Technical change and total factor productivity growth for Swedish manufacturing and service industries

This article presents alternative specifications of the production functions of a large panel of Swedish firms for the period 1992 to 2000. The period can be characterized as a transition when long-run productivity growth in the Swedish economy improved from being among the weakest to one of the strongest within the Organization for Economic Co-operation and Development (OECD). In order to present a detailed exploration of this dramatic change, the time trend and general index models are applied to estimate Total Factor Productivity (TFP) growth, rate of technical change and returns to scale. The models are extended to allow for firm specific as well as time-varying technical change. The parametric TFP measures are also compared with the nonparametric Solow residual, and several hypotheses are tested to explain the growth patterns in the Swedish economy. It is found that the improved growth rate, initially starting in large exporting manufacturing firms, after a deep economic crisis at the beginning of the 1990s, spilled over to the rest of the economy, both manufacturing and services.     

Technical change and total factor productivity growth: The case of Chinese provinces

In the literature technical change (TC) is mostly assumed to be exogenous and specified as a function of the time trend or time dummies. However, some exogenous external factors other than time can also affect TC. In this paper we model TC via time trend (external non-economic) as well as other exogenous (external economic) factors (technology shifters). For this we define technology indices based on the external economic factors and the time trend. The specification of production function is then amended to accommodate these technology indices which are not necessarily separable from the traditional inputs. That is, these technology indices allow for non-neutral shift in the production function. In doing so we are able to decompose TC (a component of TFP change) into two parts. One part is driven by time and the other part is related to producer-specific external economic factors. The latter can further be decomposed into each external economic factors. The empirical model uses panel data on Chinese provinces. We identify a number of key technology shifters and their effect on technical change and TFP growth of provinces are examined.     

Measuring productivity in an imperfect world

Most measures of multifactor productivity (MFP) assume constant returns to scale and perfect competition. Using a general aggregate production function together with duality theory and allowing for the possibilities of disequilibrium, markups and economies of scale, the study derives a more generalized MFP measure. The model was used to assess the economic performance in US manufacturing for the 1949 to 1988 period. The results suggest that scale and markups have substantial power in explaining MFP growth for all periods and that half of the measured MFP growth (as measured within the conventional framework) comes from biases due to scale economies, market power, and interaction effects.     

Total factor productivity and the measurement of technological change

Abstract.  TFP is interpreted in the literature in different, mutually contradictory ways. Changes in TFP are shown to measure not technological change, only the super‐normal returns to investing in such change – returns that exceed the full opportunity cost of the activity. Thus, in the limit, technological change can proceed with unchanged TFP. Measuring the effects of technological change instead requires counterfactual estimates. Reasons why changes in TFP are imperfect measures of super normal returns are also studied – reasons connected with the timing of output responses, the treatment of R&D in the national accounts, the omission of resource inputs, and two types of aggregation.     

The outsourcing productivity paradox: total outsourcing, organisational innovation, and long run productivity growth

A growing number of empirical studies find a relationship between the outsourcing of activities and a long term loss of firm productivity growth. The paper addresses this outsourcing productivity paradox by examining the connection between total outsourcing and organisational innovation. We present a model of organisational innovation in which managers raise productive efficiency by identifying organisational architectures that more effectively integrate value-adding activities and administrative routines. As part of this process, managers can internally or externally source an activity. Simulations of the model show that large scale outsourcing restricts the scope for future organisational innovation, leading to lower productivity growth. The findings accord with the empirical data and provide a salutary warning for managers and policy-makers about the long term implications of total outsourcing.

Models of labour services and estimates of total factor productivity

This article examines the manner in which labour services are modelled in the aggregate production function, concentrating on the relationship between numbers employed and average hours worked. It argues that numbers employed and hours worked are not perfect substitutes and that conventional estimates of total factor productivity which, by using total hours worked as the measure of labour services, assume they are perfect substitutes, will be biased when there are marked changes in average hours worked. The relevance of the theoretical argument is illustrated using data for the United States and the United Kingdom.     

Organisational change and the productivity effects of green technology adoption

This study investigates induced productivity effects of firms introducing new environmental technologies. The literature on within-firm organisational change and productivity suggests that firms can achieve higher productivity gains from adopting new technologies if they adapt their organisational structures. Such complementarity effects may be of particular importance for the adoption of greenhouse gas (GHG) abatement technologies. The adoption of these technologies is often induced by public authorities to limit the social costs of climate change, whereas the private returns are much less obvious. This study finds empirical support for complementarity between green technology adoption (either CO₂-reducing or resources and energy efficiency-enhancing technologies) and organisational change. While the sole adoption of green technologies is associated with lower productivity, the simultaneous implementation of green technologies and organisational innovations is not.     

Convergence in OECD countries: technical change,efficiency and productivity

The aim of this study is to analyse labour productivity convergence in the OECD countries over the period 1975-90. A nonparametric frontier approach is used to calculate the Malmquist productivity index. By breaking it down, the contribution in the growth of labour productivity of technical progress, of changes in efficiency, and of the accumulation of inputs per worker are quantified. Unlike other studies, the results obtained show that technical change has worked against labour productivity convergence, since it has always been greater in the countries with higher labour productivity.     

The sources of total factor productivity growth: Evidence from Canadian data

A dynamic general equilibrium model is constructed and used to identify sources of total factor productivity growth in Canada and to quantify their importance. The model also provides procedures for constructing measures of technological progress. We find that periods of low productivity growth correspond to periods of high growth in investment-specific technology (IST) or high rates of technology embodiment. For example, the growth rate of IST was relatively high between 1974 and 1996. The higher growth rate of IST during this period should have increased the rate of productivity growth by an estimated 0.29 percentage points, ceteris paribus. Yet, productivity growth slowed. Why?     

中国金融发展与全要素生产率关系研究

运用柯布一道格拉斯生产函数和增长核算法计算出1978—2006年全国的TFP,并选取FIR作为金融发展指标,对二者进行单位根检验、协整检验,继而运用误差修正模型得出FIR与TFP的回归方程。实证结果显示,长期全要素生产率存在一定的自回归调整,金融发展的短期波动也起到了显著的调整作用。     

A note on the measurement of the slowdown in total factor productivity

Investigation of foreign exchange control generally focuses on the black market in currencies and the resultant welfare loss to the country under exchange control. But very little attempt has been made to formulate the internal income transfer from foreign exchange earners who choose not to resort to black market, to importers who receive the foreign exchange at less than free market rate. This paper quantifies such measures of income transfer as importer's cost savings, exporter's income transfer, and the transaction cost loss of the market. A case study is developed using the 1951–74 export figures of the state of Kerala in India, showing that the exchange-earning pure or net exporter pays a hidden subsidy to the exchange-consuming importer; and by extension, an exchange-earning agricultural region of a less developed country subsidizes the import-consuming industrial sector of that country.     

Malmquist indices of productivity change in Portuguese banking: The deregulation period

This paper will evaluate productivity change in Portuguese banking using the Malmquist productivity index. The results show that between 1990 and 1997, banks in Portugal witnessed increased productivity and strong technological progress. Both small and large banks experienced higher productivity and technological change scores, while mid-sized institutions are putting more effort into catching-up policies. Rural banks have experienced strong productivity growth and are catching up with the best practices but lower levels of technological change. Urban banks show higher productivity growth and technological change levels. Government-owned banks have experienced lower levels of productivity change. Finally, the asset per employee ratio shows a positive correlation with the productivity scores, suggesting that this simple index is a good proxy for productivity.     

Human capital in OECD countries: Technical change,efficiency and productivity

The aim of this paper is to analyse the role of human capital in the productivity gains of the OECD countries in the period 1965-90, breaking down the productivity gains into technical change and gains in efficiency. For this purpose we use both a stochastic frontier approach and a non-parametric approach (DEA) and calculate Malmquist indices of productivity. The results obtained indicate the existence of both a level effect (a higher level of human capital raises labour productivity) and a rate effect (a higher level of human capital affects positively the rate of technical change) associated with human capital. The differences among countries in endowments of human capital have worked against labour productivity convergence, since the richer countries, thanks to their greater endowment of human capital, have experienced higher rates of technical change.     

Measuring embodied technical change in the US local telephone industry

This study attempts to measure the rate of embodied technical change by using a short-run variable cost function that contains arguments for labour and capital quality. In this short-run variable cost model, the expansion of the amount of physical capital increases variable costs due to more maintenance outlays, and then it leads to improvements in capital quality. When a measure of competition is included as a proxy for organizational efficiency, improvements in labour and capital quality explain more than two-thirds of productivity growth. The degree of returns to scale and the shadow cost of capital input in the embodiment cost model are presented as well. The study is based on pooled time-series and cross-section data of eight US local exchange carriers.     

The network of networks: Localized technological change in telecommunications and productivity growth

Radical innovations in the usage of telecommunication services have drastically changed the role of telecommunications in the economy. Today the usage of telecommunications services is associated with the opportunity to extract significant quasi-rents. An empirical analysis of the Italian case in the mid-eighties confirms the significant difference between telecommunications cost share and marginal productivity levels. The opportunity to reap transient quasi-rents has in turn pushed users to innovate so as to become major players in the arena of technological change in telecommunications and information technologies. In this context the notion of network of networks, implemented in the European Union, seems most appropriate to push the dynamic efficiency of the system and accommodate both centrifugal and centripetal innovations, yet also to retain network interoperability and interconnectivity.     

Measuring potential food productivity for different areas in Songnen Plain based on analytic hierarchy process

The improved analytic hierachy process method was utilized in this paper,and a variety of factors influencing the food production were classified into several interrelated orderly objectives layers;based on the works above,this paper made an scientific assessment on the influencing factors of food production and production potential of the various regions in the Songnen Plain.The weights and composite indices were calculated with the method of solving weight by AHP＇s accumulation factor sequence evaluating data,and were processed by single-level sorting and general sorting.The result showed that,the region of Changchun had the biggest potential for improving food production,but smallest for Heihe region.The key reason for the food production discrepancy of a variety of regions in Songnen Plain is the differences in scale of production and climatic conditions,the weight coefficients of which are 0.3654 and 0.2742;however,the weight coefficients of agricultural science and technology investment is very low just 0.1703,which should be increasted in the future.     

A comparison of stochastic frontier approaches for estimating technical inefficiency and total factor productivity

This article compares standard stochastic frontier models for panel data with a number of recently developed models which attempt to control for unobserved heterogeneity in the inefficiency component. Results are used to construct a generalized Malmquist Total Factor Productivity (TFP) index for the Irish tillage sector. While our application yields similar general TFP trends across models, it is evident that this new class of model leads to fewer theoretical inconsistencies in the production frontier. Furthermore, inefficiency estimates across models are critically compared and the potential benefits of controlling for unobserved heterogeneity are highlighted.