Empirical Analysis of Technical and Allocative Efficiency of Firms and International Trade Behaviour

2020 ◽  
pp. 123-156
Author(s):  
Murali Patibandla
Keyword(s):  
Technical Efficiency ◽  
Comparative Advantage ◽  
Small Firms ◽  
Allocative Efficiency ◽  
Large Firms ◽  
Firm Level ◽  
Capital Costs ◽  
Factor Markets ◽  
Medium Firms ◽  
Technical And Allocative Efficiency

We measured firm-level relative technical and allocative efficiency drawing from Farrell’s production frontier approach. Technical efficiency captures technology dimension of realization amount output for given level of inputs employed. It is determined by technological, organizational firms and consequent technical efficiency. It shows very large and small firms are relatively technically inefficient compared medium sized firms. And technical efficiency explained exports positively. These results support our main hypotheses. Firm-level allocative efficiency is optimum combination of inputs (labour and capital) given the input prices (wages and capital costs). We argued that India’s factor markets were fragmented: large firms pay lower price to capital and higher price labour in comparison small and medium firms. This, in turn, made large firms deviate from India’s comparative advantage in labour intensity. On the other hand, small and medium scale firms realized allocative efficiency in accordance with India’s comparative advantage.

scholarly journals Measuring the Effect of Size on Technical Efficiency of the United Arab Emirates Hospitals

2016 ◽  
Vol 9 (3) ◽  
pp. 116 ◽  
Author(s):  
Ashraf Mahate ◽  
Samer Hamidi ◽  
Fevzi Akinci
Keyword(s):  
Technical Efficiency ◽  
United Arab Emirates ◽  
Health Authority ◽  
Allocative Efficiency ◽  
Economies Of Scope ◽  
Optimal Size ◽  
Data Envelopment ◽  
Future Health ◽  
Hospital Size ◽  
Technical And Allocative Efficiency

<p><strong>OBJECTIVE:</strong> The main purpose of this study is to estimate the technical efficiency of the United Arab Emirates (UAE) hospitals and examine the effect of hospital size on estimated technical efficiency scores.</p><p><strong>METHODS: </strong>Using 2012 data from Ministry of Health, Dubai Health Authority, and Health Authority in Abu Dhabi,<strong> </strong>we employed a nonparametric method, data envelopment analysis (DEA), to estimate the technical efficiency of 96 private and governmental hospitals in the UAE. Efficiency scores are calculated using both Banker, Charnes, and Cooper (BCC) and Charnes, Cooper, and Rhodes (CCR) models. </p><p><strong>RESULTS: </strong>The average technical efficiency of the UAE hospitals is estimated at 59% based on the BBC model and at 48% based on the CCR model. The optimal size of a hospital in the UAE is between 100 to 300 beds. We also found evidence of economies of scope between the provision of outpatient and inpatient care in the UAE hospitals.</p><p><strong>CONCLUSION: </strong>Our findings indicate that only one third of the UAE hospitals are technically efficient. There is evidence to suggest that there are considerable efficiency gains yet to be made by many UAE hospitals. Additional empirical research is needed to inform future health policies aimed at improving both the technical and allocative efficiency of hospital services in the UAE. </p>

scholarly journals Innovation in the Textiles Sector: A Firm-Level Analysis of Technological and Nontechnological Innovation

2016 ◽  
Vol 21 (Special Edition) ◽  
pp. 129-166 ◽  
Author(s):  
Waqar Wadho ◽  
Azam Chaudhry
Keyword(s):  
Small Firms ◽  
Innovation Process ◽  
Foreign Market ◽  
Knowledge Flows ◽  
Innovation Activity ◽  
Local Market ◽  
Large Firms ◽  
Firm Level ◽  
Innovation Activities ◽  
Innovation Rate

In a knowledge-based economy, it has become increasingly important to better understand critical aspects of the innovation process such as innovation activities beyond R&D, the interaction among different actors in the market and the relevant knowledge flows. Using a sample of 431 textiles and apparel manufacturers, this paper explores the dynamics of firms’ innovation activities by analyzing their innovation behavior, the extent and types of innovation, the resources devoted to innovation, sources of knowledge spillovers, the factors hampering technological innovation and the returns to innovation for three years, 2013–15. Our results show that 56 percent of the surveyed firms introduced technological and/or nontechnological innovations, while 38 percent introduced new products, these innovations were generally incremental as the majority of innovations were new only to the firm. Furthermore, the innovation rate increases with firm size; large firms have an innovation rate of 83 percent, followed by medium firms (68 percent) and small firms (39 percent). Technologically innovative firms spent, on average, 10 percent of their turnover on innovation expenditure in 2015. Acquisition of machinery and equipment is the main innovation activity, accounting for 56 percent of innovation expenditures. Large firms consider foreign market sources (clients and suppliers) and small firms consider local market sources their key source of information and cooperation. 63 percent of technological innovators cite improving the quality of goods as their most important objective. Lack of available funds within the enterprise is the single most important cost factor hampering innovation, followed by the high cost of innovation. Our results show that 67 percent of the turnover among product innovators in 2015 resulted from product innovations that were either new to the market or new to the firm.

scholarly journals DOES SIZE MATTER?: Technical Efficiency and Industry Size in Indonesia

2013 ◽  
Vol 4 (3) ◽  
pp. 297
Author(s):  
Richard V. Richard V. Llewelyn ◽  
Wang Sutrisno
Keyword(s):  
Technical Efficiency ◽  
Small Firms ◽  
Nonparametric Analysis ◽  
Large Firms ◽  
Small Companies ◽  
Output Data ◽  
Small Business Development ◽  
Manufacturing Sectors ◽  
Programming Techniques ◽  
Size Matter

The debate over which size industry is best suited for Indonesiacontinues with proponents of both large and small sizes pointing out the benefits of each. However, little empirical analysis has been done regarding economic matters such as technical efficiency. Nonparametric analysis of technical efficiency for three sizes of firms in seven manufacturing sectors is estimated using linear programming techniques. Aggregated input and output data from BPS from 1991 to 1997 are used.Household size firms are found to be most efficient relative to the other sizes for five of the seven sectors analyzed. Large firms are relatively more efficient in ‘Food, Beverage, and Tobacco’ sector. Small companies are relatively less efficient than household firms in all but one case, but relatively more efficient than large firms in five of seven sectors. The results validate and perhaps explain the duel economy in Indonesia with both large and small firms existing in the same industry.When each sector is analyzed for each firm size, the ‘Non-MetallicMineral Products Other Than Petroleum and Coal’ sector is most efficient for all sizes of firms. The least efficient sector is the ‘Chemical and Plastics’ industry.The results suggest that government policy should be focused oncreating a stable environment for business, which promotes growth of efficient businesses, either large or small. Specific policies and intervention for small business development are not necessary, given the relative efficiency of small firms in Indonesia.

scholarly journals Assessing the Technical and Allocative Efficiency of U.S. Organic Producers

2010 ◽  
Vol 42 (2) ◽  
pp. 247-259 ◽  
Author(s):  
Timothy A. Park ◽  
Luanne Lohr
Keyword(s):  
Technical Efficiency ◽  
Allocative Efficiency ◽  
Male And Female ◽  
Farm Level ◽  
Organic Products ◽  
Certified Organic ◽  
Revenue Mix ◽  
Technical And Allocative Efficiency

We develop measures of technical and allocative efficiency of producers in marketing certified organic products. A stochastic output distance frontier and the associated revenue share equations are estimated using comprehensive U.S. data on certified organic producers. Farm-level measures of technical efficiency are calculated and factors that enhance performance are identified. Factors that systematically influence allocative efficiency are assessed. The revenue mix of organic producers is systematically inefficient as both male and female producers rely too heavily on revenue from organic markets relative to conventional outlets.

A Perceptual Measure of Innovation Performance: Firm-Level Evidence from Turkey

2017 ◽  
Vol 14 (06) ◽  
pp. 1750038 ◽  
Author(s):  
Derya Findik ◽  
Berna Beyhan
Keyword(s):  
Factor Analysis ◽  
Small Firms ◽  
Innovation Performance ◽  
Large Firms ◽  
Firm Level ◽  
Process Innovations ◽  
Significant Difference ◽  
Process Oriented ◽  
Product And Process ◽  
The Impact

This paper aims to introduce a qualitative indicator to measure innovation performance of Turkish firms by using firm-level data collected by Turkish Statistical Institute (TURKSTAT) in 2008 and 2009. We propose a new indicator to measure the innovation performance which is simply based on the perception of firms regarding to the impacts of innovation. In order to create performance indicators, we conduct a factor analysis to group the firms’ perceptions on the impacts of innovation. Factor analysis gives us product and process-oriented impacts of innovation. There are significant differences among product innovators, process innovators and firms engaged in both product and process innovations with respect to their perceptions on product and process-oriented impacts of innovation. Among these three groups, product- and process-oriented impacts provide a highest value for the firms that perform both product and process innovations. As far as the link between firm characteristics and the impact of innovation is considered, there is a significant difference between small and large firms with respect to their perceptions on product-oriented impact of innovation. While product-oriented impact is larger for small firms, large firms focus more on process-oriented impact. Anova results also indicate that perceptions on process-oriented impact significantly differ among exporter firms, domestic market-oriented firms and firms being active in internal and external markets. Process-oriented impact generates results in favor of exporting firms.

scholarly journals Productivity and Misallocation in General Equilibrium*

2019 ◽  
Vol 135 (1) ◽  
pp. 105-163 ◽  
Author(s):  
David Rezza Baqaee ◽  
Emmanuel Farhi
Keyword(s):  
Social Cost ◽  
Returns To Scale ◽  
Allocative Efficiency ◽  
The United States ◽  
Resource Reallocation ◽  
Firm Level ◽  
Tfp Growth ◽  
The Social ◽  
Over Time ◽  
Technical And Allocative Efficiency

Abstract This paper develops a general theory of aggregation in inefficient economies. We provide nonparametric formulas for aggregating microeconomic shocks in economies with distortions such as taxes, markups, frictions to resource reallocation, financial frictions, and nominal rigidities. We allow for arbitrary elasticities of substitution, returns to scale, factor mobility, and input-output network linkages. We show how to separately measure changes in technical and allocative efficiency. We also show how to compute the social cost of distortions. We pursue applications focusing on firm-level markups in the United States. We find that improvement in allocative efficiency, due to the reallocation over time of market share to high-markup firms, accounts for about half of aggregate TFP growth over the period 1997–2015. We also find that eliminating the misallocation resulting from the large and dispersed markups estimated in the data would raise aggregate TFP by about 15%, increasing the economy-wide cost of monopoly distortions by two orders of magnitude compared with the famous 0.1% estimate by Harberger (1954). These exact numbers should be interpreted with care because the data are imperfect and require substantial imputation.

Allocative and technical efficiency of New Zealand Banks

2016 ◽  
Vol 24 (4) ◽  
pp. 574-587
Author(s):  
Paul Rouse ◽  
David Tripe
Keyword(s):  
New Zealand ◽  
Technical Efficiency ◽  
Design Methodology ◽  
Allocative Efficiency ◽  
Improve Performance ◽  
Data Set ◽  
Content Type ◽  
Academic Literature ◽  
Price Effects ◽  
Technical And Allocative Efficiency

Purpose Paying too much for funding or failing to obtain adequate returns for lending and interest-bearing assets because of inappropriate mix is just as much a source of inefficiency in banking as overutilisation of input resources. The purpose of this research is to examine bank performance in terms of both technical and allocative efficiency. Design/methodology/approach This paper uses an extensive quarterly data set from New Zealand (NZ), which allows a decomposition of interest costs and revenues into quantity and price effects to explore the factors, including both technical and allocative efficiency, that impact changes in banks’ costs and revenues. Findings The research finds that focusing solely on technical efficiency can give a misleading impression of banking performance in our NZ sample. The inclusion of allocative efficiency measurement shows greater variability of performance, as well as highlighting changes in the mix of inputs and outputs needed for banks to improve performance. Originality/value A focus on prices and allocative efficiency has received little attention in the academic literature on banking. This paper shows how banking data can be decomposed into the respective price and quantity components.

Land rental market and rural household efficiency in China

2021 ◽  
pp. 1-17
Author(s):  
Jean Paul Chavas ◽  
Guanming Shi ◽  
Xiangyi Meng
Keyword(s):  
Technical Efficiency ◽  
Land Tenure ◽  
Agricultural Sector ◽  
Rural China ◽  
Allocative Efficiency ◽  
Household Level ◽  
Rental Market ◽  
Positive Effects ◽  
Land Rental ◽  
Factor Markets

Abstract Well-functioning factor markets play an important role in improving the performance of the agricultural sector. Our paper examines both technical and allocative efficiencies at the household level, with an application to a cross-section sample of rural households in three provinces of China in 2009. In a first step, we use nonparametric methods to estimate household efficiency. In a second step, we examine econometrically the role of land rental market and its linkages with household-level efficiencies. We find that participation in the land rental market does not affect technical efficiency but has large positive effects on allocative efficiency. This stresses the need to distinguish between technical efficiency and allocative efficiency in the analysis of land tenure issues. The improvements in allocative efficiency from land-leasing contribute to significant increases in household income in rural China.

Productivity growth in India's bakery manufacturing industry

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shiv Kumar ◽  
Abdulla ◽  
ChhatraPal Singh
Keyword(s):  
Technical Efficiency ◽  
Productivity Growth ◽  
Manufacturing Industry ◽  
Stochastic Frontier ◽  
Allocative Efficiency ◽  
Scale Efficiency ◽  
Firm Level ◽  
Indian States ◽  
Content Type ◽  
Bakery 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.

scholarly journals Global Value Chains and Productivity

2020 ◽  
Vol 20 (117) ◽  
Author(s):  
Hang Banh ◽  
Philippe Wingender ◽  
Cheikh Gueye
Keyword(s):  
Small Firms ◽  
Global Value Chains ◽  
Value Chains ◽  
Aggregate Productivity ◽  
Large Firms ◽  
Potential Growth ◽  
Firm Level ◽  
Exporting Firms ◽  
Level Data ◽  
The Impact

The COVID-19 pandemic has led to an unprecedented collapse in global economic activity and trade. The crisis has also highlighted the role played by global value chains (GVC), with countries facing shortages of components vital to everything from health systems to everyday household goods. Despite the vulnerabilities associated with increased interconnectedness, GVCs have also contributed to increasing productivity and long-term growth. We explore empirically the impact of GVC participation on productivity in Estonia using firm-level data from 2000 to 2016. We find that higher GVC participation at the industry level significantly boosts productivity at both the industry and the firm level. Frontier firms, large firms, and exporting firms also benefit more from GVC participation than non-frontier firms, small firms, and non-exporting firms. We also find that GVC participation of downstream industries has a negative correlation with productivity. Frontier firms and large firms benefit more from GVC participation of upstream industries, while non-frontier firms and small firms benefit more from GVC participation of downstream industries. Our results suggest that policies designed to promote participation in GVCs are important to raise aggregate productivity and potential growth in Estonia.

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