Competition among manufacturers in developing countries is remarkably vigorous. Nonetheless, markets are imperfect, so the general trend toward trade liberalization has yielded benefits beyond the traditional gains from specialization. Manufacturing firms in developing countries have traditionally been relatively protected. They have also been subject to heavy regulation, much of it biased in favor of large enterprises. Accordingly, it is often argued that manufacturers in these countries perform poorly in several respects: - Markets tolerate inefficient firms, so cross-firm productivity dispersion is high. - Small groups of entrenched oligopolists exploit monopoly power in product markets. - Many small firms are unable or unwilling to grow, so important economies of scale go unexploited. Tybout assesses each of these conjectures, drawing on plant - and firm - level studies of manufacturers in developing countries. He finds systematic support for none of them. Turnover is substantial, exploited scale economies are modest, and convincing demonstrations of monopoly rents are generally lacking. Overprotection and overregulation are probably less a problem in developing countries than are uncertainty about policies and demand, poor rule of law, and corruption. Tybout does find some evidence that protection increases firms' price-cost margins and reduces average efficiency levels at the margin. And although the econometric evidence on technology diffusion in developing countries is limited, it does suggest that protecting learning industries is unlikely to foster productivity growth. All of which suggests that the general trend toward trade liberalization has yielded greater benefits than the traditional gains from trade. This paper - a product of Trade, Development Research Group - is part of a larger effort in the group to link firm-level performance with commerical policy.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID569211_code382649.pdf?abstractid=569211&mirid=1

Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?

Many production activities generate undesirable byproducts in conjunction with the desirable outputs they produce. Russell W. Pittman (1983) showed how to adjust productivity calculations, and Rolf Fare et al. (1989) showed how to adjust efficiency measures, in the presence of undesirable outputs. Here the authors show how to estimate output distance functions as frontiers in order to generate shadow values of the undesirable outputs that are required to make both types of adjustment. An empirical application is provided. Coauthors are Shawna Grosskopf, C. A. Knox Lovell, and Suthathip Yaisawarng. Copyright 1993 by MIT Press.

Derivation of shadow prices for undesirable outputs: A distance function approach

We decompose labor-productivity growth into components attributable to (1) technological change (shifts in the world production frontier), (2) technological catch-up (movements toward or away from the frontier), and (3) capital accumulation (movement along the frontier). The world production frontier is constructed using deterministic methods requiring no specification of functional form for the technology nor any assumption about market structure or the absence of market imperfections. We analyze the evolution of the cross-country distribution of labor productivity in terms of the tripartite decomposition, finding that technological change is decidedly nonneutral and that both growth and bipolar international divergence are driven primarily by capital deepening. (JEL O30, O47, D24)

Technological Change, Technological Catch-up, and Capital Deepening: Relative Contributions to Growth and Convergence

This paper seeks to identify the characteristics that make individual U.S. banks more likely to fail or be acquired. We use bank-specific information to estimate competing-risks hazard models with time-varying covariates. We use alternative measures of productive efficiency to proxy management quality, and find that inefficiency increases the risk of failure while reducing the probability of a bank's being acquired. Finally, we show that the closer to insolvency a bank is (as reflected by a low equity-to-assets ratio) the more likely is its acquisition.

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Why do Banks Disappear? The Determinants of U.S. Bank Failures and Acquisitions

In data envelopment analysis, there are several methods for measuring efficiency changes over time, e.g. the window analysis and the Malmquist index. However, they usually neglect carry-over activities between two consecutive terms and only focus on the separate time period independently aiming local optimization in a single period, even if these models can take into account the time change effect. In the actual business world, a long time planning and investment is a subject of great concern. For these cases, single period optimization model is not suitable for performance evaluation. To cope with long time point of view, the dynamic DEA model incorporates carry-over activities into the model and enables us to measure period specific efficiency based on the long time optimization during the whole period. Dynamic DEA model proposed by Fare and Grosskopf is the first innovative contribution for such purpose. In this paper we develop their model in the slacks-based measure (SBM) framework, called dynamic SBM (DSBM). The SBM model is non-radial and can deal with inputs/outputs individually, contrary to the radial approaches that assume proportional changes in inputs/outputs. Furthermore, according to the characteristics of carry-overs, we classify them into four categories, i.e. desirable, undesirable, free and fixed. Desirable carry-overs correspond, for example, to profit carried forward and net earned surplus carried to the next term, while undesirable carry-overs include, for example, loss carried forward, bad debt and dead stock. Free and fixed carry-overs indicate, respectively, discretionary and non-discretionary ones. We develop dynamic SBM models that can evaluate the overall efficiency of decision making units for the whole terms as well as the term efficiencies.

/pdf/dynamic-dea-a-slacks-based-measure-approach-2t9vup7bvp.pdf

Dynamic DEA: A slacks-based measure approach

This paper analyzes productivity growth in seventeen OECD countries over the period 1979-88. A nonparametric programming method (activity analysis) is used to compute Malmquist productivity indexes. These are decomposed into two component measures, namely, technical change and efficiency change. The authors find that U.S. productivity growth is slightly higher than average, all of which is due to technical change. Japan's productivity growth is the highest in the sample with almost half due to efficiency change. Copyright 1994 by American Economic Association.

Z Zhang

Papers

Productivity growth, technical progress and efficiency change in industrial countries