Public Sector Capital and the Production Efficiency of U.S. Regional Manufacturing Industries

This paper applies a stochastic frontier production model with time-varying technical efficiency to investigate the relationship between public capital and technical efficiency. It is based on the proposition that public capital has an effect on actual output by enhancing technical efficiency, thereby reducing the gap between maximum potential output and actual output. Empirical results using panel data from U.S. state manufacturing industries during 1969–86 show that technical efficiencies varied substantially, both between states and between years; variations in technical efficiency are significantly explained by variations in public-sector capital.
JEL Classification Numbers: O20, H54, C23.     

FACTOR DETERMINANTS OF TOTAL FACTOR PRODUCTIVITY GROWTH FOR THE JAPANESE MANUFACTURING INDUSTRY

This study uses industrial panel data for Japanese manufacturing to estimate the sources of productivity growth by simultaneously considering embodied technical progress, spillover effects, and openness, after controlling for returns to scale, imperfect competition, and capacity utilization. Estimation results show the existence of considerable embodied technical progress and interindustry externalities of capital investments positively affecting productivity growth. Furthermore, embodied technical progress causes research and development (R&D) capital to affect productivity growth insignificantly, suggesting that the impact of R&D is realized only after being embodied into other capitals. From sector‐wise estimations, we notice differences in factors affecting productivity growth between the durable and nondurable manufacturing sectors. (JEL D24, O30)     

The effects of tariff increases on supply base complexity: A conceptual framework

Recent protectionist trends around the world have raised interest in newly enforced or increased tariffs and their effects on global supply chains. For firms sourcing globally, tariff introductions or increases significantly affect importing costs, which ultimately affect product costs. Such tariff changes may incentivize firms to adjust their supply base to mitigate these cost increases, thus altering the structure and complexity of firms' supply bases. In this paper, we first characterize the U.S. tariff landscape from 1997 to 2017. We then develop a conceptual model to explain how the severity and timing uncertainty of expected tariff increases influence a firm's speed of adapting to the changing tariff environment. Specifically, we explore firms' propensity to form or delete ties to suppliers, which influences supply base complexity. Moreover, we consider factors that moderate the relationship between severity, timing uncertainty, and supply base complexity, including a tariff's geographical scope, a firm's relative purchase spend, and supply risk. Our conceptual model offers both research and managerial implications.     

The Certification Role of Large Customers in the New Issues Market

This paper examines the certification role of large customers and finds that IPO firms that have product market relationships with large customers experience higher valuation and better long-term performance compared to IPOs without such relationships. This higher valuation is more pronounced when product market relationships are able to alleviate IPO uncertainties, when the businesses of large customers and their IPO suppliers are closely related in downstream markets, and when large customers have stronger certifying abilities. Finally, we find that large customers realize significant positive abnormal returns around their suppliers’ preliminary prospectus filing dates, suggesting that some of the benefits from product market relationships accrue to large customers.     

Factor Determinants of Total Factor Productivity Growth in Malaysian Manufacturing Industries: a decomposition analysis

To decompose total factor productivity growth into technical progress, technical efficiency change, allocative efficiency change, and scale efficiency change, a stochastic frontier approach was applied to Malaysian manufacturing data covering the period 2000 to 2004. The results show that total factor productivity was driven mainly by technical progress but was hurt by deteriorating technical efficiency. Scale efficiency and allocative efficiency also exerted significant influences on total factor productivity. The skill and quality of workers were the most important determinants of technical efficiency, whereas foreign ownership, imports, and employee quality underpinned technical progress. The impact of firm size on scale economies differed across industries.     

Economic Reform and Total Factor Productivity Growth in Indian Manufacturing Industries

A stochastic frontier production function model is applied to Indian manufacturing industries, to decompose the sources of total factor productivity growth into technical progress, technical efficiency, scale efficiency, and allocative efficiency. Empirical results based on data from 2000 to 2006 suggest that increased investment needs time to deliver increased productivity and efficiency, because new technology combined with fresh investment requires higher numbers of skilled workers, better managerial practices and an advanced input mix, all of which generally take time to develop. Thus, the Indian economy must boost technical efficiency by providing skilled workers and high quality managers to further economic reform.     

IDENTIFYING AND ESTIMATING SOURCES OF TECHNICAL INEFFICIENCY IN KOREAN MANUFACTURING INDUSTRIES

This study estimated translog stochastic frontier production functions using an unbalanced panel of Korean manufacturing firms in the food, textile, paper, chemical, basic-metal, and fabrication sectors. The sectors were estimated individually to investigate whether technical efficiency is systematically related to firm size, dependency on external funds, research and development investments, and exports. The empirical results suggest that firm size has a positive and significant effect in every sector. The effects of the other factors are less systematic and vary across sectors.     

A decomposition of trends in U.S. consumer expenditures on communications and travel: 1984–2002

This paper offers a conceptual and partly empirical decomposition of the trends in U.S. consumer expenditures on five communications and nine transportation subcategories between 1984 and 2002. We find that inflation nearly always increases unit prices. Income effects are positive for all categories, meaning that these are all normal goods, not inferior ones. We speculate that taste changes have contributed to increasing expenditures in most categories, with the exception of out-of-town lodging, the public transit component of the public transportation category, and the old communication media categories of postage and reading. We suggest that production and technological changes have led to decreased unit prices in most categories. In the private vehicle operations categories, technological improvements dominate, so that expenditure shares have been decreasing despite increasing demand. Conversely, in the new media categories, taste changes dominate, so that expenditure shares are increasing despite technological improvements which lower prices. The decomposition explored here enhances our understanding of these important expenditure categories, and provides a useful methodology with which to examine trends in other categories as well.     

The learning curve and the yield factor: the case of Korea's semiconductor industry

This article attempts to find out how the Korean economy has grown so rapidly in a short time span of less than 30 years. For that purpose, it focuses on the development of the Korean semiconductor industry-more specifically, the memory-chip segment of the industry-as a case in point. To test the hypothesis that the learning curve effects have been significant in the memory-chip industry, ‘yield factor’ (the ratio of sellable chips to total chips in a wafer) in semiconductor production is used as a measure of the learning progression. That is, by tracing how the yield factor for each generation of memory chips has increased, one is able to see how well the Korean chip makers have exploited the learning effects. This article improves the learning-by-doing modelling by introducing a richer set of yield data; and the unit of analysis employed throughout the article is at the firm level, which is not common in the literature dealing with East Asian development as well as the economics of technology, thus enhancing understanding of the industry dynamics.