Variation In Total Factor Productivity Research Articles

ICT development and total factor productivity growth

Total factor productivity (TFP) is essential for disentangling the determinants of economic growth, productivity, and the standard of living. Understanding the variations in TFP, however, is greatly challenging because of the many assumptions that comprise the theoretical growth framework. In this paper, we aim to explore the determinants of TFP growth for countries at different stages of information and communication technology (ICT) development. To address the endogenous nature of the associated growth variables, we implement a three-stage-least (3SLS) square panel regression to improve the efficiency and asymptomatic accuracy of the estimators. We find that transmission channels, such as financial openness and trade globalization, have contributed substantially to growth in both advanced and developing countries. However, we also discover that greater financial openness can undermine a country’s TFP growth if the financial system is not sufficiently developed. When time horizons are decomposed into pre-ICT development and post-ICT development periods, a significant crowding-out effect is observed between ICT investment and financial openness in the pre-period, implying that the allocation of resources is critical for countries in the developing stage. Trade and finance policies that are adopted by advanced and developed countries might not be ideal for underdeveloped countries. Discretion in choosing adequate policies regarding financial integration and trade liberalization is advised for these emerging countries.

Does the air pollution joint prevention and control policy possess the Porter effect in China -evidence from two perspectives

In order to fundamentally get rid of the plight of air pollution, China has introduced and implemented a series of joint prevention and control (AJPC) policies on air pollution. The Porter hypothesis emphasizes that environmental policies can create both environmental and economic dividends, building a win-win prospect for energy efficiency and economic growth, that is the Porter effect. However, the Porter effect of AJPC has not received the attention it deserves. Therefore, we empirically studied the short- term and long-term Porter effect of AJPC. Firstly, using the data of 283 prefecture-level cities, we studied the short-term Porter effect of AJPC by applying Propensity Score Matching Difference-in-Difference model (PSM-DID). Then, Data Envelopment Analysis (DEA) was used to estimate the potential Porter effect of AJPC, that is, the potential economic and environmental dividends of AJPC. In addition, we also calculated regional Global Malmquist Luenberger (GML) to observe variations in total factor productivity to observe the technology change caused by AJPC. Results showed that, AJPC policy has not realized Porter effect from the short-term perspective. In the long run, AJPC has environmental dividends but no economic dividends. In other words, there is no long-term Porter effect with AJPC. The implementation of AJPC policies can increase regional total factor productivity, in which technical efficiency is improved but technological progress remains unchanged.

Exploring firm-level and sectoral variation in total factor productivity (TFP)

PurposeThe objective of the study is to identify and explore factors affecting the productivity of companies in the Czech Republic with a focus on the role of firm size, firm age, indebtedness and long-term negative equity, efficiency of assets usage, liquidity, legal form, location and sector affiliation.Design/methodology/approachThe study utilizes a large unbalanced panel dataset of 91,257 firms (548,998 observations in total) covering the period 2000–2019. The dependent variable, i.e. total factor productivity (TFP), reflecting the overall firm productivity, was estimated by ordinary least squares (OLS) regression. The main findings were obtained through the estimation of two econometric models explaining the effects of factors on firm-level TFP. First, the OLS regressions together with Nomenclature of Territorial Units for Statistics (NUTS) 3 regions, year dummies and robust standard errors were estimated. Second, as a robustness check, the very same model was estimated with the random effects (RE) generalized least squares (GLS) method.FindingsThe analysis has shown a statistically significant U-shaped relationship (with the turning point of 38, resp. 36 years) between firm age and the overall TFP among the Czech enterprises. The authors provide two key findings in terms of a firm size-productivity relationship. Firms with fewer employees, often officially registered as self-employed individuals/freelancers, report higher levels of productivity. Nevertheless, when it comes to firm property (assets), the authors find a positive relationship between firm size and TFP. A high proportion of debts in the capital structure of analysed companies, or even negative equity, has been negatively associated with TFP levels.Research limitations/implicationsMore research is needed in the deeper exploration of sectoral and regional determinants of firm TFP, as both regional and sectoral heterogeneity were observed in the study. The authors propose the employment of a multi-level modelling approach, including a range of continuous variables and investigation of their role in shaping firm-level productivity.Practical implicationsConcerning the results, managers should be mindful of optimal capital structure principles due to the negative impact of a high level of debts on the productivity level. High indebtedness means high-interest payments drawing earnings off, which may be, especially in the long term, a hindrance to investments. The entrepreneurship and small- and medium-sized enterprise policies may be targeted at the soft policy actions, including advisory services and counselling on business development or risk and on the provision of financial capital allowing firms to strive for growth-oriented projects.Originality/valueTo the best of the authors' knowledge, this is the first attempt to provide insight into the firm-level productivity determinants, based on the large dataset covering enterprises across the whole economy over the long term, representing the structure of the country's entrepreneurial activity.

Total factor productivity of the non-life insurers in India: Malmquist index with a new decomposition

PurposeThis paper aims to measure the change and the sources of change in total factor productivity (TFP) of the Indian non-life insurance sector over the period 2005–2016.Design/methodology/approachThis study employs the bootstrapped Malmquist index (MI) to assess the changes in the TFP and adopts a decomposition approach proposed by Balk and Zofío (2018). Moreover, it utilises truncated regression to identify the determinants of the TFP. In addition, it employs Wilcoxon-W test and t-test to scrutinise the difference between the state-owned and the private insurers in terms of variations in TFP and its various components.FindingsThe results divulge a miniature improvement in TFP of the insurance sector, which is primarily attributable to the improvement in scale efficiency (economies of scale). The results also reveal that there are no significant TFP differences across the ownership. However, private insurers have better scale efficiency and lower input-mix efficiency than state-owned insurers. In addition, the results unveil that size, diversification and reinsurance have a negative impact on the TFP, while age has a positive impact on it.Practical implicationsThe results may help the policymakers to frame new consolidation policies. Moreover, the findings may guide the decision-makers of the Indian non-life insurance companies to abate inefficiency and improve TFP.Originality/valueThis study estimates bias-corrected changes in TFP and efficiency in the non-life insurance sector. Moreover, it adopts an elaborated decomposition of the MI to identify the true sources of change in the TFP.

Productivity growth in India's bakery manufacturing industry

PurposeThe main aim of this paper is to examine the total factor productivity (TFP) and its components namely, technological change, technical efficiency change, scale change and allocative change in bakery industry in India.Design/methodology/approachThe study is based on panel data on 35 Indian states for the period 2009–2010 and 2012–2013. Stochastic frontier function is employed to estimate the productivity growth.FindingsThe results show that TFP is driven by technological progress, followed by technical efficiency and scale efficiency. Allocative efficiency, however, has a negative effect on TFP.Research limitations/implicationsThe bakery industry needs to define its innovation strategies, as these strategies lead to different outcomes that can be achieved only through the management of resources dedicated to the generation and implementation of innovations.Originality/valueUsing frontier production function takes the stochastic context into account for the dynamic behaviour of TFP and its components. Most of the past studies have assessed the TFP at the aggregate level using three-digit National Industrial Classification (NIC) or four-digit NIC code. An analysis at higher levels aggregation masks the variation in TFP and its components available at the firm level. This study uses five-digit NIC data to measure the firm specific TFP of bakery industry. Further, it looks at the contribution of technical progress (TP), technical efficiency, scale efficiency and allocative efficiency.

Variation in Total Factor Productivity of Corn in 19 Main Producing Areas under the Constraint of Carbon Emissions

Variation in Total Factor Productivity of Corn in 19 Main Producing Areas under the Constraint of Carbon Emissions

Financial intermediation and capital reallocation

To understand the link between financial intermediation activities and the real economy, we build a general equilibrium model in which agency frictions in the financial sector affect the efficiency of capital reallocation across firms and generate aggregate economic fluctuations. We develop a recursive policy iteration approach to fully characterize the nonlinear equilibrium dynamics and the off-steady-state crisis behavior. In our model, adverse shocks to agency frictions exacerbate capital misallocation and manifest themselves as variations in total factor productivity at the aggregate level. Our model endogenously generates countercyclical volatility in the aggregate time series and countercyclical dispersion in the marginal product of capital and asset returns in the cross-section.

An Examination of Public Hospital Productivity and its Persistence: An Index Number Approach

AbstractThis paper measures the level and growth of total factor productivity (TFP) of public hospitals in Victoria, Australia, using an index number approach. We further examine the persistence of productivity over time, and the extent to which productivity varies with hospital characteristics such as hospital size. Hospital administrative data from Victoria from 2007–08 to 2011–12 are used. We find substantial variation in TFP across hospitals: large hospitals perform significantly better than small hospitals, both in TFP level and growth. Productivity level is highly persistent over time, but not productivity growth.

Total factor productivity spillovers from trade reforms in India

AbstractIt is often argued that the positive effects of policies or institutional reforms on the productivity of firms are amplified by positive spillovers to other firms. In this paper, we use a comprehensive dataset of Indian manufacturing firms and employ spatial econometric techniques to estimate the strength of inter‐firm total factor productivity (TFP) spillovers within India following trade reforms. We use externally imposed tariff reductions as an exogenous source of variation in TFP (following Topalova and Khandelwal) and test for spillovers arising from observation, labour mobility and intermediate input use. We find no evidence of TFP spillovers between Indian manufacturing firms after trade liberalization on average. However, initially productive firms seem to benefit from TFP increases in other highly productive firms located in their vicinity.RésuméEffets de débordement via la productivité total des facteurs des réformes commerciales en Inde. On suggère souvent que les effets positifs des politiques ou réformes institutionnelles sur la productivité des firmes sont amplifiés par les effets positifs de débordement sur d’autres firmes. Dans ce mémoire, on utilise une base de données compréhensive de firmes manufacturières indiennes et des techniques économétriques spatiales pour calibrer la force de cet effet de débordement entre firmes via la productivité totale des facteurs (PTF) à l’intérieur de l’Inde à la suite de réformes commerciales. On utilise des réductions de tarifs imposées de l’extérieur comme source exogène de variation dans la PTF (suivant en cela Topalova et Khandelwal 2011) et on calibre les effets de débordement par observation, mobilité du travail, et utilisation d’inputs intermédiaires. On ne détecte aucun effet de débordement de la PTF entre les firmes manufacturières après la libéralisation du commerce en moyenne. Cependant les firmes initialement productives semblent bénéficier de l’accroissement de la PTF d’autres firmes productives dans les environs.

Factors affecting variation of total factor productivity in cocoa farming in the Central Sulawesi, Indonesia

One of the main cocoa producing areas in Indonesia is the Central Sulawesi region. Cocoa farmers have been given extension and training about agricultural technology such as pruning, fertilizing and side grafting. Nevertheless, the cocoa productivity is still low. This case has been questioned by authorities; so this research aims to measure and analyze the factors that have affected the variation of total factor productivity (TFP) in cocoa farming in the Central Sulawesi. The study selected a total of 424 cocoa farmers using a simple random sampling technique. The model of stochastic frontier function of translog forms was used to anticipate factors affecting cocoa production. The Cobb-Douglas production function was used in TFP variation. The results showed that TFP of cocoa farming varied from a minimum of 0.371 to a maximum of 1.407 with an average of 0.803. Technical efficiency, education, extension access, cocoa farming experience, sanitation, and fermented cocoa beans affected TFP variation significantly. These six factors appeared to be the main determinant factors of TFP variation. However, technical efficiency was the most important factor, so policies should aim at mobilizing resources toward expanding education and extension. In addition, extension services should provide information to cocoa farmers on using inputs efficiently.

MANUFACTURING PRODUCTIVITY IN THE INDIAN STATES

In this paper, we study the total factor productivity (TFP) of manufacturing industries in 22 Indian states for the periods 2008–2009 and 2011–2012 using industry data from ASI database. We estimate TFP by ordinary least squares using cross-sectional data. For correcting potential endogeneity, we apply two-stage least-squares approach using intermediate inputs as instruments. Our results show that despite a faster growth in the industries in the sample period, there appear wide regional disparities in the TFP in most industries assessed. We note that low-productivity states display a higher variation in TFP across industries than high-productivity states. Our results also confirm the dominance of capital-intensive techniques in Indian manufacturing. In addition, more importantly, there appears to be no sign of change in elasticity of inputs over the sample period.

Explaining Output Growth Using Total Factor Productivity: Evidence from the Philippine Agricultural Sector

This study investigates the performance of the Philippine agriculture employing the methodology of total factor productivity (TFP) using the available data from 1961 up to 2005. Total factor productivity was estimated by using simple growth accounting model. The weight on each input was determined using Cobb-Douglas production function with the assumption of the existence of competitive equilibrium. The variation in total factor productivity was analyzed by considering the effect of political changes and agrarian policies. Results show that TFP’s contribution to output growth has been relatively marginal compared to the share of input growth. This suggests that growth in the agricultural sector was largely dominated by the increasing share of inputs undermining technological growth in the agriculture sector. In addition, there is evidence to show that political instability has negatively affected agricultural productivity. Results imply that policy makers should design relevant public policy enhancing productivity in the agriculture sector and these approaches should be coupled with stabilizing the political system.

Public security in Brazil: Efficiency and technological gaps

Abstract This article analyzes the technical efficiency, the Total Factor Productivity (TFP) and the technological gap in public security services in Brazilian States. The order—m frontier is used for results estimation. The TFP variation is built by decomposing the Malmquist productivity index into technical efficiency, scale efficiency and technological variation. More than 50% of the federative units were considered technically inefficient. Out of the 27 federative units, 12 presented a positive total productivity while all others suffered total productivity losses. Productivity gains in public security are more related to scale aspects than to efficiency improvements and technological progress.

Produtividade Agrícola nos Países da América Latina

Resumo: Este artigo estuda a produtividade total dos fatores (PTF) na agricultura de 19 países da América Latina no período de 1961 a 2010. Na análise do desempenho econômico dos países, utiliza-se a abordagem paramétrica da fronteira estocástica de produção. Verifica-se que todos os países apresentaram variação da PTF positiva para o período entre 1961 a 2010, ou seja, apresentaram crescimento do produto, assim como progresso técnico positivo. A maior variação da PTF corresponde ao Brasil, 55,73%; já a menor variação apresenta-se para Trinidad e Tobago, 42,06%. Contudo, a mudança na eficiência técnica mostrou-se decrescente para quase 50% da totalidade dos países. Tratando-se de eficiência de escala, apenas Argentina, Brasil e Uruguai apresentaram médias positivas para o período. Em relação à mudança na eficiência alocativa, todos os países mostraram-se decrescentes.

A Decade Trend of Total Factor Productivity of Key State-Owned Forestry Enterprises in China

State-owned forestry enterprises are important elements of the forestry economy in China. The operational efficiency of such enterprises depends on technological progress and other input factors. Total factor productivity (TFP) is an important means to evaluate the efficiency of technical elements. The growth of production efficiency can be classified into efficiency variation and technical variation. The TFP of 135 key state-owned forestry enterprises in the northeast, southwest, and northwest regions of China in 2001–2011 was measured through Malmquist–data envelopment analysis. The technological progress of the state-owned forestry enterprises positively affected TFP variation, but technical efficiency only slightly increased and scale efficiency even negatively affected TFP variation. The average growth rate of TFP in the northwest region is higher than those in the northeast and southwest regions. The Western Development Program of China increasingly contributes to the economic development of western areas. The increasing investment of the government in science and technology accelerates the development of forestry economy in China.

Productivity and research and development content of intermediate inputs - evidence from Indian industries

Research and Development (R&D) investments are foundations for generating new knowledge through basic research and ultimately for generating products and services through applied research and commercialization. For this pay-off to happen and innovation-driven growth to flourish a successful R&D ecosystem is required. With current government support, R&D sector in India is all set to witness some robust growth in the coming years. Over the last decade researchers have emphasized the role of R&D expenditure in determining rate of growth of total factor productivity and hence in overall growth of an economy. Against this backdrop, the present study evaluates the extent to which R&D knowledge embodied in intermediate inputs is related to productivity at industry level in India. Industry-level Total Factor Productivity (TFP) with respect to R&D content of intermediates is computed for industries as a whole and for manufacturing sectors classified under high and low-R&D industries. A global input output matrix is used to separate total R&D content of intermediates into domestic and foreign R&D stocks. Using two way panel estimation, variation in TFP for twenty six industries for the years 2001, 2004 and 2007 are estimated as function of variations in domestic and foreign R&D content of intermediates. The study obtains much of the required data from GTAP databases – versions 6, 7 and 8 and from OECD Stan database, World Development indicators, India’s National Sample Survey Organization and its Department of Science and Technology. Results indicate that while industries, in general, as also manufacturing have shown increased productivity due to increased R&D in intermediate inputs, but it is the small scale low R&D sectors which are found to be the biggest beneficiaries. Particularly, the results point to the fact that it is the foreign R&D stock of inputs which have mainly contributed to improved productivity in these low R&D sectors. Thus, innovation by these sectors in the form of new machines, alternative materials, improved product quality etc. which they brought in via imports has resulted in their increased productivity. This finding is a contribution to existing literature which have mostly observed that that manufacturing output in general is responsive to R&D stock of intermediates. Large part of India’s population are employed in low R&D labor (mainly unskilled) intensive sectors. Thus, more R&D and innovation in these sectors via imported inputs may make them efficient in terms of value addition to output, employment and income and thus make innovation more inclusive.

Agro-Enterprise Performance and Rural Investment Climate: Evidence from the North of Vietnam

This paper measures the impact of rural investment climate factors on the total factor productivity (TFP) of agro-enterprises in the North of Vietnam. Endogeneity of the production function and of the rural investment climate variables is addressed by using econometric models, based on individual agro-enterprise information, and by aggregating rural investment climate factors by various business lines and regions. Using agro-enterprise survey data, we conduct the analysis consist of two steps: firstly, an econometric regression of production function is estimated to produce a measure of TFP at the firm level; and secondly, the variation in TFP across agro-enterprises is statistically related to the rural investment climate factors as well as agro-enterprise characteristics. The result yields a number of insights on the factors that underlie productivity. In across various business lines and regions, the indicators of poor rural investment climate such as administrative procedures, outages and policy uncertain have significant negative effects on agro-enterprise productivity. In contrast, the other indicators include number of year in land using, internet use, and regional advantages have positive impact on TFP. However, the effects of the rural investment climate factors in magnitude on agro-enterprise performance are various among business lines and regions. Key words: Agro-Enterprise performance; TFP; Rural investment climate; North of Vietnam

Evaluating Economic Theories of Growth and Inequality: A Study of the Danish Economy

We present a model for studying regional and sectoral variation in total factor productivity (TFP) and develop an empirical test, based on the skewness of TFP distribution, to empirically distinguish between different growth theories. While negative skewness is consistent with the neo-Schumpeterian idea of catching up with leaders, zero skewness supports the neoclassical view that deviations from the frontier reflect only idiosyncratic productivity shocks. We argue that positive skewness corresponds to a model where the combination of exogenous technology with non-transferable knowledge accumulated in specific sectors and regions explains TFP. This argument provides the framework for an empirical model based on stochastic frontier analysis. The model is used to analyse regional and sectoral inequalities in productive efficiency across Danish sectors and regions.

Analysis of the efficiency of national civil construction firms

The article analyzes the efficiency of national civil construction firms, through the application of Data Envelopment Analysis in multistage, for a pool of construction companies, between the years 2005 and 2008.TheMalmquist index is used to calculate the variation in total factor productivity over the period, decomposing it into variations in technical and scale efficiency and technological progress. The results for our sample, point to significant differences in technical and scale efficiency according to the invoicing level and indicate that, on average, technical efficiency scores decreased between 2005 and 2008, as well as the variation in total productivity of factors. The average technical efficiency score for the period was 0.433 and showed a downward trend since 2006. The total factor productivity in the period from 2005-2008, decreased by 7.2% due, mainly, to the negative variation in the technological progress.

Evaluating the effects of entry regulations and firing costs on international income differences

This paper analyzes the effects of entry regulations and firing costs on cross-country differences in income and productivity. We construct a general equilibrium industry-dynamics model and quantitatively evaluate it using the cross-country data on entry costs and firing costs. Entry costs lower overall productivity in an economy by keeping low-productivity establishments in operation and making the establishment size inefficiently large. Firing costs lower productivity by reducing the reallocation of labor from low-productivity establishments to high-productivity establishments. The linear regression of the data on the model prediction accounts for 27% of the cross-sectional variation in total factor productivity. Moving the level of entry costs and firing costs from the U.S. level to that of the average of low income countries (countries with a Gross National Income below 2% of the U.S. level) reduces TFP by 27% in the model without capital, and by 34% in the model with capital and capital adjustment costs.