Higher Total Factor Productivity Growth Research Articles

Venture Capital Financing, Patenting, and Long-Run Performance of Private Acquisitions

Our model reconciles seemingly contradictory empirical evidence on venture capital activity. Despite the venture capital-backed companies' superior long-run performance, stock markets react more negatively to their acquisitions than to other private acquisitions. Moreover, venture capital intensive industries show higher patent count, but not higher total factor productivity growth. We explain both contradictions through the venture capitalists' incentive to signal their companies' value prior to exiting. Such incentives increase their companies' investments, patenting, and performance; but inflate investment costs and acquisition prices. We generate novel testable predictions for the interaction of patent law, early-stage financing, and long-run performance of private acquisitions.

Banking Sector Deregulation and Productivity Change Decomposition of Indian Banks

The competition in the Indian Banking Industry has intensified since the financial liberalization, which started in the early 1990s. The paper tries to examine changes in bank productivity growth through employing the Malmiquist Total Factor Productivity (TFP) indices. The study also decompounds the TFP change of banks into technological progress, pure technical efficiency and scale efficiency change. Overall total productivity growth of banks was almost stagnant during the study period. The contribution of technical progress towards productivity is decline, however, technical efficiency and scale efficiency has been improved for all banks. The highest TFP growth has been observed among public sector banks, followed by old private banks (mostly in terms of increasing efficiency in catching up with new private and foreign banks), while both new private banks and foreign banks recorded decline in TFP growth.

TFP Growth in Old and New Europe

Using Solow-Törnqvist residuals as well as two alternative measurements, we present the estimates of total factor productivity (TFP) growth in a sample of 30 European economies for the period 1994–2004. In most of Western Europe, we find a deceleration of TFP growth since 2000. However, the economies of ‘New Europe’ exhibit a higher level of TFP growth overall and have slowed less than those of ‘Old Europe’. In the new market economies of Central and Eastern Europe, we find both high TFP growth as well as acceleration in the second half of the sample. Regression evidence from Western Europe suggests that product market regulation may adversely affect TFP growth and may thus impair convergence.

Corporate innovation and corporate governance: A study of US firms

The paper relates corporate governance to firm’s total factor productivity growth of U.S. firms from 1990 to 2004. Given technological constraints, some firms are very efficient whereas others are not and some firms have much faster rates of innovation and productivity growth than others. Are these differences due to chance or are there some factors contributing to higher total factor productivity growth? In this paper, we find evidence that firms with stronger shareholder rights have higher total factor productivity growth. By employing the governance index compiled by Gompers, Ishii, and Metrick (2003), we determine that the effect of governance on productivity varies positively with the quality of corporate governance. Furthermore, this relationship is strongest among firms which have the strongest shareholder rights.

Efficiency and productivity in the Indian unorganized manufacturing sector: did reforms matter?

This paper analyzes total factor productivity growth of the unorganized manufacturing sector in India using several rounds of the large scale national sample survey state level data for 15 major Indian states for the period 1978–1979 to 2000–2001. Data envelopment analysis is used to compute Malmquist total factor productivity index and its components. The impact of economic reforms on efficiency and productivity is examined. Evidence suggests that total factor productivity registered a positive growth during the period in the country as a whole. Most states in the country witnessed higher total factor productivity growth in the post 1990s reforms period than in the pre-reforms period. Decomposition of the Malmquist productivity index shows that improvement in technical efficiency rather than technical progress had contributed to the observed acceleration in the growth rate. Econometric analysis of the determinants of total factor productivity growth demonstrates that ownership, literacy, farm growth and infrastructure availability significantly influence total factor productivity growth in the sector.

Economic Reforms and Total Factor Productivity Growth in the Indian Unorganized Manufacturing Sector: Spatial and Temporal Analysis

This paper analyses total factor productivity growth in the unorganized manufacturing sector in India using several rounds of the large scale National Sample Survey state-level data for 15 major Indian states for the period 1978-79 to 2000-01. Data Envelopment Analysis is used to compute Malmquist total factor productivity index and its components. The impact of economic reforms on efficiency is examined. Evidence suggests that total factor productivity registered a positive growth during the period in the country as a whole. Most states in the country witnessed higher total factor productivity growth in the post 1990s reform period than in the pre-reform years. Decomposition of the Malmquist productivity index shows that improvement in technical efficiency rather than technical progress had contributed to the observed acceleration in the growth rate. Technological regress was observed which has continued at a decelerated rate in the reforms period. Econometric analysis of the determinants of total factor productivity growth indicates tendency towards convergence in the productivity growth rate across the Indian states.

TQM emphasizing 5‐S principles

PurposeThis study aims to evaluate an organizational development programme (TQM) that was implemented at the tertiary‐care public hospital that showed the highest total factor productivity growth in Sri Lanka for the 1997‐2001 period.Design/methodology/approachBalanced score card approach is used to assess the performance of the hospital under study. Value chain analysis is conducted to identify the changes in organizational management following TQM implementation. Employee feedback is obtained by questionnaire‐based interviews.FindingsPerformance of the hospital with regard to service quality, employee‐performance, fixed‐asset‐performance, and social responsibility improved. Overall, value chain analysis shows that the differentiation was used to improve quality of services. Leadership, team‐work and continuous monitoring were the key factors that facilitated implementation of 5‐S based TQM.Practical implicationsThe 5‐S system‐based TQM appears to be a feasible and promising system to initiate management improvement of public hospitals in developing countries.Originality/valueThis paper is of value for hospital managers and policy makers of developing countries, where there are chronic resource shortage and managerial constraints, particularly in government sector health services.

Net Capital Flows and Productivity: Evidence from U.S. States

We study capital flows between U.S. states. We present a simple neoclassical model with total factor productivity (TFP) that varies across states and over time and where capital freely moves across state borders. In this framework capital flows to states that experience a relative increase in TFP. While TFP can not be directly observed, we can identify states with high TFP growth as states with high output growth. By comparing the level of personal income to output, we construct indicators of capital flows into a state. We then examine if capital (on net) flows to states which experience relative increases in TFP. We find this prediction clearly confirmed by the data.

The Sources of China's Economic Growth: 1952-1998

In this paper, we make an empirical analysis of the roles of total factor productivity (TFP), capital and labor in China's economic growth for 1952-1998, with the consideration of a structural change due to reform in 1978. We find that China's TFP has fluctuated drastically during 1952-1998, due to political instability and policy shocks, and it remained at a low level for 1952-1978. However, it picked up quickly in China's post-reform period, converging to a high level and remains as steady after the 1992 policy shock, as the result of technology adoption. On top of this, a comparison of the roles of TFP, capital and labor in China's growth with those in the East Asian Tigers is made, and we find: for the Tigers, their major deficiency is a low TFP growth; for China, technology adoption leads to a higher TFP growth in the post-reform period, and the problem is an inefficient allocation of capital, due to the official control of credit. Further financial reforms are needed to correct the case.

Productivity, Efficiency and Economic Growth: East Asia and the Rest of the World

This study compares the sources of growth in East Asia with the rest of the world, using a methodology that allows one to decompose total factor productivity (TFP) growth into technical efficiency changes (catching up) and technological progress. It applies a varying coefficients frontier production function model to aggregate data for the period 1970-1990, for a sample of 45 developed and developing countries. Our results are consistent with the view that East Asian economies were not outliers in terms of TFP growth. Of the high-performing East Asian economies, our methodology identifies South Korea as having the highest TFP growth, followed by Singapore, Taiwan and Japan. Our methodology also allows us to separately estimate technical efficiency change, which is a component of TFP growth, and we find that, in general, the estimated technical efficiency of the high-performing East Asian economies was not out of line with the rest of the world.

Productivity, Efficiency and Economic Growth: East Asia and the Rest of the World

This study compares the sources of growth in East Asia with the rest of the world, using a methodology that allows one to decompose total factor productivity (TFP) growth into technical efficiency changes (catching up) and technological progress. It applies a varying coefficients frontier production function model to aggregate data for the period 1970-1990, for a sample of 45 developed and developing countries. Our results are consistent with the view that East Asian economies were not outliers in terms of TFP growth. Of the high-performing East Asian economies, our methodology identifies South Korea as having the highest TFP growth, followed by Singapore, Taiwan and Japan. Our methodology also allows us to separately estimate technical efficiency change, which is a component of TFP growth, and we find that, in general, the estimated technical efficiency of the high-performing East Asian economies was not out of line with the rest of the world.

Productivity performance and priorities for the reform of China's state‐owned enterprises

This study reports on the results of a survey of 300 state‐owned, collective and foreign‐funded industrial enterprises conducted in three of China's coastal provinces; Guangdong, Fujian and Shanghai‐shi in 1993.’ Its major focus and policy relevance is to identify which of China's recent enterprise, market and ownership reforms have been most effective in improving the productivity performance of China's state owned enterprises. The study concludes that productivity growth (measured by total factor productivity) has been significantly higher for non‐state‐owned than for state‐owned enterprises and for firms located in the special economic zones of Shenzhen and Xiamen and the open city of Guangzhou than for firms in the more centrally planned Shanghai. Export‐orientated enterprises also had higher total factor productivity growth than non‐export‐orientated ones. At a lower level of significance, enterprises that controlled their own decision‐making produced a lower proportion of output for the plan, procured a higher proportion of their investment finance from loans (rather than budgetary allocations) and achieved higher total factor productivity growth. Finally, labour‐intensive industries in general had higher total factor productivity growth than did capital‐intensive ones. A number of policy conclusions may be drawn from these results.

Productivity and externalities: models of export-led growth

In developing countries, successful export-led growth (ELG) industrialization has been associated with rapid structural change and productivity growth. There are major difficulties in explaining this performance using a standard neoclassical growth model. To develop a more satisfactory framework, we start from empirical and theoretical work with models incorporating externalities. We develop a simple analytical model with an export externality that captures the large increase in both total factor productivity and trade share associated with ELG. A second model is developed to decompose growth into various components: (i) factor accumulation, (ii) a factor reallocation effect from moving factors from low to high productivity sectors, (iii) an export externality effect arising from exporting light and heavy manufactures and (iv) an import externality effect arising from importing capital goods (heavy manufactures). The second model is implemented with data for an archetype semi-industrial country. In addition to accounting for the higher total factor productivity growth observed in countries pursuing ELG strategies, the model captures the patterns of structural change experienced by such countries better than simpler neoclassical models without disequilibrium features or externalities.