Role In Productivity Growth Research Articles

The fallacy in productivity decomposition

This paper argues that the typical practice of performing growth decompositions based on log-transformed productivity values induces fallacious conclusions: using logs may lead to an inaccurate aggregate growth rate, an inaccurate description of the micro sources of aggregate growth, or both. We identify the mathematical sources of this log-induced fallacy in decomposition and analytically demonstrate the questionable reliability of log results. Using firm-level data from the French manufacturing sector during the 2009–2018 period, we empirically show that the magnitude of the log-induced distortions is substantial. We find that around 60–80% of four-digit industry results are prone to mismeasurement depending on the definition of accurate log measures. We further find significant correlations of this mismeasurement with commonly deployed industry characteristics, indicating, among other things, that less competitive industries are more prone to log distortions. Evidently, these correlations also affect the validity of studies investigating industry characteristics’ role in productivity growth.

A decomposition analysis of total factor productivity growth in MENA countries: stochastic frontier analysis approach

ABSTRACT The present study aims to examine the output and total factor productivity (TFP) growth by estimating a stochastic frontier production function for a panel of Middle East and North Africa (MENA) countries, and to decompose TFP growth into technical change, technical efficiency, and scale efficiency. The empirical findings reveal that, while factor accumulation is the main driver of output growth in the MENA region, TFP growth is increasingly accounting for a respectable proportion of output growth, with improved technical efficiency playing a crucial role in productivity growth. Specifically, the average annual TFP growth is found to be 0.846%, with positive contributions from technical efficiency and scale efficiency. However, the results show that technical progress has had a negative impact on TFP growth. The positive growth in technical efficiency suggests that the countries are catching up towards the optimal production frontier. At a disaggregated level, oil-rich countries registered negative effects of technical progress, while non-oil countries registered negative effects of scale efficiency. Technical efficiency, however, accounts for the largest positive factor in TFP growth in both oil and non-oil country groups.

Mapping SME productivity research: a systematic review of empirical evidence and future research agenda

Small and medium-sized enterprises (SMEs) are the lifeblood of economies around the world. They play an important role in productivity growth, which is crucial for developed economies as they adjust to major trends such as the industrial revolution, an ageing population and changes in the nature of work. This study maps the SME productivity research landscape by way of a systematic literature review focusing on the direct, indirect and mediating/moderating factors that enable or constrain productivity in SMEs. We review 109 empirical studies and highlight the fragmented nature of the extant research in this field. Our thematic analysis identifies six key themes, namely organisational environment, organisational capabilities, investments, types of innovation, external knowledgebase and commercialisation. By taking stock of existing knowledge, we highlight critical gaps and methodological issues that limit our understanding of SME productivity. We propose a future research agenda to address current shortcomings and advance knowledge on this topic. Implications for policy are also discussed.

Role of Productivity Growth in Economic Growth: Evidence from Nigeria (1970–2010)

The Global Conference for Wikimedia and The Economist held in London, 2014, ranked Nigeria as the largest economy in Africa using the nominal gross domestic product. But, income redistribution, equality and productivity improvements, which are indicators for the development of an economy, remain at large. Against this background, the study is set to examine the extent to which the positive trend experienced in economic growth has translated into development in Nigeria; this is with a view to ascertaining the effect of growth translating into economic development. With particular emphasis placed on the productivity patterns in Nigeria, the study determined the contribution of productivity growth and economic growth as well as the causal relation between both variables. Using the concept of productive efficiency as a major determinant, the autoregressive distributed lag (ARDL) and Granger causality estimates were employed. It was discovered that a unidirectional existed between both variables. Moreover, it was discovered that productivity growth contributed positively to real economic growth and negatively to nominal economic growth. This result implies that the presence of innovations through technology has augmented productivity intricately but not so visibly in Nigeria.

The Differential Effects of Population Aging on Provincial GDP Per Capita and the Role of Productivity Growth as a Possible Offset

A shift in population distribution toward older ages is underway in industrialised countries throughout the world and will continue well into the future. We provide a framework for isolating the pure effects of population aging on per capita GDP, employ the framework in calculations for the ten provinces of Canada, and derive the rates of productivity growth required to offset those effects. For comparison, as possible alternative offsets, we consider also some changes relating to the supply of labour.

Financial Aid and Higher Education Dropout in Colombia

One of the reasons for a government to support an education system is its role in productivity growth of its citizens and nation’s economic development. Although in some less-developed countries, such as Colombia, there is low levels of non-participation in primary and secondary education, there are high levels of dropout in higher education. The Colombian educational loan system experienced some changes to comply the 2010 National Agreement to Reduce Dropout. This paper analyzes the behavior of higher education dropout and its relation with financial aid before and after this Agreement. By means of a discrete-time logit model and a difference-in-differences approach, there is evidence that loans conditions after the National Agreement would not have achieved its goal.

Role of R&D in the productivity growth of Korean industries: Technology gap and business cycle

The gap between the productivity of the Korean economy and that of advanced economies has narrowed considerably in the manufacturing sector while remaining large in the service sector. Using a panel of Korean industries, this paper assesses the determinants of Korea's productivity growth. Our empirical analysis finds that (i) labor productivity has converged across industries, (ii) research and development (R&D) investment has played an important role in fostering productivity growth, and (iii) the productivity impact of R&D is stronger in more advanced industries (i.e., industries that are close to the technology frontier) and during economic downturns. The implication is that for more developed economies, such as Korea's, in which innovation plays a key role in productivity growth, R&D spending is best focused on more advanced industries and timed counter to the business cycle.

Total Factor Productivity Growth in Local Enterprise Partnership Regions in Britain, 1997–2008

Harris R. and Moffat J. Total factor productivity growth in Local Enterprise Partnership regions in Britain, 1997–2008, Regional Studies. This paper decomposes aggregate total factor productivity (TFP) growth in Britain for 1997–2008 to show the contribution of different Local Enterprise Partnerships (LEPs) as well as manufacturing and services and UK- and foreign-owned plants within LEPs. These contributions are further decomposed to show the role of productivity growth in continuing plants vis-à-vis reallocations in output shares. The results show that the largest LEPs, in population terms, with higher levels of job density, a greater reliance on manufacturing, more skilled and better qualified workers, and a lower turnover of businesses achieved the highest TFP growth. This is mostly the result of reallocations of output shares towards high productivity plants.

Information Technology, Organizational Transformation and Productivity Growth: An Examination of the Brynjolfsson–Hitt Proposition

This study investigates what happened to productivity growth during the Information Technology (IT) revolution in an IT‐driven economy, Korea. To this end, we have decomposed the source of productivity growth into technological change, technical efficiency and scale economies using a stochastic frontier function and examined how the composition of productivity growth has changed with different phases of IT developments. We have used panel data that is comprised of 4022 firms from 1996 to 2000. We have found that Korean firms have been quick to embrace organizational restructuring to adapt to a new business environment brought about by IT, which seems to be the major source of the success of Korean firms. We have also found that: (i) there is no substantial difference in productivity gains between IT‐producing firms and IT‐using firms; (ii) productivity growth is more robust to business cycles in an IT‐driven economy than in the traditional economy; and (iii) efficiency improvement attributed to organizational transformation plays a greater role in productivity growth as IT applications become more widespread.

Productivity growth of East Asia economies' manufacturing: A decomposition analysis

Applying a stochastic production frontier to sector-level data within manufacturing, this paper examines total factor productivity (TFP) growth for seven East Asian economies during 1963–98, using both single country and cross-country regressions. The analysis focuses on the trend in technological progress (TP) and technical efficiency change (TEC), and the role of productivity change in economic growth. The empirical results reveal that although input factor accumulation is still the main source for East Asian economies' growth, TFP growth is accounting for an increasing and important proportion of output growth, among which the improved TEC plays a crucial role in productivity growth.

The role of productivity growth and farmers’ income protection policies in the decline of relative farm prices in the United States

The paper emphasizes three interrelated questions about the decline in relative farm to non-farm prices in the United States since 1973: (1) Is it unusual, (2) What caused it, and (3) Is it likely to continue? We find that based on historical and international evidence this phenomenon may be considered unusual. Separating farm price and income support in 1973 and growing relative productivity in agriculture have been the major contributors to changing the trend of the relative farm goods inflation. This trend is likely to continue based on predicted steady growth of relative agricultural productivity and continuation of direct payments and other forms of farm income support policies.

Growth of factor productivity in the Turkish manufacturing industry at provincial level

Karadağ, M., Önder, A. O. and DElİktaş, E. (2005) Growth of factor productivity in the Turkish manufacturing industry at provincial level, Regional Studies 39 , 213–223. This paper estimates the total factor productivity (TFP) change of the private and public sectors in the Turkish manufacturing industry in the selected provinces for 1990–98. It uses data envelopment analysis to compute Malmquist productivity indices decomposed into two components, namely efficiency change and technical change. The results show that many of the provinces show improvement in TFP on average for the public sector, while in the private sector, only half the provinces show growth in TFP. Overall evidence of catching up can be observed only in the private sector. The results also reveal that technical progress plays the main role in productivity growth.

Mapping the Two Faces of R&D: Productivity Growth in a Panel of OECD Industries

Many writers have claimed that research and development (R&D) has two faces. In addition to the conventional role of stimulating innovation, R&D enhances technology transfer (absorptive capacity). We explore this idea empirically using a panel of industries across twelve OECD countries. We find R&D to be statistically and economically important in both technological catch-up and innovation. Human capital also plays an major role in productivity growth, but we only find a small effect of trade. In failing to take account of R&D-based absorptive capacity, existing U.S.-based studies may underestimate the return to R&D.

Mapping The Two Faces Of R&D: Productivity Growth In A Panel Of OECD Industries

Many writers have claimed that R&D has two 'faces'. In addition to the conventional role of stimulating innovation, R&D enhances technology transfer by improving the ability of firms to learn about advances in the leading edge ('absorptive capacity'). In this paper we document that there has been convergence of TFP within a panel of industries across thirteen OECD countries since 1970. Furthermore, we find evidence that both R&D and human capital appear statistically and economically important in this catch up process as well as stimulating innovation directly. Trade, by contrast, plays a more modest role in productivity growth.

Energy use and productivity performance in the Nigerian manufacturing sector (1970‐90)

This paper investigates the relationship between productivity performance and energy consumption in the Nigerian manufacturing sector at both aggregated and disaggregated levels.It adopts a non‐parametric approach to the measurement of total factor productivity (TFP). It then specifies a regression model linking the estimated TFP growth with changes in energy use. The objective is to examine the impact of energy‐pricing policy on efficiency in the manufacturing sector.The paper establishes that energy consumption still plays a critical role in productivity growth in the Nigerian manufacturing sector. However, the recent price reforms in the energy sector can only achieve meaningful results if accompanied by technological reforms in the manufacturing sector. The industrial sector is still dominated by old energy‐inefficient technology.However, there are prospects for enhancing energy efficiency in the long run. When prices are allowed to signal the real cost of an input, producers would not only become efficient in energy use, but would also be able to select appropriate input combinationsthat minimised their costs of production. Long‐term investment would also be committed to energy‐saving equipment.Furthermore, the development of the gas sub‐sector may also provide an alternative source of energy to many firms.

Productivity growth in Illinois electric utilities

The purpose of this paper is to study productivity growth in Illinois electric utilities. We develop an input based Malmquist productivity index which makes use of Shephard's input distance functions. Our Malmquist productivity index does not require that firms be revenue maximizers or cost minimizers or that information be available on input prices. Moreover, our productivity index accounts for changes in technical efficiency as well as changes in the frontier technology. Linear programming techniques are used to calculate the Malmquist productivity index for a sample of 19 coal-fired steam electric generating plants in Illinois during 1975–1981. On average, rates of productivity growth are relatively stable but statistically significant productivity slowdown is found for the period of 1976–1977. The major contribution to this productivity slowdown is due to technological regress in that period. At the plant-specific level, we found that there are considerable variations in changes in both efficiency and technology and that efficiency change plays a major role in productivity growth. Our results suggest that neglecting technical efficiency in the analysis of productivity growth may lead to inappropriate conclusions.