Determinants of total factor productivity in former Soviet Union economies: A stochastic frontier approach

This paper investigates the process of GDP generation in former Soviet Union (FSU) economies to provide an understanding of the impact of technology channels on countries’ efficiency. We apply a stochastic frontier approach to 15 FSU economies over the period 1995–2008 and find that FDI and human capital improve countries’ technical efficiency. Furthermore, we show that these factors also have a positive impact on total factor productivity (TFP), which, in turn, improves real GDP growth. Hence, our results suggest that FSU countries should promote public policies that provide incentives to attract foreign investment and enhance domestic education in order to improve their economic growth. Additionally, our empirical evidence argues against the resource curse hypothesis. We also show, by computing efficiency change and technological change indices at the country level, that FSU economies benefit more from exploiting technological progress than from catching up to the best practice frontier.     

Decomposing multifactor productivity in Italy from 1998 to 2004: evidence from large firms and SMEs using DEA

This paper presents a firm-level analysis of multifactor productivity (MFP) in Italy between 1998 and 2004. Using data envelopment analysis (DEA) technique, MFP change are measured for 31 industries and decomposed into efficiency change and technical change (which in turn is interpreted as the combined effect of technical progress and scale economies). The results highlight the stagnation in many Italian production activities and even a decrease in MFP in some industries. A non-parametric statistical test on the results obtained from DEA reveals that the analysed larger firms have been more likely to perform better in efficiency than the smaller ones. This outcome seems to complement the Schumpeterian view of a relatively high attitude of larger firms towards technological innovation and productivity growth.     

Parametric Decomposition of a Generalized Malmquist Productivity Index

This paper provides a parametric decomposition of a generalized Malmquist productivity index which takes into account scale economies. Unlike Balk (2001), the contribution of scale economies to productivity change is evaluated without recourse to scale efficiency measures, which are neither bounded for globally increasing, decreasing, or constant returns to scale technologies nor for ray-homogeneous technologies. An empirical application using panel data from Spanish savings banks is included. This application shows the advantages of the suggested method compared to Balk's approach. The results show an increase of total factor productivity which can be mainly attributed to technical progress and the positive effect of returns to scale.     

Hicks-Moorsteen versus Malmquist: a connection by means of a radial productivity index

A primal index of productivity change is introduced which decomposes exactly into three components: technical change, technical efficiency change and average scale economies (radial scale change). The productivity index is defined using variations of the distance function along pre-assigned input–output rays and, for this reason, it is deemed a radial productivity index (RPI). It is proven that: first, the RPI index collapses to the Malmquist productivity index when the technology is constant returns to scale (CRS); second the RPI index equals the Hicks-Moorsteen productivity index under homotheticity of technology (and non-CRS). The key to these results is a new definition and measure of the contribution of scale economies to productivity change.     

General Equilibrium Analysis of International TFP Growth Rates

The paper presents a study of the total factor productivity (TFP) performance among developed countries between 1985 and 1990. The analysis includes the three large economies: the US, Japan and Europe. A general equilibrium model of these economies is used to estimate TFP growth at the sectoral and at the aggregate levels. The model is based on the fundamentals of the economies and employs only data on input-output flows, factor inputs across sectors, consumption and trade patterns and endowments. Prices are endogenous in the model. They are obtained as shadow prices from the model's linear program and then used to measure TFP growth and decompose it in a technical change effect, a demand effect and a terms-of-trade effect. The technical change effect is highly correlated with the conventional Solow residual measure. This result lends support to the standard measure of technological change.     

两种等效益面生产函数与全要素生产率变化率的分解

本文根据规模报酬可变还是规模报酬不变，分别定义了一般等效益面生产函数和典型等效益面生产函数。由一般等效益面生产函数的离散型分解式可以测算一个生产单元的纯技术进步，以及纯技术效率变化对经济增长的贡献；而由典型等效益面生产函数可以将全要素生产率的变化率分解为典型技术进步率、纯技术效率和规模效率的变化率之和。进而由具有明确几何意义的离散型分解式分别测算典型技术进步和规模效率对经济增长的贡献。等效益面生产函数与分解式的几何意义还说明，全要素生产率的改变最终是由技术创新、制度创新和管理创新共同推动的。     

A Cost Indirect Evaluation of Productivity Change in UK Universities

The study provides an empirical analysis of productivity change in publicly-funded UK universities, against a background of government policy specifically designed to enhance the productive efficiency of universities in the provision of teaching and research. The nonparametric analysis employs a cost indirect approach to measuring productivity change, taking explicit account of the quality of research output and decomposing productivity change into technical change and efficiency change. The latter is also decomposed into changes in pure technical efficiency, scale efficiency and output congestion. Changes in size efficiency are also computed. On average, productivity declined by 4% over 1989–92, mainly as a result of regressive technical change. Evidence of biased technological change was found, with the frontier shifting out in favour of the teaching outputs and in relative to the research output.     

The productivity of private and social farms: Multilateral Malmquist indices for Slovene dairying enterprises

Applying programming techniques to farm-level panel data for four cooperative and 12 private dairy farms in the Yugoslav Republic of Slovenia gives estimates of technical efficiency, scale efficiency, and technical progress. These are used to construct multilateral Malmquist indices of total factor productivity (TFP). For the cooperatives, TFP growth has been slow and is attributable to technical progress. For the private farms, technical progress was also slow, but TFP growth was faster due to improved efficiency. Scale inefficiency explains the poorer absolute performance of the private farms, indicating the need for land reform as well as technological change.     

Profit, productivity and distribution: Differences across organizational forms - The case of Spanish banks

We examine variations in financial and economic performance as a function of organizational form, and, over time. The forms we consider include Spanish commercial banks, savings banks, and financial cooperatives. We decompose multilateral variation in operating profit, our measure of financial performance, into price and quantity effects. We then decompose the latter into a margin effect and productivity change. Our measure of economic performance, productivity variation, is subsequently disaggregated into technical, cost efficiency, and scale. We find that deregulation and liberalization have acted to narrow performance gaps among organizational forms; this, despite less-than compelling evidence that increased competition has contributed to this convergence. For the Spanish banking system as a whole, the margin effect appears to deliver twice as much financial benefit as do improvements in productivity. Importantly, this finding does not vary across organizational form. Such regularity has an important implication: Incentives for growth are apparently provided by a positive margin rather than by the more elusive benefits of economies of scale and improved cost efficiency.     

Creation of climate-smart and energy-efficient agriculture in the European Union: Pathways based on the frontier analysis

Creation of the climate-smart agriculture requires efficient resource use and mitigation of the environmental pressures among other objectives. Therefore, it is important to assess the energy efficiency and productivity growth in the European Union's agriculture. This paper analyses the sample of the selected European Union member states. The productive technology including the energy consumption and the resulting greenhouse gas (GHG) emission is constructed. The measurement of the energy efficiency and productivity change relies on the slacks-based measure and Luenberger productivity indicator. The productivity growth was decomposed with respect to the input/output variables and the sources of growth (i.e., efficiency change and technical progress). The average annual productivity growth of 0.79% was obtained for the selected countries during 1995–2016. The highest productivity gains were observed in Lithuania, Denmark, Belgium and Romania (1.27%–1.94% per year). The productivity growth related to GHG emission dominated the contributions by the input/output variables in Lithuania, Denmark, Belgium, Romania, Poland, Austria, France, the Netherlands, Hungary and Estonia.     

The structure of technology in Brazilian sugarcane production, 1975–87: An application of a modified symmetric generalized McFadden cost function

Sugarcane-based ethanol has become a primary automotive fuel in Brazil over the past 15 years. Because sugarcane costs are over two-thirds of the costs of ethanol production, the economic efficiency of this renewable petroleum substitute hinges on the structure of technology in sugarcane production. In this paper a modified symmetric generalized McFadden (SGM) cost function for sugarcane is estimated and the presence of technical change and economies of scale are investigated. The original SGM proposed by Diewert and Wales (1987) is modified to allow for fixed factors of production. This allows the cost function to be applied to processes which have fixed factors. The results suggest that there is no empirical evidence of economies of scale and very little technical change, only in the north of Brazil. The implications for the future economic efficiency of this petroleum substitute are discussed.     

Rising productivity of Australian trading banks under deregulation 1986–1995

Productivity of four major trading banks and six regional banks is investigated using Malmquist productivity indices in the deregulated period 1986–1995. The principal findings indicate an overall rise in total productivity driven more by technological progress than technical efficiency. Performance of major trading banks on technical efficiency is similar to that of regional banks but higher on technological progress. Distinguishing between improvement in technical efficiency and technological change is significant for policy formulation. Technological innovation can be construed as a sign of dynamic efficiency where banks take advantage of new cost-effective technologies and pursue product and market development.     

Productivity, convergence and policy: a study of OECD countries and industries

This paper analyses trends in labour productivity and its underlying determinants in a panel of OECD countries from 1979 to 2002. Data Envelopment Analysis (DEA) is used to estimate a Malmquist measure of multifactor productivity (MFP) change. We decompose the growth in labour productivity into (i) net technological change (ii) input biased technical change (IBTC) (iii) efficiency change and (iv) capital accumulation. We analyse the effect of each of these factors in the transition towards the equilibrium growth paths of both labour productivity and per capita GDP for the OECD countries, controlling for the effects of different policies and institutions. The results indicate that on average gaps in productivity or income levels are narrowing down although there is no evidence to suggest that the entire OECD area comprises a single convergence “club”. Using kernel estimation methods we find that that labour productivity and per capita GDP are settling toward a twin peak (bimodal) distribution. Panel unit root tests over an extended (1960–2001) period provide general support for the convergence hypothesis. Analysis of the contributions of productivity growth within industries and sectoral composition changes show that aggregate productivity change is predominantly driven by ‘net’ within sector effects with very little contribution emerging from sectoral shifts (the ‘in-between’ static or dynamic effects resulting from higher or above average productivity industries gaining employment shares or low productivity industries losing shares).     

研发创新绩效评价的国际比较研究

本文运用超效率DEA方法,建立统一的投入产出指标体系,对不同国家1998～2005年的研发创新活动进行效率评价。通过计算Malmquist指数,分析了各国的技术进步和技术效率、规模效率的变动情况。研究结果表明,大多数国家的研发创新主要依靠规模效率推动。我国的技术进步效率不高,应重点加强研发活动中的技术进步,并逐步提高研发投入的规模。     

The impact of embodied and disembodied technical progress on productivity gaps—An applied general equilibrium analysis for Germany and Spain

The purpose of this paper is to analyze the impact of disembodied and of capital embodied technical progress on the closing of international productivity gaps. Within the framework of a partial equilibrium model the direct effect of technical progress on the change of productivity gaps can be calculated directly. However, since the two types of technical progress affect unit costs of industries differently, and hence the system of relative prices, an applied general equilibrium model is required in order to measure the indirect effect of technical progress on the change in productivity gaps. We employ variable cost functions with quasi-fixed effective capital, depending on the rate of embodied technical change, in order to generate a system of prices. Based on similarly structured applied general equilibrium models for Spain and Germany, we quantify the effects of sectoral embodied or disembodied technical change on reduction in national inflation as well as the effect on closing productivity gaps.     

An analysis of technology,productivity, and regulatory distortion in the interstate natural gas transmission industry: 1977–1985

The purpose of this paper is to provide the first comprehensive firm level analysis of cost structures and production in the interstate pipeline industry during the transition from price regulation to partial deregulation, 1977–85. The regulatory changes during this period were numerous and complex. We do not attempt to isolate the impact of any single change in regulation; rather, we examine how the regulatory environment, as a whole, affected the industry. Our study is based on a newly constructed panel of twenty-four interstate pipeline firms. We give particular attention to the impact of output change, technical change, scale economies, and non-optimal input allocation on total factor productivity growth and the implication of the 1978 Natural Gas Policy Act partial price decontrol relative to total wellhead price decontrol for residential, commercial, utility, and industrial consumers of natural gas, and for the transport industry itself. © 1998 John Wiley & Sons, Ltd.     

Efficiency and productivity in the Thai non-life insurance industry

This paper estimates a stochastic cost frontier for a sample of the non-life insurance industry in Thailand from 2000 to 2007. Our model explicitly considers the heteroscedasticity in the variances of the noise and inefficiency components that could affect the position of the cost frontier as well as the measurement of efficiency. Tests for double heteroscedasticity and appropriate specification for the cost frontier are performed. The chosen model is used to examine whether economies of scale and a change in technology exist. In addition, this paper calculates total factor productivity (TFP) change and decomposes it into scale effect, cost efficiency effect, technology effect, output effect, price effect, and environmental effect. Our results reveal that, on average, Thai non-life insurance firms are between 74 and 79 % efficient, that economies of scale exist, and that regress in technology shifts the cost frontier upward by 2.2 %. The regress in technology is the dominant contributor to a negative TFP growth of 1.15 %. The restructuring of the industry following the 1997 Asian financial crisis finally paid off when the industry experienced technology progress in 2005 and beyond. Between 2005 and 2007, technology progress and productivity growth occurred at a little over 2 % a year. In-depth analysis of the most and the least efficient firms reveals that most efficient firms tend to strategically select types of insurance services and underwrite average and small size sum insured per policy to diversify their risks. In addition, they tend to be savvy investors. The opposite holds for the least efficient firms which concentrate in providing labor-intensive, small sum automobile insurance policies or underwrite large coverage policies for fewer policyholders. Balancing the mix of insurance types, spreading risk across insurance types or across number of policyholders, investing in high yield assets, or developing a market niche may prove beneficial for improving cost efficiency.     

Efficiency and Technological Change in the U.S. Brewing Industry

This study demonstrates that the measurement of technological change and economic efficiency are tightly linked. Efficiency measures may depend on carefully controlling for technological change, while tests of technological change may be sensitive to empirical model specifications. Moreover, the study underlines Solow's (1994) and Romer's (1994) admonition that econometricians should pay attention to industry and institutional evidence in building models of technological change. The empirical results presented here suggest that there has been substantial technological change in the U.S. brewing industry from 1950 to 1992. This occurred in the form of a dramatic shift in technology beginning with the introduction of super breweries in about 1972. There has also been a substantial increase in scale economies, which undoubtedly caused many inefficiently small firms to exit the industry during the 1960s and 1970s. Further results suggest that a more complete specification of technological change and the stochastic nature of the frontier production function leads to higher and more tenable estimates of efficiency.     

Energy use,technical progress and productivity growth: A survey of economic issues

In this paper I survey and interpret several of the most important aspects underlying relationships among technical progress, productivity growth, and energy use, viewed from the vantage of an economist. The first portion of the paper provides a noneconomist with a nontechnical summary of the economic theory of cost and production, and defines single-factor and multi-factor productivity growth. In the second half of the paper, four examples are presented that highlight the special role of energy consumption in inducing and reflecting the effects of technical progress and productivity growth. A common theme in the four examples is that the concepts of embodiment, diffusion and learning are critical to understanding the forces linking energy usage, technical progress and productivity growth.The refereeing process of this paper was handled through T.G. Cowing.