Manufacturing Labor Productivity Research Articles

Integration of manufacturing and services: Examining its effect on resource allocation and manufacturing labor productivity

The integration of manufacturing and services is a key factor driving the development of the manufacturing sector. Thus, this study uses Chinese province–industry data to determine the effect of such integration on resource allocation and manufacturing labor productivity. Additionally, heterogeneity is systematically examined, while avenues for its improvement are explored. Based on the results, dividing integration into forward and backward integration shows that both types significantly enhance manufacturing labor productivity by improving resource allocation efficiency, with forward integration demonstrating a more pronounced effect. This mechanism mainly manifests in capital- and technology-intensive industries but not in labor-intensive ones. Notably, while the integration of manufacturing and services enhances both economic and social efficiency by curbing capital over-allocation, it creates the problem of labor over-allocation. These conclusions provide value insights for promoting industrial transformation and upgrading.

Heat causes large earnings losses for informal-sector workers in India

Abstract Heat reduces labor productivity and output in formal manufacturing but little is known about its impacts on the earnings and welfare of workers in the informal sector that comprise 82\% of the labor force in low-income and lower-middle-income countries. This study reports the results from daily surveys of nearly 400 workers in two slums in Delhi for a month in the summer of 2019. Every degree Celsius increase in wet bulb temperature was associated with a fall in gross earnings of 13(± 3.5) percentage points, a fall in earnings net of work-related expenditure of 19(± 4.5) percentage points, an increase in the self-reported probability of sickness of the worker or a family member of 6(± 0.5) percentage points, and a decrease in the probability that a worker went to work of 2(± 0.5) percentage points. Net earnings were 40\% lower during the two heatwaves that occurred during the study period.Over 320 million informal-sector workers in low-income and lower-middle-income countries are currently exposed to temperatures similar to those observed in this study.

Industrialização e desindustrialização: uma análise empírica das causas de mudança estrutural no Brasil, 1947-2021

ABSTRACT This article investigates the causes of structural change in Brazil, through the rise and the fall of the manufacturing industry, and the consequences for total factor productivity and manufacturing labour productivity, from 1947 to 2021. Our results show that the industrialization of the Brazilian productive structure is positively associated with expansions in infrastructure investments and with the pursuit of a competitive real exchange rate, that is, with policies oriented towards economic development. Our findings also indicate that such variables exert a direct influence on total factor productivity and manufacturing labour productivity and an indirect influence through their impacts on the Brazilian productive structure. Our conclusions suggest that an important cause of the Brazilian premature deindustrialization, and then of its poor performance in terms of total factor productivity and manufacturing labour productivity, is the adoption of policies not oriented towards economic development adopted since the neoliberal reforms of the 1980s and 1990s.

Industrialization and Convergence of West Java Manufacturing Labor Productivity, Indonesia

West Java as a national manufacturing center has experienced industrialization since 1989. This is marked by the continuous increase in the manufacturing sector so that it is able to shift other sectors. Unfortunately, the industrialization that occurred in West Java was not followed by a reduction in the manufacturing labor productivity in West Java. The convergence of manufacturing labor productivity in West Java is an important phenomenon because inequality can lead to a different pace of development and exacerbate inequality. This study uses dynamic panel data regression with the first-different GMM (FD-GMM) method for inferential analysis and Location Quotient (LQ), Klassen Typology and the calculation of the coefficient of variation for descriptive analysis. The results showed that only 7 out of 27 regencies/cities in West Java had the economy dominated by the manufacturing sector and there were fluctuations in the productivity of the manufacturing workforce in these areas. Based on Klassen's Typology, there are still many areas that are categorized as developing and underdeveloped areas. However, there is a decrease in inequality between regions as seen from the results of the convergence analysis. Sigma convergence and beta convergence occurred in West Java with the time needed to close half the gap (half-life convergence) of less than one year. Factors that significantly affect the convergence process of manufacturing labor productivity are the manufacturing labor productivity lag, FDI, DDI, and real wages of manufacturing workers.

Improvement of the “big but not strong” situation of manufacturing industry in China from the perspective of China-US comparison based on gravity model and sustainable livelihood framework

Compared with the United States, the “large but not strong” situation of China’s manufacturing industry is still prominent. The reasons are, in addition to the “two-end squeeze” of “re-industrialization” of developed countries and emerging economies relying on low-cost advantages to build new “world factories”, China’s development shows weak core competitiveness, few leading companies and brands, fragmented production chains, low labor productivity in manufacturing, weak technological innovation capabilities, internal disadvantages such as insufficient support for high-end factors required for manufacturing industry development and the need to optimize the business environment, which should arouse greater attention. Therefore, based on Gravity Model, Sustainable Livelihood Framework and Core Competitive theory were used to find the reason and solution, and there is still a long way to go to build a strong manufacturing country.

Amount of credit and its variability as labor productivity determinants: Evidence from Hungary and Poland

Abstract Using annual sectoral data for Hungary and Poland covering the period of 2005–2016, this paper assesses the impact of credit market characteristics on labor productivity in manufacturing. Apart from the amount of loans extended to non-financial corporations, which has been extensively studied in the literature, it focuses on credit market stability and tightness. The main results are that the volatility of credit originating from the supply side of the market has a negative influence on labor productivity, while credit market tightness is insignificant. There is no robust evidence that the stock of credit is a critical productivity determinant.

Innovative activity of industrial enterprises of Kazakhstan: research of factors and key indicators

In Kazakhstan, there is an intensification of innovation activity which is particularly important in modern conditions. The aim of the research is to determine the degree of influence of several indicators on the innovation activity of industrial enterprises of Kazakhstan, as well as to conduct a qualitative analysis of the invention activity of industrial enterprises in the country. Within the framework of the research tasks, a scientometric analysis was carried out which made it possible to identify the main global trends in scientific publications dealing with the research of innovative activities of industrial companies. The research of the innovative capacity of industrial enterprises was carried out with the help of correlation and regression analyses. The timeframe of research data is 2009-2019. It was demonstrated that the share of GVA of industry in the country’s GDP, labor productivity in manufacturing and the number of enterprises that have innovations for all types of innovations are the most significant factors influencing the «volume of innovative products shipped by companies». In addition, we analyzed 78 issues of the Industrial Bulletins of the National Institute of Intellectual Property of the Republic of Kazakhstan for the years 2011 and 2021, which made it possible to study the characteristics of the innovative activity of the country’s industrial enterprises quantitatively and qualitatively. In this regard, the main findings are the following: an analysis of industrial bulletins showed that in 2011 the leaders in terms of the effectiveness of the implementation of innovative developments were the city of Almaty, Karaganda and East Kazakhstan regions; in 2021, Almaty and Karaganda region retained their positions, in addition, the city of Astana was added to them; in 2011, the main share of innovative developments accounted for inventions, while in 2021 – for utility models.

Comparative labour productivity in British and Russian manufacturing, circa 1908

ABSTRACT Using data from official manufacturing censuses, we compare labour productivity in the UK and the Russian Empire around 1908 in the industries in which medium- and large-size enterprises predominated. We find that Russia’s labour productivity was 75.3 or 57.4% of the British level, depending on whether we include or exclude Russia’s large and highly productive spirits industry. Russia’s productivity was between France’s and the Netherlands’, if we include the spirits industry; and between the Netherlands’ and Italy’s, if we exclude it. We find that the majority of Russian industries underperformed the British ones. However, some of the industries that had been established or modernized during the state-induced industrialization policies of the 1890s, including the metallurgy in the Southern industrial region, iron and steel tubes, railway carriages, and butter and cheese, performed on a par with or close to their British counterparts. The remaining modernized industries, including spirits, tobacco, and petrochemical sectors, outperformed their British equivalents. Our findings suggest that although Russia’s aggregate labour productivity lagged behind the UK’s, Russia’s modernized industries achieved, and in some cases surpassed, the productivity level of their British counterparts.

Trans-boundary air pollution spillovers: Physical transport and economic costs by distance

The economic costs of trans-boundary pollution spillovers versus local effects is necessary to evaluate centralized versus decentralized environmental policies. Directly estimating these for air pollution is difficult because spillovers are high-frequency and vary with distance while economic outcomes are usually measured with low-frequency and local pollution is endogenous. We develop an approach to quantify local versus spillover effects as a flexible function of distance utilizing commonly-available pollution and weather data. To correct for the endogeneity of pollution, it uses a mixed two-stage least squares method that accommodates high-frequency (daily) pollution data and low-frequency (annual) outcome data and can improve efficiency. We estimate spillovers of particulate matter smaller than 10 μg (PM10) on manufacturing labor productivity in China. A one μg/m3 annual increase in PM10 locally reduces the average firm's annual output by CNY 45,809 (0.30%) while the same increase in a city 50 km away decreases it by CNY 16,248 (0.11%). This effect declines rapidly to CNY 2847 (0.02%) for an increase in a city 600 km away and then slowly to zero at 1000 km. The results suggest the need for supra-provincial environmental policies or Coasian prices quantified under the approach.

The Contribution of Agricultural Manufacturing in the Egyptian Economic Growth: Kaldor's Hypotheses

This research uses a Kaldor’s hypotheses to estimate the contribution of the agricultural manufacturing sector to increase the economic growth of the Egyptian agricultural sector during the period 1997-2018. It based on the three "hypotheses" of growth. Kaldor model depends on three hypotheses related to the relationship between the growth of manufacturing sector and the economic growth. The study used the growth rate, dummy variable, Ordinary Least Square (OLS) test, and used CUSUM squares test and Chow breakpoint test. In addition to, testing the stability of time series depended on E-view 11.0. The food, beverage, tobacco industries and textiles industry are the largest two sectors in the Egyptian agricultural manufacturing industries, as they represent about 83.58% of the total value of the agricultural manufacturing industries output during the period 1997-2018. The results shows that the increase of real growth rates of food, beverage, tobacco industries and textile production lead to increasing in the real growth rate of agricultural output. According to CUSUM Sq test and Chow test, the year 2003 is considered as the switch point for the study variables. Also, if the real agricultural manufacturing production growth rate increases, the real agricultural manufacturing labor productivity growth rate will increase. And if the real growth rate of agricultural manufacturing production value increases, the real growth rate of agricultural non-manufacturing labor productivity will increase. The results of the research assist decision-makers in the field of manufacturing industry and agriculture in Egypt, especially in the stages of economic development.

Производительность труда секторов экономики в регионах: роль информационно-коммуникационных технологий

The attention of this article is focused on the impact that expanding of the usage of information and communication technologies (ICT) has on the economic development of Russian regions. As shown by various authors, the use of ICT ultimately leads to an increase in the factor productivity. Here, we assess to what extent the use of ICT contributes to the growth of economic development efficiency at the regional level, which is interpreted here as labor productivity in certain economic sectors, and measured as output per worker. Panel data analysis for Russian regions covers 2015–2018. The analysis shows that the spread of ICT has a positive effect on labor productivity in both mining and manufacturing, with dividing regions into two groups – ‘resource’ and ‘non-resource’ depending on role of the extractive industry in regional economy – when considering labor productivity in mining. It was found that there is a relationship between ICT development indicators and labor productivity, with significant factors being industry and regionally specific. The widespread adoption of ICT has a positive effect on the economic development effectiveness, with a stronger link in the manufacturing, while for the mining the discovered relation was not so clear. Among the factors affecting labor productivity in the mining in ‘resource’ regions are access to the Internet, the use of ‘cloud’ services, as well as involvement in research and development; for ‘non-resource’ regions significant factors are the use of local computer networks, regional ICT subsidies, and the purchase of computing equipment. For the manufacturing, the key factors are access to the Internet, the share of high-tech businesses in the regional economy, the purchase of computing equipment, and the use of the services of third-party organizations and ICT specialists

Testing spatial interactions in Kaldor's growth laws: A cross‐country analysis

This study tests spatial interactions in Kaldor's growth laws in a cross‐country perspective during 2000–2001 to 2014–2015. In particular, we examine the interactive hypothesis through spatial proximity using a spatial panel data framework. The results reveal that ordinary least square estimates undermine the relationship defined through standard Kaldorian setting, besides an inconsequential relationship in some cases. Spatial estimates support the Kaldorian growth strategy with a strong spatial interaction across the countries chosen. The first and third law show significantly positive spatial interactions in lag as well as error component. While as Verdon's law reflects similar as well as dissimilar spatial patterns in error and lag components respectively. The results reflect the fact that manufacturing labor productivity and output growth are more spatially interactive which is imperative for sustained higher economic growth. Therefore, highlighting the significant role of the manufacturing sector in attaining the higher steady state. The empirical findings suggest that the relationship between economic growth, manufacturing output, and labor productivity is global and spatially interactive. Considering these interactions may lead to narrowing down the disparities across the countries.

La dinámica exportadora manufacturera como restricción al crecimiento en México mediante el análisis de la productividad y la IED, 2005-2018

Esta investigación tiene como objetivo analizar la problemática del lento crecimiento económico de México durante el período 2005-2018 a partir de la evolución de la productividad laboral manufacturera y la Inversión Extranjera Directa (IED) como determinantes de la dinámica de las exportaciones de manufacturas, que a su vez constituyen una fuente de crecimiento económico para economías abiertas. Por otra parte, la validación de esta hipótesis se realiza a través de la metodología de Vectores de Corrección de Error (VEC), donde los resultados muestran que la incidencia de la IED es menor con relación a la productividad laboral manufacturera y que ambas variables están cointegradas en el largo plazo. Por lo tanto, se concluye que es importante atender el diseño de políticas sectoriales que se traduzcan en mejoras de la productividad laboral, y también modificar las estrategias de captación de inversión extranjera para así estimular conjuntamente el crecimiento económico.

Energy Use and Labor Productivity in Ethiopia: The Case of the Manufacturing Industry

This study investigates the effect of energy use on labor productivity in the Ethiopian manufacturing industry. It uses panel data for the manufacturing industry groups to estimate the coefficients using the dynamic panel estimator. The study’s results confirm that energy use increases manufacturing labor productivity. The coefficients for the control variables are in keeping with theoretical predictions. Capital positively augments productivity in the industries. Based on our results, technology induces manufacturing’s labor productivity. Likewise, more labor employment induces labor productivity due to the dominance of labor-intensive manufacturing industries in Ethiopia. Alternative model specifications provide evidence of a robust link between energy and labor productivity in the Ethiopian manufacturing industry. Our results imply that there needs to be more focus on the efficient use of energy, labor, capital, and technology to increase the manufacturing industry’s labor productivity and to overcome the premature deindustrialization patterns being seen in Ethiopia.

Labour productivity in African manufacturing: Does the level of skills development matter?

AbstractMotivationThis article provides the first comprehensive evidence on the relationship between skills and labour productivity among manufacturing firms across Africa. It makes two contributions. First, we re‐examine the relationship between skills and labour productivity using nuanced firm‐level data. Second, we examine whether the relationship between employee skills and firm productivity varies by size and age of the firm.PurposeThis paper poses two questions. What is the relationship between skills and labour productivity using nuanced firm‐level data? Is the relationship between employee skills and firm productivity mediated by firm size and age?Approach and MethodsWe used the World Bank’s Enterprise Survey data and employed the pooled Ordinary Least Squares estimation. Owing to endogeneity concerns, we used Instrumental Variables, where country‐sector‐size averages instrument for high school and university education. Propensity Score Matching was used to estimate the effects of training.FindingsWe find that the effects of high school and university education are higher among small and young firms respectively. Training is positively associated with labour productivity, particularly among older and large firms.Policy implicationsOverall this article highlights the importance of skills development in Africa’s aspiration to boost manufacturing. Key to this is encouraging schoolchildren to complete the education cycle. It helps too if employers can identify the level of education that suits their needs for skills, given firm size and age. They need to identify skill gaps, then match training to the skills employees require.

«Зеленая» экономика как фактор производительности труда в обрабатывающей промышленности стран Европейского союза

These days many countries declare saving natural resources and reducing anthropogenic pressure on the environment as being among their national priorities. They place importance on sustainable development and the transition to a green economy model. However, the problem of assessing the effectiveness of the green economy and the competitiveness of related technologies is still open to debate. The paper examines approaches to measuring the green economy and presents an empirical analysis of the relationship between labor productivity in the manufacturing industry and green economy factors for a number of European Union countries, characterized by high performance in the global rankings of the green economy. Studying approaches to the identification and measurement of the green economy, the authors identify trends in the realization of a new environmentally sustainable development model in the countries of the European Union and the dynamics of key indicators of the green economy. The paper develops an empirical correlation and regression model that defines, along with other factors, the influence of green economy factors on labor productivity in manufacturing. An assessment of the model specification based on panel data from the manufacturing industries of seven European countries shows a significant positive effect of investment in equipment and plant for pollution control on labor productivity in the industry. The results indicate the relevance of further studies, in particular, the possible attractiveness of private investment in the formation of a green economy in various sectors of the economy in both developed and developing countries.

‘Mechanization Takes Command’: Inanimate Power and Labor Productivity in Late Nineteenth Century American Manufacturing

During the nineteenth century, the US manufacturing sector shifted away from the “hand labor” mode of production, characteristic of artisan shops, to the “machine labor” of the factory. This was the focus of an extremely detailed but extraordinarily complex study by the Commissioner of Labor published in 1899 that has until now defied systematic analysis. Here, we explore the overall productivity gains associated with these changes in production methods and the specific, causal role of inanimate power. Under the machine labor mode, the time necessary to complete production tasks declined by 85 percent, a remarkable gain in labor productivity. We also present OLS and IV estimates of the effects of using inanimate power, such as steam, at the production operation level Our IV is based on the gerunds describing the various production activities. Treating our IV estimates as causal, about one-third of the higher productivity of machine labor is attributed to greater use of inanimate power per se.

Not Backward: Comparative Labour Productivity In British And Russian Manufacturing, Circa 1908

Using data from official manufacturing censuses, we compare labour productivity in Great Britain and the Russian Empire around 1908. We find that Russia’s labour productivity was at 81.9 percent of the U.K. level. Russia’s productivity was on a par with France’s and significantly superior to Italy’s. We also find that the majority of Russian industries underperformed British ones. However, the industries that had been established or modernised during the state-induced industrialisation policies of the 1890s, such as the Southern metallurgy, performed on a par with their British counterparts. Russia’s alcohol, tobacco, and petrochemical sectors outperformed their British equivalents. Our findings suggest a revision of the view that, at the turn of the 20th century, Russian manufacturing was economically underdeveloped.

Agricultural productivity, the real effective exchange rate, and structural change: Some evidence from Africa

AbstractAgriculture is thought to play a number of roles in the early development process. All of these roles involve fostering non‐agricultural development, in particular manufacturing. It is argued in this paper that agriculture plays a role that has hitherto been ignored. Specifically, if agricultural labor productivity increases faster than manufacturing labor productivity, the real effective exchange rate will depreciate. This depreciation of real effective exchange rate occurs because in very poor countries agriculture makes up the dominant share of both GDP and employment. The depreciation also makes it easier for a country to expand the production of tradables relative to nontradables, with manufacturing being the main tradable. This proposition, which as agricultural labor productivity increases relative to manufacturing labor productivity the real effective exchange rate depreciates, is tested using data drawn from 10 sub‐Saharan African countries.

Relationship between Korean Manufacturing Wages and Labor Productivity

외환위기 이후 악화되기 시작한 한국 제조업의 노동소득분배율은 2010년 이후에 소폭 개선되었는데 그 주요인은 실질임금 상승이 아닌 노동생산성 둔화이다. 노동생산성이 임금을 결정한다는 주류 경제학의 가정과는 달리 포스트케인스주의 생산성체제 분석은 임금 상승이 노동생산성 향상으로 이어질 수 있다고 주장한다. 본 연구에서는 임금과 생산성의 관계에서 양방향의 상호관계가 있음을 전제하고 고용(총노동시간)의 변화에 주목하면서, 노동생산성 증가율과 임금 증가율의 상호 작용에 대해 분석한다. 노동생산성, 고용(총노동시간), 임금 사이의 관계를 패널벡터자기회귀 모형으로 실증한 결과 임금상승이 노동생산성 증가를 통해 다시 임금 상승으로 이어지는 선순환 고리가 2010년 이후 한국 제조업에서 다소 약화되었고, 임금 상승이 노동생산성을 증가시키는 효과가 그 반대의 경우보다 클 수 있음을 보여준다. 다만 임금 상승이 노동생산성을 증대시키는 효과는 존재하지만 고용(총노동시간)을 감소시키기 때문에 그 효과는 반감될 가능성이 있다. 따라서 혁신의 유인을 감소시키지 않으면서 일자리 대체를 최소화하는 정부의 조정 능력이 요구된다. 시스템 일반화 적률법을 사용하여 한국 제조업 노동생산성의 결정요인을 분석한 결과 역시 시간당 임금은 제조업 노동생산성 증가율에 정(+)의 효과를 보이는 것으로 나타났다.Income inequality in Korean manufacturing sector began worsening since the East Asian economic crisis in 1997. Although it has been slightly improved after 2010, this improvement is not due to the enhanced real wages, but due mainly to the slowdown of the labor productivity. Mainstream and post-Keynesian economics show two conflicting views on the relationship between wages and labor productivity: the latter determines the former according to the mainstream economics, and vice versa according to the post-Keynesian economics. In this study, assuming the existence of two-way interactions between the two variables, we investigate the relationship among the change of the labor productivity, the change of the real wages, and the change of the employment using a 3-variables panel vector autoregression method. Among the results of an empirical analysis, it is noteworthy that the positive impact of wage growth on labor productivity growth is much greater and significant than that of the reverse, which can imply the possibility of a restored virtuous circle between wages and productivity through that channel. However, it is also noteworthy that employment responds negatively to changes in wages and productivity, which can be ascribed to the rapid application of automation in the production process. The government should implement a policy supporting the creation of decent jobs in new industries to minimize the negative externalities of workforce redundancy. We adopt a System GMM method to investigate the determinants of the Korean manufacturing labor productivity. The result also show that the hourly wage is positively related to the labor productivity.