997-98 Asian financial crisis. Models of FDI are estimated by utilising plant-level data and various trade and tariff data. Production networks or agglomeration are found to play an important role in driving FDI in Indonesia's manufacturing sector, at least for the period 2000-2015. This study provides the insight that agglomeration could be utilised to increase FDI in Indonesia. This not only improves the productivity of the sector targeted by the investment but also promotes productivity growth. Creating more agglomeration areas could therefore be a policy direction taken by Indonesia to help increase FDI.
    Keywords: Indonesia, foreign direct investment, production networks, agglomeration
    JEL: O14 F12 F21
    Date: 2023–05–04
  6. By: Diep Phan (University of Wisconsin-Madison and Institute of Developing Economies (IDE-JETRO), Tokyo); Ian Coxhead (University of Wisconsin-Madison and Institute of Developing Economies (IDE-JETRO), Tokyo)
    Abstract: This paper explores the consequences of a policy regime in which state firms enjoy privileged access to capital while private firms are crowded out. Consequently, state firms choose technologies that are capital-intensive and thus demand more skilled labour. Econometric estimates using Viet Nam's enterprise censuses confirm some of the propositions generated by the model. Relative to private firms, state firms have higher fixed capital stocks but do not have lower variable capital costs; they also employ more skilled labour. Also, as predicted, there is a U-shaped relationship between production scale and skills intensity; many private firms (which are mostly small) are limited to labour-intensive techniques and increase output simply by adding unskilled labour, whereas larger firms are more likely to operate at scales at which it is profitable to employ more skills-intensive and efficient technologies.
    Keywords: state-owned enterprises, Viet Nam, skills intensity, technological choice
    JEL: O14 O25 J24 L25
    Date: 2023–07–03
  7. By: Gries, Thomas; Fritz, Marlon; Wiechers, Lukas
    JEL: C33 C36 O40 O47
    Date: 2023
  8. By: Carsten Eckel (LMU Munich, CESifo, CEPR); Lisandra Flach (LMU Munich, ifo Institute, CESifo, CEPR); Ning Meng (Nanjing University, CESifo)
    Abstract: Products produced by a multiproduct firm can be linked through demand linkages or supply linkages. On the demand side, changes in the price of one product can affect the demand for a firm's other products through shifts in consumer expenditures. This is commonly referred to as the cannibalization effect. On the supply side, joint inputs can create a dependency of one product's marginal costs on the output of other products. The existence of these linkages is important for how firms respond to shocks and has major implications for several performance measures, such as productivity and markups. This paper provides first empirical evidence for the existence of cannibalization linkages in presence of supply linkages, which is implied evidence for market power.
    Keywords: multiproduct firms; cannibalization effect; demand linkages; supply linkages; anti-dumping tariffs; quality; mark-ups;
    JEL: D21 D24 F12 F13 F14 L11 L15 L25
    Date: 2023–11–17
  9. By: Matteo Picchio (Department of Economics and Social Sciences, Universita' Politecnica delle Marche); Jan C. Van Ours (Erasmus School of Economics and Tinbergen Institute, The Netherlands)
    Abstract: High temperatures can have a negative effect on work-related activities because workers may experience difficulties concentrating or have to reduce effort in order to cope with heat. We investigate how temperature affects performance of professional tennis players in outdoor singles matches in big tournaments. We find that performance significantly decreases with ambient temperature. This result is robust to including wind speed and air pollution in the analysis. There are no differences between men and women. However, there is some heterogeneity in the magnitude of the temperature effect in other dimensions. In particular, we find that the temperature effect is smaller when there is more at stake. Our findings also suggest that the negative temperature effect is smaller if the heat lasts, i.e. there is some adaptation to high temperatures.
    Keywords: Climate change, temperatures, tennis, performance, productivity.
    JEL: J24 J81 Q51 Q54
    Date: 2023–12

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