ESTIMATING NON-CONCAVE METAFRONTIERS USING DATA ENVELOPE ANALYSIS

In this article we propose non-concave metafrontiers for estimating the inefficiency among production functions which do not necessarily belong to the same technology. In this case, estimating a joint production by literature approaches might be inappropriate. We call this inefficiency technological inefficiency and suggest Data Envelopment Analysis to construct a metafrontier production function which consists only of parts of different (group) frontier production functions. Thus, in contrast to the common literature our metafrontier does not need any assumptions additional to the group production functions. We illustrate our approach by means of a large sample of differently diversified crop farms. Results show that the literature approach overestimates the technological inefficiency in our sample for 75% of the observations and on average up to 7%-points in a diversification class of farms.Efficiency analysis, Metafrontier production function, Data Envelopment Analysis, Production Economics,

Could small dairy farms in Switzerland compete with their French counterparts? A metafrontier analysis during 1990-2004

The objective of the paper is to investigate whether Swiss farms specialised in dairy (the prevailing production of the country), which are small in international standards, would have a survival potential if they had to compete more directly with EU farms. More specifically, we investigate whether Swiss dairy farms would be able to compete with their French counterparts (located in mountainous areas, but larger than Swiss ones) in a future made of increased globalisation and reduced borders. For this we evaluate which country, during the period 1990-2004, would have been more able to use efficiently a common hypothetical technology, and would have had a more productive (own) technology. Efficiency scores and technology ratios are calculated using the concept of metafrontier and the Data Envelopment Analysis (DEA) approach. Results indicate that Swiss farms would have been slightly less efficient on average with respect to the common frontier, and that they had a less productive technology, the productivity gap with France being however only 5 percent. Regression results suggest that the efficiency differential and the productivity gap between Swiss farms and French farms were mainly due to larger Swiss farms with lower labour per livestock unit and higher proportion of family labour.technical efficiency, technology gap, Data Envelopment Analysis, dairy farming, Switzerland, France, Agricultural and Food Policy, Productivity Analysis, Q12, D24,

A Metafrontier Analysis of Technical Efficiency of Selected European Agricultures

Technical efficiency refers to the situation where it is impossible for a firm to produce, with the given know-how, (1) a larger output from the same inputs or (2) the same output with less of one or more inputs without increasing the amount of other inputs. In practice, the interest is on the relative position in terms of efficiency of a particular firm with respect to others. Therefore, technical efficiency is characterised by the relationship between observed production and some ideal or potential production (Greene, 1993). Although the beginning of the efficiency work can be traced to the 1950s (Farrell, 1957), there have been a growing interest on its use in benchmarking performance, predominantly as a means of identifying best practice and improving the efficiency of resource use within the agricultural industry (e.g., Defra 2004, SAC 2009). This paper deals with the estimation of technical efficiency for the agricultural sectors in several European countries and moreover, it aims to compare the efficiency amongst them using a metafrontier analysis. The use of this type of analysis is justified because a frontier, which represents the best available technology within a particular region/country cannot be strictly compared across other regions/countries, unless they operate under the same production set. The metafrontier analysis has been developed in a number of studies (Battese and Rao, 2002; Nkamleu et al., 2006; Chen and Song, 2006; O‟Donnell et al., 2008.) The metafrontier analysis in this paper, which uses data from the Farm Accountancy data Network (FADN), was focused on four farm types: two specialised farming types (i.e., specialist cereals, oilseed and protein crops and specialist dairying) and two more mixed farming sets (i.e., general field cropping and mixed farms), and was applied to a total of 11 countries namely Belgium, Denmark, France, Germany, Hungary, Ireland, Italy, Netherlands, Poland, Spain and the UK. For most of the countries the information was available from 1995 until 2007, excepting Hungary and Poland, for which it was available only since 2004. Also note that not all the farm types were available for all the countries. The structure of the paper is as follows: it starts presenting an overview of the metafrontier analysis used to compare technical efficiency amongst the European countries. It is followed by the empirical work, which comprises a description of the data used, the estimation and discussion of the results. Finally we present conclusions.Research and Development/Tech Change/Emerging Technologies,

Working Paper 104 - Technology Gap and Efficiency in Cocoa Production in West and Central Africa: Implications for Cocoa Sector Development

This paper applies the recentlydeveloped metafrontier functiontechnique to investigate productivitypotentials and efficiencies in cocoaproduction in West and Central Africa.The methodology enables the estimationof national technology gap ratios (TGRs)by using a decomposition resultinvolving both the national productionfrontiers and the (regional)metaproduction frontier. Empiricalresults are derived using acomprehensive dataset collected duringone of the larger surveys of cocoafarmers in four West and Central Africacountries, namely Cameroon, Ghana,Nigeria and Cote d’Ivoire. The data andanalysis support the view that technicalefficiency in cocoa production is globallylow, and technology gap plays animportant part in explaining the ability ofcocoa sector in one country to competewith cocoa sectors in other countries inthe West and Central Africa region. Thepaper ends by highlighting relevantstrategies for sustainable cocoadevelopment in Africa.

A metafrontier approach to measuring technical efficiencies across the UK dairy sector

A regional approach is applied to measure technical efficiencies on dairy farms which employs the deterministic metafrontier approach. We construct six super regions for the UK, i.e. Eastern, Western, Northern England, Wales, Scotland and Northern Ireland. Data are collected through three different administrative systems, all be it under the same FADN guidance. We find for dairy farming comparative indicators of performance in all three data sets. The stochastic frontier approach is applied to construct 6 regional frontiers and a pooled (UK) dataset for comparison. A likelihood ratio test rejects the null hypothesis that these regions operate under a common frontier which may indicate bias in previous attempts to measure dairying efficiency at the country level. Mean technical efficiencies are high for the period 2005 to 2008, though there is some indication that little technical progress has occurred since decoupling of CAP payments from production in all regions. The metafrontier presents estimates against a common technology and mean scores range from below 0.50 for the English regions and Northern Ireland, 0.52 for Wales and 0.56 for Scotland. This paper promotes the application of the deterministic metafrontier approach for similar sub-country studies.Stochastic Production Frontiers, Metafrontiers, UK Farm Account Data, Dairy farming., Agricultural and Food Policy, Q12, D24, C23, C51,

Output complexity, environmental conditions, and the efficiency of municipalities: a robust metafrontier approach

Over the last few years, many studies have analyzed the productive efficiency of local governments in different countries. An accurate definition of their output bundles -i.e., the services and facilities they provide to their constituencies- is essential to this research. However, several difficulties emerge in this task. First, since in most cases the law only establishes the minimum amount of services and facilities to provide, it may well be the case that some municipalities go beyond the legal minimum and, consequently, might be labeled as inefficient when compared to other municipalities which stick to the legal minimum. Second, municipalities face very different environmental conditions, which raises some doubts about the plausibility of an unconditional analysis. This study tackles these problems by proposing a metafrontier analysis in which the efficiency of municipalities is evaluated after splitting them into clusters according to various criteria (output mix, environmental conditions, size). We perform our estimations using order-m frontiers, given their robustness to outliers and immunity to the curse of dimensionality. We provide an application to Spanish municipalities, and results show that both output mix and, more especially, environmental conditions, should be controlled for, since efficiency differences between municipalities in different groups are notable. Durante los últimos años muchos trabajos han venido analizando la eficiencia productiva de las corporaciones locales de una gran variedad de países. Para este tipo de estudios resulta crucial una definición precisa de los servicios e infraestructuras que los municipios proporcionan a sus ciudadanos. Sin embargo, esta tarea presenta varias dificultades. En primer lugar, dado que en muchas circunstancias la ley únicamente establece los servicios mínimos que debe proporcionar un municipio, puede darse el caso de que algunos municipios vayan más allá de este mínimo legal y, consecuentemente, sean clasificados como ineficientes al compararlos con otros municipios que se ciñen al mínimo. En segundo lugar, las corporaciones locales operan en condiciones ambientales muy dispares, lo cual genera dudas acerca de la factibilidad de un análisis incondicional. Este trabajo aborda estas cuestiones proponiendo un análisis metafrontera en el que la eficiencia de las corporaciones locales se evalúa tras clasificarlas en distintos grupos de acuerdo con criterios múltiples (output mix, condiciones ambientales, tamaño). Las estimaciones son llevadas a cabo utilizando fronteras orden-m, debido a la robustez que presentan frente a observaciones atípicas y la inmunidad a la ¿maldición de la dimensionalidad¿ (curse of dimensionality). Llevamos a cabo una aplicación a los municipios españoles, y los resultados indican que tanto el output mix como, sobre todo, las condiciones ambientales, deberían ser tenidas en cuenta al evaluar la eficiencia, pues las diferencias en la eficiencia de los municipios en los distintos grupos son notables.eficiencia, condiciones ambientales, gobierno local, metafrontera, orden-m efficiency, environmental conditions, local government, metafrontier, order-m

Farm performance and support in Central and Western Europe: A comparison of Hungary and France

The paper investigates the difference in technical efficiency and in productivity change, and the technology gaps, between French and Hungarian farms in the dairy and cereal, oilseeds and proteinseeds (COP) sectors during the period 2001-2004. The analyses are performed with national FADN data and the Data Envelopment Analysis (DEA) approach under each country’s respective frontier and under a metafrontier. Results revealed that in both the dairy and the COP sectors, Hungarian farms’ technology was the more productive, despite a technological deterioration. This suggests technological advantages for large-scale (Hungarian) over small-scale (French) farming in these two sectors. These findings may also be explained by the higher policy support in France. Subsidies received by farms have indeed a stronger negative impact on technical efficiency for French farms than for Hungarian farms, and a negative impact on the ability to lead the technology only for French farms.technology gap, technical efficiency, Malmquist indices, subsidies, farms

The efficiency of education in generating literacy: a stochastic frontier approach

The growing importance attached to education as a key factor to improve economic performance coupled with the persistent scarcity of resources for education makes it important that skills and literacy are produced efficiently. This paper provides an international comparison of the efficiency of literacy production. We find substantial differences between countries in levels of literacy, differences in literacy between education levels and differences in the efficiency of literacy production. There are some notable differences between more Anglo-Saxon countries and the Continental European countries. The findings suggest that in almost all countries the scope for efficiency improvements in education is large. So even without major increases in (public) funding, improvements in educational outcomes are achievable. We can get better value for the money we spend on education.

THE IMPACT OF DE-REGULAMENTATION ON THE BRAZILIAN BANKING INDUSTRY: A PRODUCTION METAFRONTIER APPROACH

This paper analyzes the impact after the entry and the increase in the capital participation of foreign banks in the Brazilian financial institutions. In this sense, taking into account three sub-sets of banks by controlling capital origin - domestic privates, foreigner and public-, an analysis was carried out to find out whether there were technical efficiency and productivity gains in Brazil' banking industry. Therefore, a production frontier was built using the Data Envelopment Analysis (DEA) which allows for the calculation of technical efficiency. Next, performing one of these measures, Malmquist's total productivity index is calculated. The results showed that the technical efficiency of the Brazilian banking industry has not evolved as must as it has been expected, although a total productivity increase has actually occurred, arising only from the technological progress. The foreign banks earned the most productivity gains followed by the domestic private banks. The technological leadership (test), proposed by Marinho and Benegas (2002), showed that the domestic private banks determined the industry's technological pattern.

Capturing the environment, a metafrontier approach to the drinking water sector.

Environmental factors add complexity to the comparison between specific activities or entire entities. Decision making units with an inferior performance are tempted to invoke that their organization is different from the others in the data set. By reinterpreting and extending the metafrontier literature, we propose an all-embracing concept to fully capture the operational environment. We suggest the ‘Group Specific Technical Efficiency’ as a new measure to assess the overall efficiency of a utility while allowing for environmental differences. A real-world example of drinking water utilies out of 5 different countries illustrates the concept. JEL Classification: C14, C61, D24, L95Free Disposal Hull, Efficiency Measurement, Environmental Variables, Metafrontier, Water Industry