ICTs and time-span in technical efficiency gains. A stochastic frontier approach over a panel of Italian manufacturing firms

In this paper, in contrast to much of the existing literature dealing with the impact of information and communication technologies (ICTs) on labour productivity, we assess the relationship between ICT investments and technical efficiency (TE) using a stochastic frontier approach. We utilize a large panel dataset of Italian manufacturing firms over the period 1995–2006 and confirm the findings of the previous work on ICT and productivity. In addition, we test to what extent ICT investments influence the gap between firms and the production frontier; that is, how adoption of ICT influences the narrowing of the said gap. We also test the duration of the effects of adopting ICT on technical efficiency. Finally, our results indicate that ICT returns on TE are influenced by certain firm characteristics, most of which idiosyncratic, such as management practices, labour organization, research and development.     

Efficiency frontier and matching process on the labour market: Evidence from Tunisia

The purpose of this paper is to study the determinants of the inefficient functioning of the Tunisian labour market. The study takes advantage of the recent development in the stochastic frontier techniques and estimates, the matching function for Tunisia using disaggregated data. We include control variables as determinants of matching efficiency and regional disparities. We confirm that the persistently high rate of unemployment is the result of not only excess labour supply but is also related to a shortfall between supply and demand (sector, location, and qualification).     

A model for technical inefficiency effects in a stochastic frontier production function for panel data

A stochastic frontier production function is defined for panel data on firms, in which the non-negative technical inefficiency effects are assumed to be a function of firm-specific variables and time. The inefficiency effects are assumed to be independently distributed as truncations of normal distributions with constant variance, but with means which are a linear function of observable variables. This panel data model is an extension of recently proposed models for inefficiency effects in stochastic frontiers for cross-sectional data. An empirical application of the model is obtained using up to ten years of data on paddy farmers from an Indian village. The null hypotheses, that the inefficiency effects are not stochastic or do not depend on the farmer-specific variables and time of observation, are rejected for these data.     

Do outsourcing services provided by agricultural cooperatives affect technical efficiency? Insights from tobacco farmers in China

In this study, we assess whether household outsourcing production tasks provided by tobacco cooperatives affect household technical efficiency, using the survey data from 449 households in Guizhou Province, China in 2014. The one-step estimation of the stochastic frontier production function is employed. We also use the instrumental variable approach to address the potential selection biases that may arise from unobserved factors that are correlated with both outsourcing service adoption and technical efficiency. The empirical results show that the farmers’ decision to outsource agricultural services provided by cooperatives has a positive effect on technical efficiency. The effects of outsourcing on technical efficiency are highly heterogeneous at different production stages. It is also interesting to note that the magnitudes of outsourcing effects on technical efficiency are similar between labor-intensive services and technology-intensive services.     

Knowledge spillovers,absorptive capacity and total factor productivity in China’s manufacturing firms

Applying the stochastic frontier framework, this study explores the diffusion and absorption of technological knowledge in China’s manufacturing firms, based on a panel of more than 10,000 local and foreign-invested firms over the period 1998–2001. Our empirical approach allows us to distinguish between technological progress (TP) and technical efficiency (TE) in analysing whether R&D, exports and the presence of foreign direct investment simultaneously enhance TP through knowledge spillovers in a single framework and whether different types of domestic absorptive capacity moderate external knowledge spillovers in relation to TE. The results show that there are positive inter-industry productivity spillovers from R&D and foreign presence, whereas evidence of intra-industry productivity spillovers from FDI to Chinese firms is less robust. We find evidence that absorptive capacity is one of the key determinants to quantitatively explain intra-industry differences in productivity of local Chinese firms. The findings have important policy implications.     

Allocative and scale efficiency among maize farmers in Zambia: a zero efficiency stochastic frontier approach

The commonly used stochastic frontier model assumes that all firms are inefficient. In this specification, inefficiency is non-negative, and the probability of inefficiency being exactly zero is also zero. To the extent that efficiency varies widely across farms in under-developed economies, it is important to employ techniques that account for both inefficiency and full efficiency to ensure unbiased efficiency estimates. In this study, we employ a zero-inefficiency stochastic frontier model to examine allocative efficiency and scale economies, as well as key determinants of efficiency among Zambian maize farmers. The results show that, unlike the stochastic frontier model, the zero-inefficiency stochastic frontier model successfully allows for both fully efficient and inefficient firms to be accounted for in the estimation procedure. The estimates also reveal the presence of scale economies, with the zero-inefficiency stochastic frontier model better predicting scale efficiency compared to the stochastic frontier model. The findings also show that inefficiency is explained by the level of education, access to extension services, distance to markets and access to credit.     

Technical efficiency of small scale farmers: An application of the stochastic frontier production function to rural and urban farmers in Ondo State,Nigeria

Abstract

The main objective of this study was to estimate empirically the technical efficiency of rural and urban small-scale farmers in Ondo State, Nigeria, using the stochastic frontier production function. With the rapid urbanization being currently experienced in Nigeria, the socio-economic and the farming environment in both the rural and urban centres are undergoing transformation. This study involved collection and analysis of data on 200 food crop farmers from rural and urban centres in Ondo state of Nigeria. The results of analysis show that there are wide differences in the socio-economic and production inputs of the farmers from rural and urban centres. While farmers from rural centres have relatively larger farms, the urban farmers have better access to production inputs, especially, fertilizer. However, rural farmers, with a mean technical efficiency of 0.66 are found to be more technically efficient than urban farmers, who have a mean technical efficiency of 0.57. There is a wide confidence interval around the point estimates of the technical efficiency scores. Level of education, farming experience and land are found to have negative effects on technical inefficiency of both rural and urban farms. The marginal effect of inefficiency variables is, however, found to be highest for education among both rural and urban farms.     

Japan's productivity stagnation: Using dynamic Hsieh–Klenow decomposition

This study provides a new perspective on Japan's stagnant aggregate productivity by extending the Hsieh and Klenow (2009) framework to account for productivity growth, entry and exit, and product variety change. We measure the technical efficiency (TE) and allocative efficiency (AE) by the aggregate production possibility frontier and the distance from the frontier, respectively. We apply our approach to establishment- and firm-level data sets from Japan and find that the AE among survivors declined during the banking crisis period, while the TE declined during the global financial crisis period.     

Accounting for heterogeneity in cross‐country bank efficiency comparisons

In this article, we investigate the significance of the heterogeneity problem in banking efficiency research by using stochastic frontier techniques. The cost frontier function is estimated on a sample of banks from new European Union members from Central and Eastern Europe and the Baltics (CEEB) for the 1998–2007 period. The results imply that environmental variables can only partly control for the presence of heterogeneity in the sample. By employing the ‘true’ random‐effects model as originally proposed by Greene (2005a, 2005b) , the unobserved heterogeneity that is typically associated with the complexity of the banking environment is additionally taken into account. This approach is found to result in considerably smaller differences in average country efficiency levels, which implies that CEEB countries represent a relatively homogeneous group in terms of bank performance.     

A metafrontier approach for measuring Malmquist productivity index

This paper presents an alternative framework for the decomposition of the Malmquist productivity index by using the concept of a metafrontier. The approach employed allows the calculation of technical efficiency changes, as well as technical changes, for economic agents operating under different technologies. It also enables the computation of the technological gap and its changes for economic agents operating under different technologies. This framework is applied to the analysis of panel data on 58 countries over a period of 31 years from 1970 to 2000. The empirical results show that Asian countries have attempted to move towards the frontier technology and that European countries have taken the lead in the world frontier technology.     

Assessing the impact of economic liberalization across countries: a comparison of dairy industry efficiency in Canada and the USA

This paper examines and compares the technical efficiency measures of Ontario and New York dairy producers for the period 1992 to 1998. A nonparametric stochastic frontier model is introduced to estimate technical efficiency. The backfitting algorithm of Breiman and Friedman is used to estimate the frontier. Empirical results indicate that during the period of study, New York dairy farmers produced milk more efficiently than Ontario dairy producers, but the magnitude of the difference was small. The estimated mean technical efficiency for the former group is 0.602 as compared to 0.532 for the latter. The results also indicated that over time, dairy farms in both regions improved their level of technical efficiency. Furthermore, no correlation was found between farm size and estimated technical efficiency.     

The impact of knowledge accumulation and geographical spillovers on productivity and efficiency: The case of U. S. shipbuilding during WWII

This paper examines the productivity and efficiency experience of World War II Liberty ship builders using two complementary paradigms which can be viewed as alternative specifications of the endogenous growth model introduced by Romer (1986) and the stochastic frontier production model introduced by Aigner, Lovell, and Schmidt (1977). We develop modifications in the endogenous growth model to allow for learning as well as spatial spillovers by relating productivity growth to cumulative productive experience (the ‘learning curve’) and to worker experience as it is transferred and utilized across different geographical regions. We also consider the relative impact of both proximal and distant simultaneous production on productivity growth. We then utilize a framework in which the efficiency component of productivity growth is explicitly considered using a stochastic frontier model wherein contributions to productivity growth introduced in the endogenous growth model are formally modeled as determinants of efficiency change.     

Farm household efficiency in Bangladesh: a comparison of stochastic frontier and DEA methods

This study compares estimates of technical efficiency obtained from the stochastic frontier approach and the Data Envelopment Analysis (DEA) approach using farm-level survey data for rice farmers in Bangladesh. Technical inefficiency effects are modelled as a function of farm-specific socioeconomic factors, environmental factors and irrigation infrastructure. The results from both the approaches indicate that efficiency is significantly influenced by the factors measuring environmental degradation and irrigation infrastructure.     

前沿技术、吸收能力与中国区域 产业的协同发展*

本文以新增长理论为基础,构建了区域产业与前沿技术差距、区域产业自身发展条件和前沿技术吸收能力的整合空间面板实证分析框架,量化分析了前沿技术、吸收能力和空间外部性引致的产业全要素生产率的收敛机制。研究结论表明：区域产业与前沿技术的差距对于产业的全要素生产率收敛具有显著的促进效应,在短期体现为能够显著的促进区域全要素生产率的增长,长期则表现为存在长期协整关系;前沿技术的吸收能力能够显著地提高全要素生产率;空间溢出效应则进一步强化了这一效应。因此,提升区域产业自身对前沿技术的吸收能力,合理协调区域基础设施、研发创新等空间发展规划,是实现中国区域产业协同发展的有效途径,也有助于实现区域经济协调发展的宏观目标。     

Measuring China's innovative capacity: a stochastic frontier exercise

We adopt a stochastic frontier analysis of innovative activity to disentangle countries’ patenting capacity from patenting efficiency. We analyse the determinants of innovative capacity of a set of 26 OECD countries plus China, over the period 1992–2007, to show if and how China's technological activity is growing faster than commonly held as compared to the most innovative countries of the world. Our results highlight that both internal and external elements jointly contribute to enhance countries’ innovative capacity and efficiency. In particular, while government-funded R&D is more important for innovative capacity, privately funded R&D as well as foreign direct investments (FDIs) affects technical efficiency (TE). Moreover, as for the whole set of countries, FDIs seem to exert a resource-seeking role (as they negatively affect TE), this does not happen for China, where FDIs exert a positive effect. Results are robust to the use of alternative measures of innovative inputs (such as higher education expenditure in R&D and R&D personnel, but also FDI flows rather than stocks). Finally, human capital measures are generally not very effective in enhancing patenting efficiency, apart from tertiary education.     

A comparison of proxy variable and stochastic latent variable approaches to the measurement of bias in technological change in south african agriculture*

Technical change is inherently unobservable and has conventionally been represented by proxy variables, from simple time trends to more sophisticated knowledge stock variables. This paper follows Lambert and Shonkwiler (1995) in modelling technical change as a stochastic unobservable variable and tests this formulation against the alternative of using R&D and patent indices. This is done by fitting a system of share equations, derived from the dual profit function, to production data for South African agriculture. Each equation includes both unobserved technical change components and technical proxy variables. Variable deletion tests show that conventional proxy variables fail to explain the biases of technological change, while cointegration tests show that technical change is both stochastic and biased. The latent variables provide estimates of biases that are consistent with past studies and the historical record and can be explained by policy change in South Africa following WWII. The demonstration of high rates of return to R&D is not sufficient to justify R&D activity when biased technological change exacerbates input use and welfare distortions within and without the sector. * We thank the University of Pretoria for funding the study and the referees and delegates for many useful comments.     

Alternative stochastic specifications of the frontier production function in the analysis of agricultural credit programs and technical efficiency

The effect of subsidized credit on the technical efficiency of traditional farmers in Southeastern Brazil is analyzed under two alternative stochastic specifications for the production frontier. It is found that the choice of stochastic specification significantly influences inferences regarding the effect of subsidized credit on measured technical efficiency.     

ASSESSING THE EFFICIENCY OF PUBLIC SCHOOLS USING DATA ENVELOPMENT ANALYSIS AND FRONTIER REGRESSION

The cost efficiency of 520 New York school districts is measured using data envelopment analysis and stochastic frontier regression. Mean inefficiency is 14% using either method, and the rank order correlation coefficient of inefficiency between the two methods is 86. The three largest school districts (Buffalo, Rochester, and Syracuse) are among the most efficient. Student test scores are output variables, and socioeconomic control variables are included to adjust for the harshness of the educational environment in which districts operate. (JEL C29, C61, 121)     

Impact of the adoption of information and communication technologies on firm efficiency in the Tunisian manufacturing sector

This paper aims at measuring the impact of information and communication technology use on the efficiency of the Tunisian manufacturing sector at the firm level within a simple theoretical framework. We are using a firm-level panel data for the manufacturing sector in Tunisia to investigate whether adoption of ICT influences efficiency in factor use. The analysis is conducted through the use of a parametric method to measure technical efficiency. We estimate a stochastic production frontier and the relationship aims to explain technical efficiency differentials in a single stage as suggested by Battese and Coelli [Battesse, G.E, Coelli, T.J. (1995). A model for technical inefficiency in a stochastic frontier production function for panel data. Empirical Economics, 20, 325–332].The results have confirmed the presence of positive returns to ICT capital. We have found that the impact of ICT on efficiency is strong. Our results also suggest that it is important to carefully control for human capital related characteristics of employment when studying the effect of ICT. The evidence shows that achieving benefits from investment in ICT requires complementary investments and changes in human capital. This means that the combined use of ICT and human capital in a firm would enhance its efficiency beyond the direct effects of these factors taken alone.     

Innovation and total factor productivity in organic farming

This article measures the contribution of innovations to Total Factor Productivity (TFP) of organic olive farmers. By constructing an innovation variable instead of using a time trend, technical change is replaced by technical difference and TFP growth becomes TFP difference. Primary cross-section data on organic olive enterprises from a Greek region is used in the application of the stochastic frontier profit function. Farmers are classified into groups according to their innovative ‘profile’. TFP difference among consecutive innovation groups is decomposed into technical difference and adjustment in innovativeness effects. Results indicate that more innovative farmers perform better than less innovative ones regarding TFP scores. The rate of technical difference is always positive to the formation of TFP difference, whereas the adjustment in innovativeness effects varies among the innovation groups. Nevertheless, high-tech capital is to a different extent under-utilized, regardless of the innovation group.