Production Function Method Research Articles

How do soil and water conservation practices influence climate change impacts on potato production? Evidence from eastern Canada

We used a stochastic production function method together with a farm-level dataset covering 18 farms over a 23-year period to assess the role that soil and water conservation practices play in affecting the climate change impacts on potato yield in northwestern New Brunswick, Canada. Our analysis accounted for the yield effects of farm inputs, farm technologies, farm-specific factors, seasonal climatic variables, soil and water conservation practices, and a series of interaction terms between soil and water conservation practices and climatic variables. Regression results were used in combination with three climate change scenarios developed by the Intergovernmental Panel on Climate Change (A2, A1B, B1) and four general circulation model predictions over three 30-year time periods (2011–2040, 2041–2070, and 2071–2100) to estimate a range of potato yield projections over these time periods. Results show that accounting for soil and water conservation practices in climate–yield relationships increased the impacts of climate change on potato yield, with yield increases of up to 38 % by the 2071–2100 period. These findings provide evidence that adoption of soil and water conservation practices can help boost potato production in a changing Canadian climate.

Using a new generalized LMDI (logarithmic mean Divisia index) method to analyze China's energy consumption

As one of the largest energy consumer in the world, China has been facing great pressure to guarantee energy supply security. Investigating the driving forces dominating China energy consumption levels and their evolution may help to institute energy saving policy. Nowadays, the LMDI (logarithmic mean Divisia index) method has become a popular tool to find the nature of the factors that influence the changes in energy consumption. But the LMDI method does not study such factors as fixed asset investment and labor. Combined C-D production function and LMDI method, a new LMDI method is generalized, and that method can be utilized to study many factors. Finally, the new generalized LMDI method is utilized to analyze the driving factors dominating China's energy consumption over the period 1991–2011. Since 1992, China has become a net energy importer. Energy intensity effect played the dominant role in decreasing energy consumption during the study period. However, the investment effect and labor effect were the critical factors in the growth of energy consumption.

Measuring Contributions of Labor, Capital and Technology in Indian Manufacturing Sector - A Cobb Douglas Production Function Approach

The production function method for the measurement of potential output growth takes into account different sources of an economy's productive capacity, namely of labour, capital and total factor productivity later on including information on technological and allocative efficiency. A production function shows the technological relationship between the maximum output obtainable from a given set of inputs and the relationship between inputs in the existing state of technological change. In this paper , a Cobb Douglas form of production function has been used to measure the contribution of labour, capital and technology for Indian Economy. The basic data source of the study was Annual Survey of Industries (ASI) published by Central Statistical Organization (CSO), Government of India covering the period from1999-00 to 2010-11. Findings of the statistical analysis are that out of five sectors, three sectors namely Public Limited Company, Government Department Enterprises and Aggregate Corporate sector had recorded increasing returns to scale and the remaining sectors namely the Private Limited company and the Public corporation recorded decreasing returns to scale. Results also show that percentage share of wages was high compared to the percentage share of capital in all the sectors.

The Impact of Foreign Direct Investment (FDI) on Gross Domestic Production (GDP) in Indian Economy

In this study, an attempt has been made to analyze the effects flow of foreign direct investment (FDI) arising from the implementation of liberalization polices (economic reform) on the gross domestic production (GDP) growth in Indian economy using a Cobb–Douglas production function and ARDL method during the period 1990-2008. The empirical results show that in the long run there exists a long-run relationship among the growth of gross domestic production and its major determinants of the labour force, the real capital and the real foreign direct investment. Finding indicates that foreign direct investment has positive effect but small significant on Gross Domestic Production, while the labour force and capital have had the most effect on gross domestic production.

USING COST-EFFECTIVENESS ESTIMATES FROM SURVEY DATA TO GUIDE COMMISSIONING: AN APPLICATION TO HOME CARE

The aim is to describe and trial a pragmatic method to produce estimates of the incremental cost-effectiveness of care services from survey data. The main challenge is in estimating the counterfactual; that is, what the patient's quality of life would be if they did not receive that level of service. A production function method is presented, which seeks to distinguish the variation in care-related quality of life in the data that is due to service use as opposed to other factors. A problem is that relevant need factors also affect the amount of service used and therefore any missing factors could create endogeneity bias. Instrumental variable estimation can mitigate this problem. This method was applied to a survey of older people using home care as a proof of concept. In the analysis, we were able to estimate a quality-of-life production function using survey data with the expected form and robust estimation diagnostics. The practical advantages with this method are clear, but there are limitations. It is computationally complex, and there is a risk of misspecification and biased results, particularly with IV estimation. One strategy would be to use this method to produce preliminary estimates, with a full trial conducted thereafter, if indicated.

Impacts of soil and water conservation practices on potato yield in northwestern New Brunswick, Canada

We investigated the effects of soil and water conservation practices on mean and variance of potato (<i>Solanum tuberosum</i> L.) yield across 267 fields in northwestern New Brunswick, Canada, from 1988 to 2010. A stochastic production function method was used to account for seven soil and water conservation practices in addition to farm inputs, potato varieties, technological change, site characteristics, and seasonal climate effects. Overall, soil and water conservation structures had mixed effects on potato yield. While spring tillage and terracing increased mean potato yield, grassed waterways, drainage, chisel plowing, and other practices had the opposite effect. Rock management did not impact mean potato yield. Most practices did not impact yield variance. While soil and water conservation practices can be effective farm management tools for maintaining soil fertility and enhancing potato yields, there are no one-size-fits-all prescriptions to enhance yield.

Labor Productivity Growth in the Kansas Farm Sector: A Tripartite Decomposition Using a Non-Parametric Approach

We use nonparametric production function methods to decompose farm-level labor productivity growth into components attributable to efficiency change, technical change, and factor intensity. The estimation is accomplished using balanced panel data drawn from the Kansas Farm Management Association for the period 1993 to 2007. We find that labor productivity growth is primarily driven by factor intensity and technical change. Efficiency change is declining with increasing productivity growth, and technical change is not Hicks-neutral and occurs at high levels of factor intensity, suggesting that innovation is embodied in factor intensity.

Damage Cost of Drying of Aflaj in the Sultanate of Oman

Life style changes, population and economic growth, and lack of institutional innovations are causing noticeable damage to the rural communities living in and around Aflaj. The Ministry of Regional Municipalities and Water Resources (MRMWR) reported more than 1,000 dried-up Aflaj out of 4,112 in 1996. This paper presents an estimation of the damage caused to the rural communities due to Aflaj dry-up. The production function method and the cost based method are used to estimate the direct losses incurred by farmers and the local communities. These are related to (1) losses in marketed agricultural products, (2) increase in domestic water expenditures per household and (3) capital losses related to changes in house and land values. The study considered 33 dried-up Aflaj among the 1029 monitored by the MRMWR. Our results show that on average each family in the dried-up Falaj has lost an income equivalent of O.R 320 per month. This highlights the importance of Aflaj as an income generator in the remote rural areas. Live Aflaj provide fresh vegetables and healthy food as well as drinking water to the rural population without the need for governmental intervention. The contribution of the supporting wells, whenever provided by the MRMWR, is estimated at O.R 1,478 per family per year. On average the annual financial loss per family due to dry-up is estimated at O.R 3,301 per year. The total damage cost of dried-up Aflaj, at the Sultanate level, is estimated at more than O.R 59 million per year.

Estimation of R&amp;D depreciation rates: a suggested methodology and preliminary application

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Technical Efficiency of Agricultural Farms and Capital-Output Ratio: A Study on Jhansi Division of Uttar Pradesh

The increasing use of modern technological inputs like fertilizers, pesticides and manure under the condition of unstable irrigation could be the responsible factors for increasing the agricultural productivity. The mechanical inputs like tractor power, threshers, diesel pumps, electric motors are useful to save time, money and water. These inputs increase the farmer’s income and efficiency. Present study contains the objective to find out the technical efficiency of capital use resources and capital output ratio. In order to find the technical efficiency, the Cobb-Douglas production function method was applied in which Ordinary Least Square (OLS) estimators were converted into the Corrected Ordinary Least Square (COLS) estimators. To examine the technological equality between two districts, Chow Test has been used. The study is on Jhansi, Lalitpur and Jalaun districts of Jhansi division in Uttar Pradesh. Soil type was the main criteria for differentiating the areas for sampling. The selected farm size categories are marginal (up to 2.5 acre land), small (> 2.5 acre land to 5 acre land), and large (> 5 acre land). The study finds that, in selected regions, the maximum percentage of farmers lies in 51% to 60%, 51% to 70%, 71% to 80% and 81% to 90% categories of technical efficiency. But the 61% to 70% and 71% to 80% technical efficiency categories are followed by majority of farm size categories in the selected regions. In Jhansi and Lalitpur districts, marginal and small farmers are used the different amount of inputs but large farmers are used same amount of inputs in two regions. In the case of Jhansi and Jalaun districts and Lalitpur and Jalaun districts, there is no significant difference among the marginal-marginal, small-small and large-large farm size categories in the used amount of different inputs. In selected regions, the individual shares of each input for different categories of farmers are likely to be same to raise the output.

Potential Growth of Australia and New Zealand in the Aftermath of the Global Crisis

Using a production function method, this paper assesses the impact of the global crisis on the potential growth of Australia and New Zealand. The two countries have not been hit hard by the global crisis, but have large net external liabilities. The paper finds that the main negative impact of the global crisis is likely to come through higher costs of capital, offset partly by a higher return to capital from strong demand for commodities by emerging Asia. It estimates medium-term potential growth of about 3 percent for Australia and 2. percent for New Zealand, higher than that of many other advanced economies.

Looking Beyond the Methods: Productivity Estimates and Growth Trends in Indian Manufacturing

Studies on Indian manufacturing have been unable to provide consistent estimates of productivity and its growth rates. This paper performs detailed and exhaustive set of accounting exercises for the period 1970-2003 using production function, index number and envelopment analysis methods. TFP growth rate average is 1.1% for both gross output based and net value added based measures. In gross output production, share of materials is 0.6, much larger than the capital and labor shares. Share of capital is constantly increasing. For the period just after the reforms (1991-1997), input growth jumps but TFP growth is negative. But after 1998, the trend reverses and output grows slowly despite negative input growth due to large TFP growth. Aggregated TFP growth rates (Domar-weighted and Fisher index) also follow the same pattern; showing upward trends after mid- 1990s. There are no significant differences in TFP growth rates among different-sized firms. After the reforms, TFP growth increases substantially in the public corporations. Productivity transition seems to be random across different (3-digit NIC code) industries. Industries with focus towards services experienced higher productivity growth than others. These results show that the lack of productivity growth was the reason for unimpressive performance of Indian manufacturing earlier.

VALUING ECOSYSTEM SERVICES OF CHILEAN TEMPERATE RAINFORESTS

The Valdivian Rainforest Ecoregion (35°–48° S) in southern South America is among the ecosystems with highest conservation priority worldwide due to its rich diversity, degree of endemism, and critical conservation status. Temperate rainforests in this vast area are essential as source of biological resources and to maintain different ecosystem services which remain largely unmeasured and unvalued. Consequently, the benefits they provide are not reflected in decision-making regarding forest management and conservation. Based on existing studies and results from ongoing research we describe selected ecosystem services and provide estimates of their economic value. Timber benefits for secondary forests expressed as net present stumpage values were US$ 3742 ha−1 and US$ 3093 ha−1 for sustainable forest management (SFM) and unsustainable harvesting, respectively. Timber benefits for old growth forests␣equaled US$ 4546 ha−1 and US$ 5718 ha−1, for SFM and unsustainable harvesting, respectively, using an 8% discount rate. Annual benefits from recreation were US$ 1.6 ha−1 and US$ 6.3 ha−1 for the two most important national parks located in the study area. The annual value of maintaining soil fertility was US$ 26.3 ha−1 using the replacement cost of nutrient losses due to soil erosion. The annual economic value of water supply for human consumption using the production function method was US$ 235 ha−1. These results provide valuable information on the kind and magnitude of values that could be relevant in decision-making concerning conservation and management of native forests in the Valdivian Rainforest Ecoregion.

Some Estimates of Potential Output and the Output Gap for South Africa

This paper estimates potential output and the output gap using three methods: the statistical time trend, a Cobb-Douglas production function and the Hodrick-Prescott Filter methods. Estimates of potential output growth rate of the economy are discussed as well as contributions to growth during the period under study, using the production function method. The implied output gap estimates could prove useful in formulating macroeconomic policy in South Africa, as it may indicate underlying inflationary pressure in the economy.

Potential Output in the Czech Republic: A Production Function Approach

This paper deals with the Czech economy supply side performance from the macroeconomic point of view. In order to evaluate the supply side behaviour we calculate the potential output dynamic path and contribution of its particular determinants using the production function method. The results show that the potential output growth was rather slow around 2 per cent. This implies that e. g. even 3 per cent growth can cause macroeconomic imbalances. Increase of the non-accelerating-inflation-rate of unemployment (NAIRU), weak growth of the capital stock and weak growth of total factor productivity appear to be the reasons for the constrained ability of the Czech economy to grow steadily and converge to EU level.

Agglomeration economies in the finnish manufacturing sector

Regional concentration of population and economic activity is a common phenomenon both in Finland and the other most developed countries, which refers to the existence of agglomeration economies. Two types of economies are usually recognized to be important: specialization (Marshall externalities) and diversity (Jacobs externalities) economies. The former refer to the geographical concentration of a specific industry and the latter to the industrial diversity of the local system. This study examines the relationship between agglomeration economies and regional productivity in the manufacturing sector in Finland. A distinction is made between the effects of urbanization and localization economies. The production function method is applied to the manufacturing sub-sectors in the 83 NUTS 4-level regions in 1995 and 1999. The results support the regional specialization more than diversification even if some differences can be seen between the manufacturing sub-sectors.

Evaluating technology programs: tools and methods

This article reviews the analytical tools, methods, and designs being used to evaluate public programs intended to stimulate technological advance. The review is organized around broad policy categories rather than particular types of policy intervention, because methods used are rarely chosen independent of context. The categories addressed include publicly-supported research conducted in universities and public sector research organizations; evaluations of linkages, especially those programs seeking to promote academic-industrial and public-private partnerships; and the evaluation of diffusion and industrial extension programs. The internal evaluation procedures of science such as peer review and bibliometrics are not covered, nor are methods used to projects and individuals ex ante. Among the conclusion is the observation that evaluation work has had less of an impact in the literature that it deserves, in part because much of the most detailed and valuable work is not easily obtainable. A second conclusion is that program evaluations and performance reviews, which have distinctive objectives, measures, and tools, are becoming entangled, with the lines between the two becoming blurred. Finally, new approaches to measuring the payoffs from research that focus on linkages between knowledge producers and users, and on the characteristics of research networks, appear promising as the limitations of the production function and related methods have become apparent.

Using the frontier production function and minimax approaches in measuring productive efficiency: Critical remarks

This paper shows that Aigner and Chu's frontier production function (FPF) method is,at best, a special case of the Farrell method. That is, the FPF method implicitly creates a hypothetical decision-making-unit (DMU) from the original data and uses the frontier evaluating the hypothetical DMU to evaluate all the DMUs, which may make the estimated frontier, efficiency scores and the ranking of DMUs unidentifiable. The paper also shows that one of Sengupta's minimax methods is alsoat best a special case of the Farrell method (i.e., it uses the frontier evaluating the most inefficient DMU to evaluate all the DMUs), and Sengupta's other minimax method cannot produce meaningful efficiency scores and production frontiers. The Farrell method, which uses the whole piecewise linear frontier to evaluate DMUs, is concluded to be better than both the FPF and Sengupta's methods.

Why Production Function Analysis is Irrelevant in Policy Deliberations Concerning Educational Funding Equity

Hanushek and Walberg use production function methodology to contend that there is no relationship between school expenditures and student achievement. Production function methodology uses correlational methods to demonstrate relationships between input and output in an economic system. These correlational methods may serve to hide rather than reveal these relationships. In this paper threats to the validity of these correlational methods for analysis of expenditure-achievement data are discussed and an alternative method of investigation is proposed. The proposed method is illustrated using data from two states (Ohio and Missouri). The method demonstrates relationships between expenditures and achievement that were overlooked by the production function method.

Estimating marginal value of water for irrigated olive grove with the production function method

Economic valuation of irrigation water is done through the use of production functions for the case of the olive grove. In order to do so the integration of an agronomic model (based on the production function) and an economic model linked to the profitability of the crop (the ratio of revenue and operating costs) in the area under study is proposed. The study case encompasses the Guadalbullon River Sub-basin area, belonging to the Guadalquivir River Hydrologic Demarcation (Southern Spain). Within the overall deficit of the Guadalquivir River basin, the Guadalbullon River poses a special problem as it is unregulated and there are important irrigated fields on its banks, most of them olive groves. Net marginal value of water obtained (having deducted the variable costs of production including harvesting and irrigation) is€ 0.60 m–3 for the allocation of 1,000 m3 ha–1 and € 0.53 m–3 for the water right allowance of 1,500 m3 ha–1 (average for period 2005/2008). The results obtained support the recommendation by other authors suggesting the use of deficit irrigation in olive, additionally the high value of water estimated contributes to explain the substantial increase in irrigated olive area in Andalucia.