Private Sector Productivity Research Articles

An empirical study on public capital spillovers from the USA to Canada

The effect of public capital on private sector productivity has received much attention in the literature. The impact of an adjacent country's public capital on domestic productivity has, however, not been previously examined. This paper attempts to fill this gap by examining the possibility of such spillovers from the USA to Canada. Due to close proximity of both countries, the hypothesis of the paper is that these spillovers are important. A production function model introduces US public capital as an exogenous variable and tests for its significance. The results indicate positive spillovers from the USA public capital to Canadian productivity.

Commercializing intellectual property: a university‐industry alliance for new product development

This article outlines a process, whereby public research efforts can be joined with private sector product needs creating a commercialization culture that can help provide opportunities and address the barriers of new product concepts for the marketplace. The issues discussed here were identified through research efforts that explored the opportunity to align academic research with private sector commercialization efforts. The purpose is to identify academic and private sector linkages that may benefit and enhance new product research efforts with the goal of moving faculty‐driven product research from inception to marketplace commercialization. The end result is a process by which public sector (institutions of higher education) and private sector organizations can interact to develop new products for the commercial marketplace that will meet the burgeoning product needs of current and future customers.

Reserve ratio, seigniorage and growth

A monetary endogenous growth model is developed by explicitly taking into account the growth-enhancing effects of reserve-augmented seigniorage. The seigniorage is generated by imposing a reserve requirement on the banking sector. The benevolent government then spends all the seigniorage revenue on the provision of a public input which has positive externality on the private sector's production. The growth effect of an increase in reserve requirement is then analyzed. An increase in reserve requirement has two opposing effects on growth. One is the well-known distortionary effect on the asset mix of the banks as well as the firm's input mix between intermediated and unintermediated capital. The other is a positive supply-side effect which arises due to the externality of public spending. A growth Laffer-curve type relationship is thus obtained between reserve ratio and growth. The model admits a second best reserve ratio.

Regional economic convergence: Do policy instruments make a difference?

The relationship between public capital, regional output and private sector productivity has been an issue of considerable interest in the regional development literature. There have however been few studies that develop linkages between these issues, and the broader literature on economic convergence. This paper presents an innovative methodology to examine the process of regional economic convergence across U.S. states. We examine the effects of economic variables such as human, and public capital in the convergence process, and control for business cycle and region specific effects in the analysis. Further, specification problems arising from spatial dependence are also addressed. Results from the empirical analysis show that the speed of convergence is influenced by region specific characteristics, and the availability of trained labor in neighboring regions.

Nonparametric estimation of returns to scale in the public sector with an application to the provision of educational services

Nonparametric programming models have been developed to measure technical efficiency and scale economies. The programming models used for public sector applications, however, are based on standard private sector production theory. In the public sector environmental variables have a significant impact on the provision of public services. Without controlling for these environmental factors point estimates of efficiency and returns to scale will be biased. This paper extends nonparametric methods to allow measurement of returns to scale in the provision of public services. The method is applied to the provision of educational services in New York State school districts for illustrative purposes.

Fiscal austerity and public servant quality

В данной статье используется простая модель для анализа причин, которые определяют размер общественного сектора и качество занятой в нем рабочей силы. Работники отличаются друг от друга по ряду характеристик, а общественный сектор использует стратегию найма, максимизирующую функцию полезности U(s, Y), где s - доля рабочей силы, занятой в общественном секторе, а Y - объем выпуска в частном секторе. Правительство имеет полную информацию о производительности труда работников. Авторы описывают поведение общественного сектора экономики и изучают, как наличие фискальных ограничений для правительства влияет на эффективность и занятость.

The impact of adjustment and stabilization policies on infrastructure spending in Central America

During the 1980s and 1990s the countries of Central America experienced protracted fiscal crises and debt repayment problems which resulted in the implementation of structural adjustment agreements. Apart from attempting to reestablish fiscal balance and to control inflation, the proponents of adjustment policies sought to enhance growth by de-emphasizing the wasteful aspects of state spending while maintaining public expenditures on physical and human capital, which were believed to promote private sector productivity. By comparing a pre-debt crisis period with the period given by debt crisis and adjustment, the study reveals that the shares of government spending on human and, particularly, physical infrastructure dropped precipitously during the adjustment period. At the same time, the shares devoted to defense and subsidy categories—as well as interest payments on external debt—generally registered notable gains. The experience of adjustment policies in Central America indicated that substantial discrepancies existed between the idea and the reality.

On the optimal policy of infrastructure provision across regions

I study an optimal level and an optimal allocation scheme across regions of infrastructure provision, constructing a model of a two-region economy characterized by inter-regional trade and migration. Special attention is paid to both a balanced allocation scheme and a polarized allocation scheme. It is shown that the optimal policy is less likely to involve the former scheme when substitutability in consumption is greater, the degree of increasing returns to scale in private-sector production with respect to the infrastructure input is higher, and/or the regional difference in terms of a comparative advantage is smaller.

The private sector and urban housing production process in Nigeria: A study of small-scale landlords in Abuja

The private production system continues to supply the majority of housing to the population of Third World cities. In Nigeria, statistics show that the bulk of urban housing units is supplied for rent by small-scale private landlords. This paper examines the process of housing production among this category of producers using, as a case study, the peripheral settlements of Abuja, Nigeria's new capital city. A predominance of small-size sole proprietorships is established among the small-scale house building firms, mostly for reasons of maintaining operational flexibility and cost saving. It is also found that the greatest attraction of investing in rental housing by small entrepreneurs is the hedge it provides against inflation and the stability and permanence it introduces into the capital base of economic pursuits. A strong influence of traditional chiefs in land supply is revealed, together with the emergence of a commercialised land market, resulting in speculation and contributing to rising land prices. It is shown that building materials are the most problematic of the key building components to the housing production process. It is argued that small building firms would make more profit if they had access to formal sector working capital and that the practice of using casual workers in project execution has the advantage of enabling firms to survive periods of job drought, but does not encourage growth of the firms, apprenticeship training and skills development in the house construction industry. It is concluded that what is needed to enhance the operation of this category of producers is for government to accept an enabling role that will seek to minimise the financial burden and risks to which they are currently exposed.

Public capital and private sector productivity in Ireland, 1958‐1990

Academic research in the USA and more recently in the UK and Sweden, has highlighted public capital as a significant growth determinant. Public capital, it is argued, has a positive effect on private sector output, productivity and capital formation. However, controversy surrounds the empirical results emerging from this literature. Much of the controversy rests on research methods employed. Adds to this body of literature in two ways. First, estimates aggregate production functions for private sector output using Irish data. The stock of public capital is included as an input to investigate the effects of government investment on private sector productivity. Second, uses modern time‐series techniques to test the hypothesis. Employs the Johansen (1988) cointegration testing procedure and error correction modelling on annual data for the period 1958‐1990. These modern techniques produce empirical results which do not support the public capital hypothesis. Suggests several reasons to explain this outcome, and outlines possible policy implications.

Housing supply, profit and housing production: The case of the United Kingdom, the Netherlands and Germany

This article investigates the relationship between housing production in the private sector and profitability in three European countries: the United Kingdom, the Netherlands and Germany. The relationship between private sector production and profitability is suggested by Ambrose and Barlow (1987) to be an important contributory factor to understanding levels of house building in Europe. The article utilizes a model of ‘profitability’ based upon three variables: house prices, land prices and building costs. The model is considered with other theories relating to housing production. These are: first, the way in which governments organize housing production, second, the mode of housing development; and third, motivations of house builders themselves. These issues are shown through the results to be significant in explaining why trends in the three countries are dissimilar. The conclusions are that a private sector functions better where government plays a strong steering role, particularly in the land market. The relationship between production and profit is weak where systems of supply exhibit a high degree of speculative activity or where new production relies upon the decisions of individual households rather than firms. The article raises particular questions of definition and comparison. These are in relation to the ‘private sector’ and to the profit model itself.

Public Capital and Private Sector Productivity: A Review of the Empirical Evidence

AbstractThis paper contains a survey of recent empirical research on the relationship between public capital and private sector production. The implications of these empirical studies for policy debates over the appropriate level of public capital are also examined.

Public Capital and Private Sector Productivity*

The role of public services in private production is quantified for the Australian economy over the period 1966/67–1989/90. Public capital is shown to have a significant and positive impact on private production and private total factor productivity. The extent to which these results can contribute towards the debate about appropriate levels of public investment is also considered.

Policy Barriers To 50% Diversion Of Municipal Solid Waste

A number of policy barriers must be addressed by the governments in Europe and North America which have adopted objectives of diverting from disposal something like 50% of the solid waste stream by means of reduction, re-use and recycling. These include: the need for clarification of responsibilities of all levels of government and of private sector product manufacturers and waste disposers; putting in place incentives for source separation; ensuring markets for recyclables; and allocating the increased cost of waste management. This paper reports on findings of a research project undertaken in 1991-92 on steps being taken by different jurisdictions to overcome such barriers.

Policy Barriers To 50% Diversion of Municipal Solid Waste

A number of policy barriers must be addressed by the governments in Europe and North America which have adopted objectives of diverting from disposal something like 50% of the solid waste stream by means of reduction, re-use and recycling. These include: the need for clarification of responsibilities of all levels of government and of private sector product manufacturers and waste disposers; putting in place incentives for source separation; ensuring markets for recyclables; and allocating the increased cost of waste management. This paper reports on findings of a research project undertaken in 1991-92 on steps being taken by different jurisdictions to overcome such barriers.

Making a Difference on Jobs

ABSTRACTWhile macroeconomic settings and the regulator environment matter, something more is needed to deal with unemployment. That involves infrastructure redevelopment, to boost private sector investment and productivity growth, industry policy to capture the full benefits of market conditions and a strategic partnership with Maori for full use of Iwi resources.

Public-Sector Capital and the Productivity Puzzle

A number of studies have suggested a quantitatively important relationship between public-sector capital accumulation and private sector productivity, with the most compelling evidence derived from analyses of state-level data. Estimates herein of production functions that use standard techniques to control for unobserved, state-specific characteristics, however, reveal essentially no role for public-sector capital in affecting private sector productivity. Only estimates of state production functions that do not include such controls find substantial productivity impacts. This result reconciles existing econometric estimates with the findings of Hulten and Schwab based on growth accounting techniques, as such techniques effectively control for state-specific effects. Region-level estimates are essentially identical to those from state data, suggesting no quantitatively important spillover effects across states.

Barriers within firms to energy-efficient investments

Many investments in energy efficiency fail to be made despite their apparent profitability. Internal hurdle rates are often set at levels higher than the cost of capital to the firm. Reasons for these practices include bounded rationality, principal-agent problems, and moral hazard. The policy implication is that government can simultaneously improve overall energy efficiency and increase private sector productivity by providing informational and organizational services that go beyond the traditional regulatory framework.

Does public capital affect private sector performance?: An analysis of the Spanish case, 1964–1988

The possible influence of public capital accumulation on private sector economic performance is examined using Spanish data for the 1964–1988 period. To do this, a simple aggregate production function for private output, including government-owned capital as a separate factor, is estimated by cointegration techniques. The results tend to support the view that the stock of public capital plays an important role in affecting private sector productivity.

The Spurious Effect of Public Capital Formation on Private Sector Productivity

The Spurious Effect of Public Capital Formation on Private Sector Productivity