Scale Efficiency Change Research Articles

Productivity and efficiency in Czech agriculture: Does farm size matter?

This paper deals with the sources of total factor productivity (TFP), namely technical efficiency, scale efficiency, and technological change, considering the size of agricultural producers and using balanced panel data in the period 2014–2018 drawn from the Farm Accountancy Data Network (FADN) database for three sectors of Czech agriculture – cereals, milk, and beef. The investigation is based on the stochastic frontier (SF) modelling of an input distance function (IDF) with four error components (heterogeneity, statistical noise, persistent and transient inefficiency). The sector-specific models are estimated by a four-step estimating procedure with a system generalised method of moments (GMM) estimator to address the endogeneity problem. The results reveal inter- and intra-sectoral differences in productivity drivers. In particular, the smallest producers lag considerably behind the largest ones due to the scale effect (SEC). While large farms should focus on technological change, improvements in scale and technical efficiency have been identified as the main sources of coping with productivity losses for small farmers.

Environmental Regulation, Corporate Economic Performance and Spatial Technology Spillover: Evidence from China's Heavily Polluting Listed Corporations.

The relationship between environmental regulation, technology spillover, and economic performance has been the subject of intense scholarly debate in environmental economics for many years. The famous Porter hypothesis states that environmental regulation promotes both the economic performance and the environmental performance of corporations. However, the existing literature has paid relatively little attention to micro-level research and spatial spillover effects. This article endeavors to fill this gap by an empirical analysis of a sample of 900 of China’s heavily polluting listed corporations for the period of 2013–2016. By utilizing spatial econometric methods to measure spatial direct and indirect effects and decomposing total factor productivity change into technical change, pure efficiency change, and scale efficiency change, we find that environmental regulation promotes corporate total factor productivity but widens the disparity between profitable and unprofitable corporations. Our results also suggest that the direct and indirect effects of environmental regulation and corporate profitability on promoting total factor productivity rely heavily on the efficiency changes, while the contribution of the key component, technical change, is insignificant.

Evaluation of Manufacturing Innovation Performance in Wuhan City Circle Based on DEA‐BCC Model and DEA‐Malmquist Index Method

The innovation performance of the manufacturing industry in the Wuhan city circle is evaluated based on the relevant data from 2018 to 2020 in 9 cities of Hubei Province within the Wuhan city circle using the DEA‐BCC model, the DEA‐Malmquist index method, and the location quotient method. This article measures the agglomeration level of innovation elements in the Wuhan city circle, constructs a performance evaluation index system including two input indicators: R&D expenditure and R&D personnel, and two output indicators: new product sales revenue and number of patent applications; evaluates the innovation performance of 27 manufacturing industries in the Wuhan city circle from five aspects: technical efficiency change (effch), technical progress change (techch), pure technical efficiency change (pech), scale efficiency change (sech), and total factor productivity change (tfpch), and compares and analyzes the innovation performance of Wuhan, Xianning, Xiantao, and Tianmen using the DEA‐BCC model and DEAP 2.1. The results show that the agglomeration level of talent elements in the Wuhan city circle is between 0.24 and 1.75, and the agglomeration level of capital elements is between 0.23 and 1.52. The differences between regions are obvious, the degree of coordination is low, and the radiation effect of Wuhan is insufficient. The average value of technological progress is 1.274, which is vital to enhance the innovation performance of the Wuhan manufacturing industry. The technical efficiency dropped by 65%, but the total factor productivity fell only 13%, indicating that the technical efficiency value is not the main factor affecting the innovation performance of Wuhan. The innovation performance of high‐tech and high‐value‐added industries such as computer, communication, and other electronic equipment manufacturing industries is relatively high, while the innovation performance of low‐tech and low‐value‐added industries such as agricultural and sideline food processing industry and textile industry is relatively low. The innovation performance of Xianning, Xiantao, and Tianmen is higher, while the relative technological inefficiency caused by the low‐scale efficiency value adversely affects the innovation performance of Wuhan. The results indicate that increasing the scale of manufacturing innovation investment can effectively enhance the innovation performance of the Wuhan city circle manufacturing industry.

Total Factor Productivity Growth of Ghanaian Electricity Distribution Utilities Using Data Envelopment Analysis and Malmquist Index (2000–2020)

The increasing need for electricity access to drive economic growth, social development, poverty alleviation and environmental sustainability requires that efficient allocation of scarce and competing resources in the generation, transmission and distribution subsectors of the electricity sector is indispensable. This paper analyses total factor productivity growth in a single input multiple-output framework in Ghana. The technique applied is data-orientated nonparametric Data Envelopment Analysis using Win4Deap 2 software. Total Factor Productivity Change is evaluated through Malmquist Productivity Index (MPI), as well as technological change (TECHC) and efficiency change (EFFCH) using firm-level panel data. Sources of productivity growth comparison are made between Electricity Company of Ghana (ECG) and the Northern Electricity Distribution Company (NEDCO) for the periods 2000 to 2020. The results show TECHCH marginally declined at an average annual rate of 0.3% and drives the electric power distribution productivity regress in ECG and NEDCO from 2000 to 2020. Further, the results indicate stagnation in scale efficiency, pure efficiency and efficiency change when estimated over 20 years. At firm levels comparison, the study shows that the Northern Electricity Distribution Company recorded a productivity growth rate of 4.9%, mainly due to technical progress. However, the Electricity Company of Ghana experienced a slight deterioration of productivity performance due to a 5.3% decline in technical efficiency. The study offers several policy recommendations on how the underperforming firm can learn to improve efficiency and technical to reduce electricity transmission losses.

Combining parametric and non-parametric approach, variable & source -specific productivity changes and rebound effect of energy & environment

In light of that the existing literature rarely investigated the impact mechanism of endogenous Total Factor Productivity (TFP) on rebound effect (RE), this paper develops a non-parametric framework variable-specifically and source-specifically, mixing econometric model and Data Envelopment Analysis (DEA). The total-factor nature allows incorporating multiple input and output variables, and further heterogeneity analysis. The method decomposes TFP (defined as dynamic inefficiencies changes) into pure & scale efficiency change (PEC & SEC), pure & scale technological progress (PTP & STP). On this basis, we estimate the rebound effect value of energy and environment variables relative to PEC, SEC, PTP and STP. Empirically, we apply the novel approach to China's 34 industrial sub-sectors, throughout 2004–2015. Results indicate that the RE can be adjusted by controlling the PEC, SEC, PTP and STP jointly. Hence, the excess rebound effect can be achieved across the whole country if the proper policy regulations can be considered, following our conclusions.

Economic size and water use efficiency: an empirical analysis of trends across China

Abstract Water shortage is a global risk that could arguably be mitigated using water more efficiently. However, the profound relationship between water use efficiency and regional economic size has not been empirically tested. The research design employed an exploratory empirical analysis done through non-linear curve function and attempted to analyze the evolution of water use efficiency over economic growth. First, the water use efficiency change was decomposed into pure technical efficiency change, scale efficiency change, and technological advance change. Second, the scale efficiency is generally less than 1, revealing that it is the main reason for the decreased water use efficiency by the empirical analysis of trends across China. Third, the fitting function between water use efficiency and economic development was constructed. The results supported the existence of an inverted-S shape between water use efficiency and regional economic growth. This analysis will be the reference to formulate scenarios for economic and demographic growth coupled with water use, particularly for planning and managing future water provision and demand.

The efficiency of provincial government health care expenditure after China’s new health care reform

ABSTRACT By drawing on the panel data of health care inputs and outputs from 31China’s provinces in the period 2004–2020, we apply the Malmquist DEA model to measure the TFP, TC (Technology change), EC (Efficiency change), PEC (Pure efficiency change or pure technical efficiency change) and SEC (Scale efficiency change) of the provincialgovernment’s health care expenditure. We find that the average TFP of China’s 31 provincial health care expenditure was lower than 1. We note this applies irrespective of the implementation of NHCR (New Health Care Reform), and also observe the average TFP was much higher after NHCR was implemented.

JODRIVERS OF ECONOMIC PERFORMANCE: WHAT CAN WE OBSERVE IN THE CZECH FOOD INDUSTRY?

This paper is focused on the investigation of the competitiveness drivers, namely technical and scale efficiency and technological change, and their relation to the profitability of the Czech food processing companies in the period 2016–2019. This investigation is based on the stochastic frontier modelling of an input distance function in the specification of the four-error-component model. The model is estimated with a multi-step procedure employing the generalized method of moments estimator addressing the potential endogeneity of netputs, and panel data gained from the Bisnode Albertina database. The results revealed (evaluated on the sample mean) that investigated food processing sectors were scale efficient in the analysed period, however, their production technologies exhibited prevailing technological regress. Moreover, the room for almost 17% cost reduction by the technical efficiency improvements was found out in all investigated sectors. Although inter-sectoral differences exist in the scale efficiency, technological change and technical efficiency dynamics, to increase the productivity and competitiveness of food processing companies, it is generally appropriate to focus on technical efficiency and technological change improvements. Both these competitiveness drivers connected with the cost reduction and minimizing of wastage of inputs are achievable through innovations. In general, the basic source of their financing is profit, the achievement of which is supported by cost minimization. However, it was found that sub-sectors, which are linked to sensitive sectors of agricultural production – that means sectors with the lowest national self-sufficiency, the highest level of imports and thus strong cost reduction pressure – have problem to translate the ability to produce efficiently into profitability. Although these food sectors, which have been also facing strong competition for a long time, which leads to significant pressure to reduce costs, achieved the highest technical efficiency, their profitability was lowest from the investigated sectors.

TOTAL FACTOR PRODUCTIVITY GROWTH IN CHINA’S CORN FARMING: AN APPLICATION OF GENERALIZED PRODUCTIVITY INDICATOR

Total factor productivity (TFP) growth measures usually focus on a certain direction of optimization and ignore the general setting encompassing the input and output orientations simultaneously. This paper uses the generalized Luenberger-Hicks-Moorsteen (LHM) TFP indicator which is additively complete and can be decomposed by three mutually exclusive elements. The input- and output-oriented analysis is undertaken in order to derive the generalized TFP measured. The paper uses the corn production data from 19 Chinese provinces over the period of 2004–2017. This research is important as China is the second largest corn producer in the world. The TFP growth was observed for Chinese corn farming the rate of 0.56% per year. The technological progress (0.48%) was the major source of the TFP growth, whereas the importance of the technical efficiency change (0.09%) and scale efficiency change (–0.01%) was negligible.

Women's empowerment in agriculture and productivity change: The case of Bangladesh rice farms.

Using productivity change as a measure of farm economic performance, we analyze the relationship between women’s empowerment in agriculture and farm productivity change and its components, which include efficiency change, technological change, and scale efficiency change. A non-parametric Malmquist approach is used to measure farm specific productivity change and its decomposition. We use a bootstrap regression to analyze factors that cause differences in productivity change and its components, testing, in particular, the role women’s empowerment plays. The empirical application focuses on a sample of Bangladesh rice farms over the crop cultivation period 2011 and 2014. Results suggest that improvements in women’s empowerment in agriculture were associated with higher levels of productivity change, efficiency change, and technical change, while they had no impact on scale efficiency change. We find that empowering women, specifically, improving their ability to make independent choices regarding agricultural production had a statistically significant positive association with productivity change, efficiency change, and technical change. We also find that lowering the gender parity gap is positively related with improving productivity of the sample farms.

Green development of China\u2019s Pan-Pearl River Delta mega-urban agglomeration

Mega-urban agglomerations in developing countries have been main parts of economic development. But at the same time, they have become the most prominent and sensitive areas of resource and environment problems. It is important to clarify the mechanism and driving factors of green growth in mega-urban agglomerations. Based on the panel data of 28 major cities in China's Pan-Pearl River Delta urban agglomeration from 2006 to 2015, this paper evaluates the level of green development of urban agglomeration by green total factor productivity index (GTFP) based on Global Malmquist DEA model, and decomposes GTFP into technological progress, pure technical efficiency change, scale efficiency change and technological scale change. On this basis, this paper constructs a panel econometric model to analyze the influencing factors of GTFP and its decomposition factors. The results show that GTFP of Pan-Pearl River Delta urban agglomeration is growing, and the scale effect caused by technological progress is the main driving factor. Green development in the Pearl River Delta urban agglomeration takes into account efficiency and regional fairness, which causes differences in GTFP growth patterns of sub-urban agglomerations within mega-urban agglomerations. The technological progress and technical efficiency improvement are becoming the main driving force of GTFP growth in relatively backward areas. Furthermore, according to the influencing factors of GTFP and its decomposition factors, mega-urban agglomeration should eliminate internal administrative barriers to build an integrated market. It should also increase the proportion of technology industries in core cities, and give full play to the role of technology spillover effect on surrounding cities. In addition, improving the efficiency of resource and energy utilization is also helpful to promote the transformation of urban agglomeration development from factor-driven to efficiency-driven and innovation-driven. Our research results have implications for the coordinated development of economy and environment in developing countries.

Efficiency of Moroccan banks: A Data Envelopment Analysis approach

In a competitive environment, the quest for efficiency becomes an imperative for each firm in order to maintain its competitiveness within the sector in which it operates. The financial firm has its own particularities but does not escape this efficiency objective. In order to measure this efficiency, the literature highlights several approaches and methods, however, among the different frontier-based efficiency analysis methods used in the literature, data envelopment analysis has shown its power to be applied to different types of studies and in different contexts Paradi & Zhu (2013). The purpose of this article is to evaluate the efficiency of Moroccan banks during the period 2017-2019. DEA Analysis was conducted with an input orientation and a variable return to scale assumptions. The choice of an input orientation is motivated by the fact that it is believed that banks can control and rationalize inputs more than outputs. On the other hand, it is believed that banks operate in different scales which motivate the choice of a variable returns scale. The meta-frontier tests were combined with the Malmquist index to analyze the total productivity change over time. The results show that indeed Moroccan banks operate in a variable return to scale. Also, it was found that the average efficiency of all banks has changed over the study period. However, the scores recorded remain low and show that there is a serious inefficiency that needs to be corrected. For the analysis of the Malmquist index, it appears that the average improvement in total productivity of banks during the three years studied is not the result of technological innovation, but rather of the change in scale efficiency and pure efficiency; however, total productivity did not improve significantly throughout this period.

Analisis Efisiensi Sektor Pariwisata di Jawa Tengah

Tourism sector as one of the sectors that relied on the government for the reception area of Central Java is required to be able to explore and manage potential owned tourism. This reseacrh was aimed to analyze the level of efficiency and productivity in the tourism sector in Central Java between 2017 and 2019 with a sample of 35 districts/cities. The analysis was carried out using the concept of efficiency based on production theory, the measurement of efficiency and productivity values was obtained using the Data Envelopment Analysis (DEA) and Malmquist Productivity Index (MPI) analysis methods. The assumptions used are variable return to scale (VRTS) and output oriented model. With a variable input of tourist objects, restaurants, travel agencies and hotels. The output variables in this study are tourists and tourism sector income. The final result of the reseacrh shows that there were 16 districts/cities (45.8%) in 2017, 18 districts/cities (51.4%) in 2019 that achieved full technical efficiency. The total factor productivity change indicates that 22 districts/cities (62.8%) are approaching the frontier in both the production frontier and the efficiency frontier and from the scale efficiency change indicates that there are 17 districts/citi.

Production efficiency and change characteristics of China's apple industry in terms of planting scale.

The global population is rapidly increasing, the arable land area is losing in a large scale, and the water supply capacity is limited. Meanwhile, China is in a critical period of the transformation of apple industrial structure, and the improvement of apple production efficiency is an important way to increase farmers' output and income, moderate-scale operation is the inevitable trend in agricultural modernization. However, few studies have explored the production efficiency of the apple industry from the perspective of planting scale. In China, there are seven major apple-producing provinces: Shaanxi, Shandong, Gansu, Henan, Shanxi, Hebei, and Liaoning. Therefore, based on provincial panel data of the seven main apple-producing areas in China, this study used the Malmquist productivity index and data envelopment analysis to measure the efficiency level of the apple industry. At the same time, the threshold regression model was used to analyze the characteristics of the change in apple planting scale and production efficiency. The results showed that apple production efficiency in different regions of China exhibited regional differences and time series fluctuations. Apple planting scale had a "double" threshold effect, and the impact on apple production efficiency showed a "negative effect-positive effect" trend. Therefore, the suggestion is to appropriately adjust the scale of operation, take measures according to local conditions, promote the upgrading of apple production technology, and realize the integration of apple production and sales by using "Internet +."

The effect of resource abundance on Chinese urban green economic growth: A regional heterogeneity perspective

AbstractThis paper proposes a slacks‐based global DEA for Chinese urban green economic growth (GECO) and a global Malmquist index for decomposing its changes into three components, technology change (GTEC), scale efficiency change (GSEC), and pure technical efficiency change (GPEC). On this basis, using China's 286 city‐level panel data for the period 2006–2018, this paper then analyses the key driving factors of GECO and the regional heterogeneous effects of resource abundance on GECO. Results show that: (a) during the sample period, the city‐level GECO of China remains at a low level. GTEC and GSEC promote GECO, but much of this growth effect is offset by a reduction in GPEC; (b) there is negative effect of resource abundance on Chinese urban GECO. Specifically, in eastern, central, and western cities, the negative effect on GECO by adversely affecting GSEC and GPEC, while in northeast cities, the main transmission is GTEC; (c) because the key factors which affect the decompositions show different characteristics from regional heterogeneity perspective, this paper takes further step to formulate specific strategies and effective implementation of policies for the improvement of GECO in China's city level.

How to improve total factor energy efficiency? An empirical analysis of the Yangtze River economic belt of China

This study employs a Luenberger-Hicks-Moorsteen productivity indicator to measure the total factor energy efficiency (TFEE) of the Yangtze River Economic Belt (YREB) of China from 2005 to 2016. The relative importance analysis method is used to investigate the driving forces of the TFEE. The main results are as follows. (a) The TFEE has an average growth rate of 3.3% during the study period. The TFEE declines first, then rebounds, and declines again. The contribution of technological efficiency changes to the TFEE growth is almost zero which indicating no catch-up effect in the sample period. Technological progress contributes a negative impact to the TFEE, with an average annual decrease rate of 3.4%. The scale efficiency changes, with an average annual growth rate of 6.7%, are extremely important for the growth of TFEE. (b) The TFEE of the western region is narrowing the gap with the central and western regions, while the gap between the central region and the eastern region is increasing. (c) Research investment can improve the growth of TFEE significantly, while government expenditure and industrial structure are not. And government expenditure, economic development, and research investment are top factors to explain the variation of TFEE.

Does Energy Efficiency Affect Ambient PM2.5? The Moderating Role of Energy Investment

The difficulty of balance between environment and energy consumption makes countries and enterprises face a dilemma, and improving energy efficiency has become one of the ways to solve this dilemma. Based on the data of 158 countries from 1980 to 2018, the dynamic TFP of different countries is calculated by means of the Super-SBM-GML model. The TFP is decomposed into indexes of EC (Technical Efficiency Change), TC (Technological Change) and EC has been extended to PEC (Pure Efficiency Change) and SEC (Scale Efficiency Change). Then the fixed effect model and the fixed effect panel quantile model are used to analyze the moderating effect and the exogenous effect of energy efficiency on PM2.5 concentration on the basis of verifying that energy efficiency can reduce PM2.5 concentration. We conclude, first, the global energy efficiency has been continuously improved during the sample period, and both technological progress and technical efficiency have been improved. Second, the impact of energy efficiency on PM2.5 is heterogeneous which is reflected in the various elements of energy efficiency decomposition. The increase in energy efficiency can inhibit PM2.5 concentration and the inhibition effect mainly comes from TC and PEC, but SEC promotes PM2.5 emission. Third, energy investment plays a moderating role in the environmental protection effect of energy efficiency. Fourth, the impact of energy efficiency on PM2.5 concentration is heterogeneous in terms of national attribute, which is embodied in the differences of national development, science and technology development level, new energy utilization ratio, and the role of international energy trade.

Productivity growth, economies of scale and scope in the water and sewerage industry: The Chilean case.

Evaluating the performance and analyzing the cost drivers of water utilities is of great interest for water regulators and water sector managers. This study uses a quadratic cost function to investigate the existence of economies of scale and scope in the Chilean water and sewerage industry over the period 2010-2017. We also estimate and decompose productivity growth into technical change and scale efficiency change. Technical change is further broken into pure, non-neutral and scale-augmenting technical change. The results indicate that cost savings can be achieved by increases in the scale of production and the separation of water and sewerage services. Productivity progressed favorably throughout the whole period at an annual rate of 8.4%, which was attributed to the scale effect, the adoption of new technologies and a good allocation of resources. Some policy implications are finally discussed based on our findings.

Drivers of productivity change: a comparison of English and Welsh water only and water and sewerage companies

ABSTRACT In regulated industries, such as the water industry, it is of great significance to estimate productivity change as it helps policy makers to evaluate the effectiveness of regulatory regime and industry performance. In this paper, and for the first time, a translog input distance function was used to estimate and decompose productivity change into several components such as technical efficiency change, scale efficiency change, input-mix, and technical change. A further decomposition of technical change into neutral, output- and input-induced shifts of the frontier is provided. The above decomposition was applied to the English and Welsh water and sewerage companies and water only companies over the years 1993–2016. The results indicated that over the entire period water industry’s productivity increased by 9% per year, mainly due to scale efficiency change, input mix and technical change. On average water only companies reported higher productivity gains than water and sewerage companies.

Total factor productivity growth and its decomposition in the Chinese construction industry since China's accession to the World Trade Organization

PurposeSince China's accession of the World Trade Organization (WTO), its construction industry has attained unprecedented growth. However, for the sources of this enormous growth, a controversy regarding the total factor productivity growth (TFPG) still remains in production practice and extant studies. In view of this, the purpose of this paper is to measure TFPG and to explore its sources in the industry post-WTO accession.Design/methodology/approachThis study presents an innovative source analysis of TFPG. Stochastic frontier approach is adopted to measure TFPG and to explore its sources by decomposing TFPG into technical progress (TP), technical efficiency change (TEC), allocative efficiency change (AEC) and scale efficiency change (SEC). Although China joined WTO in 2001, to provide an effective baseline, the study period is from 2000 to 2017.FindingsThe empirical results reveal that TFPG presented an overall downward evolutionary trend, but it still maintained a high growth post-WTO accession. From the perspective of decomposition, TP was the main source of TFPG. Furthermore, as a neglected source, interaction effects among TP, TEC, AEC and SEC have been demonstrated to have a significant influence on the cumulative TFPG.Practical implicationsTo make the results be reliable, the authors discuss the empirical findings mainly by revealing the reasons behind the evolutions of TFPG and its sources. Based on these revealed reasons, government and policy makers can further refine and summarize some more detailed and targeted policy implications to improve TFPG.Originality/valueBy providing many empirical evidences to solve the aforesaid TFPG controversy, this paper, therefore, enriches the body of knowledge on growth theories, especially at the level of industrial economics.