Do Ukrainian Firms Benefit from FDI?

All countries are eager to attract as much foreign direct investments (FDI) as possible. At the same time FDI may have not only positive, but also negative economic effects for receiving countries. Positive effects are associated with technology transfer, efficient allocation of resources, and training of domestic workers. However, the entry of foreign firms could, e.g., lead to a decrease of labor productivity at domestic firms, which is a negative effect. The main purpose of this paper is to estimate direct and indirect effects of FDI. First, we test for direct influence of foreign direct investments on firms performance, where the latter is estimated alternatively as labor productivity and as exports. FDI notably increases both labor productivity and export volumes. Second, we look for spillover or indirect effects. There is statistical evidence that the levels of FDI in certain regional industries are associated with higher performance indicators of firms not receiving FDI in those same regional industries.JEL Classification: L1, L6, F2     

Impact of R&D and Technology Diffusion on Productivity Growth: Empirical Evidence for 10 OECD Countries

This paper examines the empirical evidence on the impact of performed R&D and of R&D embodied in intermediate and capital goods on productivity performance in 10 major OECD countries over the last two decades. To quantify intersectoral and international technology flows, industry-level embodied R&D variables were constructed from an input–output (IO) R&D embodiment model. The productivity variables used are discrete Divisia growth indexes of total factor productivity (TFP), which were estimated from an IO growth accounting model. The results from pooled regressions indicate that the rates of return of the R&D variables were positively significant and increasing in the 1980s. In particular, embodied R&D is an important source for TFP growth in services, indicating very high social returns of the flows of capital-embodied technology into this sector. Moreover, the information and communi-cation technology (ICT) cluster of industries played a major role in the generation and cquisition of new technologies at the international level.     

Secondary products and the measurement of productivity growth

The paper considers alternative treatments of secondary products in input-output systems and analyzes their implications for the measurement of productivity growth at both the sectoral and overall level. Two standard models of secondary products are used: (1) the commodity technology model and (2) the industry technology model. It is argued that the first model correctly relates sectoral and overall levels of productivity growth; the second model, though more conventional, aggregates sectoral levels to a biased estimate of overall productivity growth. Estimates of the two measures are provided using U.S. 85-sector input-output data for 1967, 1972, and 1977. The empirical results indicate that the alternative assumptions do not lead to significantly different estimates of commodity-level and industry-level productivity growth over this period for the full economy but do for several sectors. Moreover, changes in secondary production did not contribute significantly to the decline in productivity growth over this period but secondary production was found to have a much lower rate of productivity growth than primary production.     

Productivity indexes under Hicks neutral technical change

The Malmquist and Hicks–Moorsteen productivity indexes are the two most widely used theoretical indexes for measuring productivity growth of firms, industries and countries. We indicate that these two indexes coincide under constant returns to scale technology and Hicks neutral technical change. While the conditions on production technology under which two indexes coincide have been examined before, this is the first study on the types of technical change under which they coincide. We shed new insight on the relationship between these popular indexes.     

Government Consumption and Industrial Productivity: Scale and Compositional Effects

Within a production function framework in which government spending produces public goods which enter firms production functions, empirical tests using time series data spanning eleven countries and thirty industries find both the scale and the composition of government consumption spending to affect the level and the rate of growth of total factor productivity at the industry level.Jel Classification: H50, D24     

Is the service sector different in size heterogeneity?

We examined whether significant differences in size heterogeneity exist between the service and the manufacturing industries by using PL exponents as the proxy for intra-industry size heterogeneity. For the purpose, we analyzed firm size distribution (FSD) and estimated the PL exponents, on the right tails of FSD, of the service and manufacturing industries in Korea for the period 2008–2012 using the Business Activity Survey dataset created by the Korean National Statistical Office As a result, we observed that the estimates of the PL exponents for the service industry are lower than those for the manufacturing industry (\(\upalpha _\mathrm{Service}<\upalpha _\mathrm{Manufacturing}\)) regardless of size variable, year, and dataset. This relationship may be related to the weaker negative relationship between the size and growth of the service industry, which made the slope of the PL distribution in the right tail of the FSD smoother. This finding implies that size heterogeneity may be more distinctive in the service industry than in the manufacturing industry. In addition, the PL exponents of sales were larger than those of assets and smaller than those of employees (\(\upalpha _\mathrm{Asset}<\upalpha _\mathrm{Sales}<\upalpha _\mathrm{Employee}\)) regardless of industry, year, and dataset. We also observed the PL exponents in the survived-firm dataset to decrease, compared to those in the all-firm dataset.     

Technology capital: the price of admission to the growth club

We assess long-run patterns of global agricultural productivity growth between 1970 and 2005 and examine the relationship between investments in technology capital and productivity. To measure agricultural total factor productivity (TFP) we employ a Solow-type growth accounting method to decompose output growth into input and TFP growth. For technology capital we construct two indexes reflecting national capacities in agricultural research and education-extension for 87 developing countries. We then correlate technology capital levels with long-term growth rates in agricultural TFP. Our findings show that global agricultural TFP growth as a whole accelerated since 1980, although performance was very uneven across developing countries. TFP growth rates were significantly influenced by technology capital. Marginal improvements to research capacity, given a minimal level of extension and schooling existed, were associated with faster TFP growth. However, marginal increases in extension-schooling without commensurate improvements in research capacity did not improve productivity performance.     

A superlative index number formula for the Hicks-Moorsteen productivity index

The Malmquist and Hicks-Moorsteen productivity indexes are the two most widely used theoretical indexes for measuring productivity growth. Since these productivity indexes are defined by unknown distance functions, it is necessary to estimate the distance functions to compute them in principle. On the other hand, the Törnqvist productivity index is an empirical index number formula that is directly computable from the prices and quantities of the inputs and outputs alone. Caves et al. (1982) imply that the Malmquist index coincides with the Törnqvist index under profit maximizing behaviour and constant returns to scale technology. The purpose of the present paper is to point out that the Hicks-Moorsteen productivity index coincides with the Törnqvist productivity index under the same condition. We emphasize that the condition of constant returns to scale is indispensable for deriving the equivalence between the two indexes. Moreover, even when this condition is relaxed to the α returns to scale, the equivalence between the Hicks-Moorsteen and Törnqvist productivity indexes is shown to hold true.     

Problems with (dis)aggregating productivity,and another productivity paradox

Using a standard definition of productivity growth, it is shown that a country may have higher productivity growth than another country in each sector, but may have a lower productivity growth rate overall. Also, it is shown that popular methods for aggregating firm/industry estimates of productivity growth have a serious problem in that productivity of all firms/industries can go up, but aggregate productivity can fall. This is not necessarily due to changes in the reallocation of resources across firms/industries. Hence, there are problems for the interpretation of previously published articles which use these methods. There can be inappropriate assessments of the cyclical properties of productivity, and the productivity impact of industry dynamics, micro-economic reforms and regulatory change. Index-number methods that avoid these aggregation problems are introduced.     

Soviet equilibrium technological gap and the post-1975 productivity slowdown

Conclusion The Soviet and Western data on lead-times in invention, innovation, construction and diffusion appear to imply that the Soviet equilibrium technology gap is of the order of 10 to 15 years. If Soviet static inefficiency levels are as high as those reported by the Hanson-Hill and Rothlingshofer-Vogel studies, then the innovation and productivity slowdown in the years since 1975 may be interpreted as the consequence of the Soviet industry concluding the catching-up process and reaching its culture—and system related technological and productivity equilibrium gaps. Consequently, a state of maturity has been reached in which the duality factor no longer plays any significant role.The other factors—such as bottlenecks in productive infrastructures, a greater share of Siberian investiments, increasing complexity of the Soviet economy, lower growth of the Soviety R&D activity, lower labour morale and poorer work discipline and effort—may also have contributed to the slowdown. Our data on lead-times and manning levels relate to the 1960s and early 1970s. This paper suggests that we do not need to assume that these leads and levels have since changed for the worse to explain the post-1975 slowdown. However, the quality of these data is such that there is still considerable room for the influence of some or all of these other factors. A multitude of partial or alternative explanations can therefore live peacefully side by side and no definite explanation of the slowdown can be expected. At the same time care should be taken to differentiate the symptoms, or the effects of growth slowdown, from its causes. One recent analysis of Soviet industrial slowdown discusses the evidence of slower investment growth, shortages of materials, energy constraints, and transportation bottlenecks (Schroeder (1985)). But investment goods, materials, energy supplies and transportation services are inputs which are themselves outputs. Their lower growth rates are therefore likely to be just intermediary, or short-term in cases of bottlenecks, causes of productivity slowdown, rather than the ultimate ones.The reader may have noted that this paper would not provide much comfort to Mr Gorbachev if his aim is, as it appears to be, to resume the catching-up of the TFA. At the same time our analysis suggests that the prediction of a continuing and significant technological and productivity regress vis-à-vis the TFA, one which a straight extrapolation of the performance during 1950–85 does imply for the post-1985 years, would be premature. Yet some movement in either direction from what I maintain to be essentially a growth equilibrium position, cannot be exclused. But unless systemic changes are really substantial, and Gorbachev's reforms do not appear to be of this category, these movements are in my view unlikely to be significant, especially since some new factors tend to counteract others (Hewett (1985); Hanson (1985)).London School of Economics. This paper is a much extended version of my American Economic Review (1986b) paper. The text benefited from seminar presentations of early ideas at Vienna's Institute for Comparative Economics, Stanford's Hoover Institution, Harvard's Russian Center, and at the London School of Economics. It was written during my fellowship at the Harriman Institute of Columbia University in the Spring of 1986. I wish to thank very much the Institute's directors and staff for their help and care. I also wish to thank Wlodzimierz Brus, Richard Ericson, Holland Hunter, Kazimierz Poznanski and Peter Wiles for their detailed and most helpful comments. Finally, the paper benefited much from absorbing a series of useful points and suggestions by its referees for this journal.     

Decomposing economic inefficiency in base-load power plants

Over the last decade, improving the performance of infrastructure industries has been the main focus of Australia's ongoing microeconomic reform program. The development and application of performance measures has been central to the reform process. In the electricity industry, a number of studies have quantified differences in economic efficiency using the multilateral total factor productivity and data envelopment analysis techniques. While both techniques aim to measure the same phenomena, rarely have the results obtained using the two techniques been compared using an identical database. A principal objective of this article is to compare the results from the two techniques using a database made up of observations from the Australian Loy Yang A base-load power plant and a range of similar plants in North America. The article also illustrates the use of international benchmarking as a tool for productivity enhancement. International benchmarking is playing a key role in the reform of Australia's infrastructure industries by promoting indirect or yardstick competition, by high-lighting the need for further reform, and by building a consensus for implementing necessary changes.     

Productivity, returns to scale and product differentiation in the retail trade industry: an empirical analysis using Japanese firm-level data

This paper examines productivity and returns to scale under the assumption of monopolistic competition using Japanese firm-level data. Although differentiating products (services) is considered important in firms?? strategies and productivity growth, it has not been sufficiently investigated in previous studies. In this paper, we study this issue in two retail trade industries, department stores and supermarkets, applying the model of Melitz (2000). Our results indicate that the standard production function is not relevant to estimate productivity in imperfectly competitive markets. It also suggests that the market structure should be carefully considered in productivity analysis. In addition, product differentiation has a positive effect on firms?? revenue for the supermarkets. Furthermore, the retail trade industries possibly follow increasing returns to scale. Thus, policy measures that promote economies of scale and product differentiation should contribute to further growth in these industries. In addition, the results indicate that the regulatory reform of the retail trade industry in 2000 increased the gap between winners and losers in terms of productivity.     

The Foundations of Rapid Economic Growth

A bstract The fast pace of economic growth of the East Asian nations known as the " Four Tigers "– South Korea, Taiwan, Hong Kong, and Singapore –has become a legend It is usually claimed that the export-oriented industrialization (EOI) strategy was the basic cause of that rapid growth However, it is contended that the growth strategy of these countries was the result of certain unique historical and geo-political factors The colonial government had created the necessary infrastructure and international linkages which set the stage for initiating the EOI strategy Furthermore, because of the political support accorded to them from foreign governments, these countries, with the exception of Hong Kong, excluded major oppositional groups from sharing political power, and thus they were able to pursue effectively growth and export-oriented policies South Korea and Taiwan also received a large amount of foreign aid from the U S This aid, and the fact the U S laid open its huge market for cheaper Asian exports without insisting on reciprocity , prepared the conditions for export-led growth in those countries     

On exact D-optimal designs with 2 two-level factors and n autocorrelated observations

In this paper we consider the exact D-optimal designs for estimation of the unknown parameters in the two factors, each at only two-level, main effects model with autocorrelated errors. The vector of the n random errors in the observed responses is assumed to follow a first-order autoregressive model (AR(1)). The exact D-optimal designs seek the optimal combinations of the design levels as well as the optimal run orders, so that the determinant of the information matrix of BLUEs for the unknown parameters is maximized. Bora-Senta and Moyssiadis (1999) gave some conjectures about the exact D-optimal designs based on their experience of several exhaustive searches. In this paper their conjectures are partially proved to be true.Received: January 2003 / Accepted: October 2003Partially supported by the National Science Council of Taiwan, R.O.C. under grant NSC 91-2115-M-008-013.Supported in part by the National Science Council of Taiwan, R.O.C. under grant NSC 89-2118-M-110-003.     

Impact of Green Innovation on Labor Productivity and its Determinants: an Analysis of the Korean Manufacturing Industry

Due to worsening environmental conditions around the globe, firms have been investing a great deal of money in green technologies as a way of coping with the environmental crisis. This paper uses a unique data set based on the Korea Innovation Survey to examine the impact of green innovation on labor productivity, and the determinants of environmental activities in 2010. The empirical results show that green innovation intended for both firm and customer benefits has a positive effect on labor productivity. This finding means that firms need to implement firm‐oriented green innovation as well as customer‐oriented green innovation in order to increase their performance. Our findings also show that there are significant differences in aggregate green innovations depending on different firm sizes and industries. Specifically, large firms implement environmental activities more than small ones, and pollution‐intensive industries tend to invest more in activities related to environmental technology. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.     

Economies of scale and scope in French banking and savings institutions

In this study, we analyze the costs incurred by French commercial banks and savings institutions. One of the main distinctions between these two types of financial entities concerns management costs, which are higher for commercial bank demand deposits than for the savings institutions' tax-free livret A passbook accounts. Taking this differential into consideration by constructing separate models based on different principles, we find that the average overall and operating costs of the savings institutions are half those of commercial banks. As regards operating costs, small savings institutions enjoy a significant cost advantage over small commercial banks, but this cost advantage is smaller when one compares the performance of large savings institutions to the large banks. The results of our econometric estimates suggest a possible explanation, as we find increasing returns to scale for the banks and diminishing returns for the savings institutions. The value of the returns-to-scope parameter at the mean point appears to indicate a complementarity between certain pairs of outputs. Therefore, ouptut diversification appears to have a positive impact on cost levels for both savings institutions and commercial banks; while institution size, measured by the total assets, has a different impact in these two industries.     

Reallocation and productivity growth in Japan: revisiting the lost decade of the 1990s

Hayashi and Prescott (Rev Econ Dyn 5(1):206–235, 2002) argue that the ‘lost decade’ of the 1990s in Japan is explained by the slowdown in exogenous TFP growth rates. At the same time, other research suggests that Japanese banks’ support for inefficient firms prolonged recessions by reducing productivity through misallocation of resources. Using the data on large manufacturing firms between 1969 and 1996, the paper attempts to disentangle the factors behind the slowdown in productivity growth during the 1990s. The main results show that there was a significant drop in within-firm productivity, the component that is not affected by reallocation of input and output shares across firms over time, during the 1990s. Although we find that misallocation among large continuing firms represents a substantial drag to overall TFP growth for these firms throughout the sample period, the negative impact of misallocation was least visible during the 1990s. The significant reduction in within-firm productivity growth suggests that, as the Japanese economy has matured, a policy which fosters technological innovations via greater competition, R&D, and fast technological adoption may have become increasingly important in promoting economic growth.

Public action and the quality of life in developing countries

An attempt is made to identify the developing countries that have performed better than others in terms of the indicators of the so called "quality of life," relating this progress to the nature of these economies and to the public policies followed in these countries. A table presents data on life expectation at birth and adult literacy rates for 100 countries that had a gross national product per head of less than $3000 in 1977. The data have some comparability, and it is reasonable to use them for a rough international comparison of performance. 38 countries have shown distinction in 1 or both of the fields. There are 10 communist countries in the total list of 100, and 9 of them show some distinction. 8 of the 9 do this despite not having literacy figures reported. The entry is longevity, which is arguably a more basic indicator of success than poverty. Many of the communist countries are wealthier than the mean or median developing country. Although the indices are relative ones, the richer countries have typically done better, on the whole. The longevity performance of the communist countries is typically superior. This applies to the poorer group also. Some of the high growth early capitalist countries also have very good performance in terms of the chosen indicators (e.g., Taiwan, South Korea, Hong Kong, and Singapore). Taiwan and Hong Kong have the best overall performance record in terms of the 2 criteria for those 61 countries for which both sets of data are available. The countries that appear to have done relatively worse in terms of the indicators are those in the "middle," i.e., neither communist nor successfully capitalist. There are some exceptions. Tanzania appears to have been relatively successful in terms of the removal of illiteracy, and Sri Lanka has been successful in raising life expectancy. In examining the excellent performance of the Republic of Korea and Taiwan, the lesson to be learned from their experience is the great importance of employment expansion in poverty removal. The experiences of Sri Lanka and Tanzania are recounted to illustrate the positive role of state action. Like Sri Lanka's program of social welfare, Tanzania's literacy program shows how much can be achieved by a determined effort, sensibly directed toward specific goals. Poverty removal and related features, including longevity enhancement, is ultimately dependent on a wide distribution of effective entitlements. This, for any given level of per capita income--would tend to be reflected in the low level of inequality in the distribution of income.     

ICT Investment, Productivity and Efficiency: Evidence at Firm Level Using a Stochastic Frontier Approach

We analyze the determinants of ICT investment and the impact of information technology on productivity and efficiency on a representative sample of small and medium sized Italian firms. In order to test the most relevant theoretical predictions from the ICT literature we evaluate the impact of investment in software, hardware and telecommunications of these firms on a series of intermediate variables and on productivity. Among intermediate variables we consider the demand for skilled workers, the introduction of new products and processes and the rate of capacity utilization. Among productivity measures we include total factor productivity, the productivity of labor, and the distance from the best practice by using a stochastic frontier approach. Our results show that the effect of ICT investment on firm efficiency can be more clearly detected at firm level data by decomposing it into software and telecommunications investment. We find that telecommunications investment positively affects the creation of new products and processes, while software investment increases the demand for skilled workers, average labor productivity and proximity to the optimal production frontier. We interpret these results by arguing that ICT investment modifies the trade-off between scale and scope economies. While software investment increases the scale of firm operations, telecommunications investment creates a flexibility option easing the switch from a Fordist to a flexible network productive model in which products and processes are more frequently adapted to satisfy consumers taste for variety.