Inefficiency in the German Mechanical Engineering Sector

This paper aims to examine the relative efficiency of German engineering firms using a sample of roughly 23,000 observations between 1995 and 2004. As these firms had been successful in the examination period in terms of output- and export-growth, it is expected that a majority of firms is operating quite efficiently and that the density of efficiency scores is skewed to the left. Moreover, as the German engineering industry is dominated by medium sized firms, the question arises whether these firms are the most efficient ones. Finally an increasing efficiency gap between size classes over time is important since that would be a signal for a structural problem within the industry. The analysis - using recently developed DEA methods like bootstrapping or outlier detection - contradicts the two first expectations. The firms proved to operate quite inefficiently with an overall mean of 0.69, and efficiency differs significantly with firm size whereas medium sized firms being on average the least efficient ones. When looking at changes in efficiency over time, we find a decreasing efficiency gap between size classes.DEA, German engineering firms

Considering the (Un)observed: temporary agency work in productivity estimations

The study focuses on the question of whether or not productivity estimates are biased due to the emergence of a new input that is usually omitted: temporary agency worker (TAW). The study analyzes labor productivity and TFP by means of a structural approach using a representative dataset of German manufacturing firms. The empirical results show, once TAW is taken into account, that: i) labor productivity in most manufacturing sectors is significantly lower; ii) average TFP differs significantly in most sectors; but iii) the coefficients for regular labor are not significantly different between estimations with and without TAW

Mechanical Engineering: Medium-Sized Companies with Highest Savings Potential

The German mechanical engineering industry, dominated by medium-sized companies, is greatly successful - both on the domestic and on the international market. A first analysis conducted by DIW Berlin reveals that this success cannot be attributed to a better exploitation of potential efficiencies - mechanical engineering is about as efficient as other key sectors (for instance the chemical industry). In fact, despite their obvious success medium-sized mechanical engineering businesses have larger savings potential than bigger companies and even than smaller enterprises in this industry.Data envelopment analysis, German engineering firms, Efficiency, Firm size

Temporary Agency Work and Firm Competitiveness: Evidence from German Manufacturing Firms

This paper addresses the relationship between the utilization of temporary agency workers by firms and their competitiveness measured by unit labor costs, using a rich, newly built, data set of German manufacturing enterprises. The analysis is conducted by applying different panel data models while taking the inherent selection problem into account. Making use of dynamic panel data models allows us to control for firm specific fixed effects as well as for potential endogeneity of explanatory variables. The results indicate a U-shaped relationship between the extent that temporary agency workers are used and the competitiveness of firms.temporary agency work, competitiveness, firm performance, manufacturing

Empiricism Meets Theory: Is the Boone-Indicator Applicable?

Boone (2008a) proposes a new competition measure based on Relative Profit Differences (RPD) with superior theoretical properties. However, the empirical applicability and robust-ness of the Boone-Indicator is still unknown. This paper aims to address that question. Using a rich, newly built, data set for German manufacturing enterprises, we test the empirical valid-ity of the Boone-Indicator using cartel cases. Our analysis reveals that the traditional regres-sion approach of the indicator fails to correctly indicate competition. A proposed augmented indicator based on RPDs performs better. The traditional Lerner-Index is still the only meas-ure that correctly indicates the expected competitive changes.Competition, Boone-Indicator, Cartels, Census Data

Kleine und mittlere Unternehmen: Stütze der gewerblichen Wirtschaft in Europa

Die kleinen und mittelgroßen Unternehmen (KMU) rücken immer stärker ins Zentrum der europäischen und deutschen Wirtschaftspolitik. Die Europäische Union verabschiedete 2008 den Small Business Act, der bessere Rahmenbedingungen für die kleineren Unternehmen schaffen soll. Auch die Bundesregierung will die Leistungskraft und Wettbewerbsfähigkeit der KMU stärken. Erst seit relativ kurzer Zeit hat die EU-Kommission jedoch mit einer systematischen, europaweiten Beobachtung dieser Unternehmen begonnen, die neue Erkenntnisse liefern und so künftig eine gezieltere Ausrichtung der politischen Maßnahmen erlauben soll. Das DIW Berlin hat die aktuellsten verfügbaren Daten ausgewertet und untersucht, wie sich die KMU in den vergangenen Jahren entwickelt haben. So wurde der Frage nachgegangen, wie gut die kleinen und mittleren Unternehmen durch die Krise gekommen sind. Dabei zeigt sich, dass Wertschöpfung und Beschäftigung in den KMU, insbesondere in den Krisenstaaten, um ein Fünftel und mehr eingebrochen sind. Zwar ist die Datenlage in mehrfacher Hinsicht schwierig, die Zerlegung der Beschäftigungsentwicklung legt aber nahe, dass die Kleinstunternehmen mit bis zu neun Mitarbeitern stabilisierend gewirkt haben. Bei Betrachtung der Arbeitsproduktivität der KMU mit bis zu 249 Mitarbeitern zeigen sich erste positive Signale. Ob dies der Beginn einer Trendwende ist, bleibt abzuwarten. Insgesamt sind die KMU eine starke Stütze der europäischen gewerblichen Wirtschaft: EU-weit produzieren sie fast 60 Prozent der Wertschöpfung und stellen fast zwei Drittel aller Arbeitsplätze.European and German economic policy are increasingly shifting their emphasis to small and medium- sized enterprises (SMEs). In 2008, the European Union adopted the Small Business Act with the goal of creating better underlying conditions for smaller businesses. The German government is also looking to strengthen the economic potential and competitiveness of SMEs. However, the EU Commission has only fairly recently started to monitor these companies systematically and Europe-wide, with the aim of gaining new insights to enable more targeted focusing of future policy measures. DIW Berlin evaluated the most recent data available and studied how SMEs have developed in the last few years, for example, how well they mastered the crisis. The study shows that value added and employment in SMEs, especially in the crisis countries, fell by one-fifth and more. Although the available data is less than perfect in several respects, the analysis of the employment trend suggests that the smallest companies with up to nine employees had a stabilizing effect. Labor productivity of SMEs with up to 249 employees showed initial positive signs. Whether this is the beginning of a turnaround remains to be seen. Overall, SMEs are a strong pillar of European trade and industry: they produce almost 60 percent of added value and provide almost two-thirds of all jobs across the EU

German R&D-Intensive Industries: Value Added and Productivity Have Recovered Considerably after the Crisis

No large industrialized nation is as strongly specialized in the production of R&D-intensive goods as Germany. In the crisis year 2009 these export-oriented industries had to pass a crucial test. The slump in sales endangered both specialized jobs and the financing of high R&D expenditures, and thus the ability of these industries to compete technologically in the future. The Commission of Experts for Research and Innovation (Expertenkommission Forschung und Innovation - EFI), which regularly informs the German government about the status and prospects of Germany's technological performance, requires early indications about the development of R&D-intensive industries. Detailed comparative international data regarding industrial development, such as the EU KLEMS Datenbasis and the OECD STAN data, is only available with a lag of two to three years. This is why the DIW has estimated the value added and the volume of labour input for R&D-intensive industries in Germany, the US, Japan, France and the UK for the period from 2008 to 2010. This extended database is used to analyze the development of production and labour productivity up to the present.Industrial specialization, international trade, manufacturing. - industries

German Industry Succeeds with Research-Intensive Goods

As a country highly specialized in the production of investment goods, Germany has been especially hard hit by the global recession. Because the production profile of German industry is technology-intensive, however, there is reason to believe that Germany will emerge from the present economic crisis with renewed strength. In no other industrialized nation is production as heavily geared to research-intensive goods as it is here. Germany has increased its lead over its most significant rivals not only in motor vehicle manufacturing, but also in machinery, communication equipment, and medical and precision instruments. The success of German companies is based not only on compelling products, but also on the relative efficiency of their production processes compared to other countries.Industrial specialisation, Technological change, Technical efficiency

Weak investment in the EU: A long-term cross-sectoral phenomenon

Based on capital stock, in total, over six trillion euros less was invested in the European Union between 1999 and 2007 than in the non-European OECD countries, including the US, Canada, and Japan. In the euro area, investment was more than 7.5 trillion euros less than in non-European OECD countries. In virtually all EU member states, gross fixed assets (capital stock) are older than the OECD average and also demonstrate slower growth. This is particularly true for industry, which is expected to play a key role in Europe's recovery. In order to achieve a higher growth rate, Europe must tackle this lack of investment across the board. Just implement investment programs in individual countries, such as the southern European crisis countries is not enough. In order to launch a broad investment offensive across the EU as a whole, specific steps must be taken. With a view to tackling the lack of investment in the long term, measures include an efficient competition policy and investmentfriendly tax policy

Intangible Capital: Complement or Substitute in the Creation of Public Goods?

This paper tests whether intangible capital is a substitute or, to some degree, a complement to standard inputs in the production process. The analysis is conducted for public sectors in which governmental institutions are directly responsible both for efficiently producing public goods and for investing in new production factors. The results reveal that intangible capital is a relevant input factor in the production of public goods and only weakly substitutable with other inputs