The Efficiency of German Universities Some Evidence from Non-Parametric and Parametric Methods

Due to tight public budget constraints, the efficiency of publicly financed universities in Germany is receiving increasing attention in the academic as well as in the public discourse. Against this background we analyze the efficiency of 72 public German universities for the years 1998 to 2003, applying data envelopment and stochastic frontier analysis. Contrary to earlier studies we account for the faculty composition of universities, which proves to be an essential element in the efficiency of higher education. Our main finding is that East German universities have performed better in total factor productivity change compared to those in West Germany. However, when looking at mean efficiency scores over the sample period, West German universities still appear at the top end of relative efficiency outcomes. --universities,efficiency,data envelopment analysis,stochastic frontier analysis

Uncertainty and the discrepancy between rate of return estimates at project appraisal and project completion

This report analyzes the World Bank's experience with project analysis from a sample of 1,105 projects. The authors compare estimated rates of return at appraisal with re-estimated rates of return at the project completion. Their findings confirm a high degree of uncertainty in project analysis. Only a small part of the discrepancy between estimated rates of return at appraisal and the re-estimated rates of return at project completion can be explained, even with the benefit of hindsight. They conclude that World Bank appraisal estimates of rates of return are too optimistic, and that uncertainties seems to be higher in the directly productive sectors (agriculture and Industry). Estimated rates of return seem more stable for infrastructure projects. One alternative to correcting modal estimates of implementation variables for"bad surprises"might be to set different minimum rate-of return criteria for different types of projects based on observed divergences in rate of return. Traditional methods of project evaluation and selection have been unable to reduce this large measure of uncertainty.ICT Policy and Strategies,Environmental Economics&Policies,Banks&Banking Reform,Health Economics&Finance,Economic Theory&Research

Enterprise restructuring in Eastern Europe : how much? how fast? where? - preliminary evidence from trade data

What kind of privatization program is best suited to stimulate enterprise restructuring in former centrally planned economies? One view, expressed by most Western business and political leaders, is that privatization is best pursued case by case, with emphasis on sales to new owners, including foreign investors. Another view, espoused by a minority of"radical"economists and economists-turned-politicians, was that restructuring is best pursued through economic incentives, combined with"mass privatization of state enterprises so that they become widely held (public) joint stock corporations. The ultimate test, of course, is future productivity growth and rising welfare standards. We cannot yet measure these. The disaggregated data on production and employment by industry required for such a measure either are not available or are unreliable. The only objective measure available - comparable across countries - is export performance. Trade data reveal to what extent firms have been able to reorient themselves to create and exploit competitive advantages. We now have four years of data, enough to get an idea of what is going on, and to compare one Central or Eastern European country's performance against another's. The data suggest that the Czech Republic, the country that has pursued mass privatization most actively and credibly, has also done best in restructuring its industries and reorienting them toward world markets. Those that pursued a gradualist approach - Hungary being the main example - have changed their export structure less, but export growth has also been above average.Environmental Economics&Policies,Economic Theory&Research,Agribusiness&Markets,Trade Policy,Water and Industry,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Agribusiness&Markets,Trade Policy,Water and Industry

The restructuring of large firms in Slovakia

The restructuring of large enterprises has received much attention in the transition of centrally planned economies to market economies. The need to transform these enterprises into viable firms is widely acknowledged. The extent of such restructuring and the determinants that underlie a successful transformation are less studied. Various schemes for dealing with large enterprises have been tried. The effect of such programs is hard to measure since the restructuring of enterprises (or the lack thereof) has taken place in the context of significant changes in the overall economic environment. Notwithstanding the difficulty in such measurement, a proper evaluation is crucial for designing further reform policies. This paper extends the literature on the microeconomics of transition by re-examining the stylized facts about firm restructuring in the light of new empirical evidence. The study is based on twenty-one case studies of Slovak firms and uses detailed financial information for the 1991-96 period and interviews with top management. A large part of sample represents firms that were initially classified as non-viable loss-makers. This study also throws some new queries on the effectiveness of different privatization methods in enhancing corporate governance and improving access to skills and capital. Author find that privatization to insiders through management-employee buy-outs did not hamper firm restructuring as the new owners (old managers) invested heavily in new technology, laid off substantial part of their workforce, sought foreign partnerships, and were prepared to sell controlling stakes to outsiders in return for fresh financial resources. The main objective of the privatization program should be the speedy transformation of ownership, not the selection of perfect owner.Banks&Banking Reform,Small Scale Enterprise,Microfinance,Small and Medium Size Enterprises,Financial Crisis Management&Restructuring,Banks&Banking Reform,Environmental Economics&Policies,Microfinance,Private Participation in Infrastructure,Small Scale Enterprise

Banks, capital markets, and corporate governance : lessons from Russia for Eastern Europe

The financial sector should be active in enterprise restructuring in the transitional economies, and should help channel resources to the private sector. What will best help the sector achieve these tasks: gradual reform or radical reform? Liberalization and privatization are the most urgent tasks transitional economies face. But for market reform to succeed, reforms of banking and capital markets must keep pace with enterprise reform and privatization. Central and Eastern Europe have pursued a gradual approach to financial reform, splitting the former state bank (or monobank) into a central bank and several large state-owned commercial banks, eventually to be privatized. Russia has taken a more radical approach, creating many new private commercial banks that have already taken over most of the business from state banks. The reform of banks and capital markets in transitional economies should not be modeled too closely on patterns in western economies, with their large institutions, complex financial instruments, and extensive regulation. A simpler process in required, compressing in a short period the historical development of financial systems - starting with small banks and accepting imperfect regulation and supervision as a fact of life. Systemic risks remain manageable if financial institutions are small and numerous enough. A system with many private banks is more likely to produce a financial sector that plays an active role in enterprise restructuring, channels resources to the private sector, and thus accelerates restructuring and economic growth. Historical comparisons confirm the benefits of such a liberal, weakly regulated banking system.Banks&Banking Reform,Financial Crisis Management&Restructuring,Financial Intermediation,Municipal Financial Management,Environmental Economics&Policies

Ownership and corporate governance : evidence from the Czech Republic

The Czech Republic's mass-privatization scheme changed the governance of many firms in a short time. The authors show that mass privatization was effective in improving firm management because of the concentrated ownership structure that resulted. For a cross section of 706 firms for the period 1992-95, they find that the more concentrated the firm's ownership, the higher the firm's market valuation and profitability. Large ownership through bank-sponsored investment funds and strategic investors appears to be particularly important in improving corporate governance and turning firms around. They find no evidence that market valuation or profitability were lower for firms in which investment funds sponsored by a firm's main bank represented a large ownership stake. It is often argued that the firm's main bank having (indirect) ownership control could represent a conflict of interest. The empirical analysis here shows, quite the contrary, that such indirect ownership control has a significant positive influence. On balance, banks that had an (indirect) equity stake in a firm have a positive influence on the firm's corporate governance.Financial Crisis Management&Restructuring,International Terrorism&Counterterrorism,Economic Theory&Research,Payment Systems&Infrastructure,Banks&Banking Reform,Economic Theory&Research,International Terrorism&Counterterrorism,Financial Crisis Management&Restructuring,Banks&Banking Reform,Environmental Economics&Policies

Economic consequences of German reunification : 12 months after the big bang

The author discusses how East Germany is faring 12 months after the big bang unification with West Germany. The experience with the German unification to date raises the question whether there would have been alternative and better courses of action. Such options can be considered in three broad areas: (a) the initial conversion rate and, closely connected, wage policies; (b) the wisdom of transferring the economic and legal system of the Federal Republic of Germany in its entirety; and (c) the desirability of the adopted mix of adjustment measures, in particular the trade-off between social assistance, public investment spending, and incentives for private investment. The"big bang"has worked. In Germany's special situation, more gradual approaches would not have worked because it was politically unthinkable to restrict east-west migration. The German unification provides an opportunity to learn a few lessons about the immensity of this task in the best of all circumstances: the take-over by a"big brother"who is ready to lend a hand in the reconstruction task, and willing to foot most of the bill.Banks&Banking Reform,Municipal Financial Management,Governance Indicators,Environmental Economics&Policies,Economic Theory&Research

Project Evaluation and Uncertainty in Practice: A Statistical Analysis of Rate-of-Return Divergences of 1,015 World Bank Projects

This article analyzes the World Bank's experience with project evaluation for a sample of 1,015 projects by comparing estimated rates of return at appraisal with reestimated rates of return when construction works are completed, usually 5 to 10 years after appraisal. The analysis highlights the high degree of uncertainty in project analysis. A wide range of variables has been introduced to explain the observed divergence in appraisal and reestimated rates of return, but only a relatively small part of the divergence can be explained, even with the benefit of hindsight. Project analysis thus has to cope with a large degree of uncertainty, which the traditional methods of project evaluation and selection have not been able to reduc

Zur Effizienz von Hochschulen : erste Ergebnisse für Deutschland

Das Humankapital einer Volkswirtschaft ist einer der zentralen Faktoren für das Wirtschaftswachstum. Daher finden nationale Bildungssysteme und die Hochschullandschaft als ein wesentlicher Bestandteil zunehmend Beachtung in der politischen und wissenschaftlichen Debatte. In Zeiten knapper öffentlicher Kassen wird zunehmend die Frage nach einer effizienten Verwendung der Steuermittel gestellt. Vor diesem Hintergrund wird im vorliegenden Beitrag die Effizienz von 72 öffentlich finanzierten Universitäten untersucht. Die empirischen Befunde zeigen, dass die ostdeutschen Hochschulen im Vergleich zu den westdeutschen Universitäten in den Jahren 1998-2003 ihre Effizienz steigern konnten. Allerdings liegen sie (noch) hinter den westdeutschen Hochschulen zurück, wenn die durchschnittlichen Effizienzwerte betrachtet werden.Hochschule; X-Effizienz; Vergleich; Deutschland

Restructuring of Large Firms in Slovakia

This paper examines case study evidence of large Slovak firms chosen to represent a wide range of initial conditions, privatization techniques and success with restructuring. We document the ownership changes and restructuring actions of firms. We then re-examine several hypotheses about firm restructuring in the light of this new evidence. In particular, we show that the majority of large Slovak firms have successfully restructured in the absence of foreign investors and government-led restructuring programs. The study also throws some new queries on the effectiveness of different privatization methods in enhancing corporate governance and improving access to skills and capital. We find that privatization to insiders through management-employee buy-outs did not hamper firm restructuring as the new owners (old managers) invested heavily in new technology, laid off substantial part of their workforce, sought foreign partnerships, and were prepared to sell controlling stakes to outsiders in return for fresh financial resources. The evidence also suggests that the mass privatization program did not result in weak corporate governance since it was followed by a rapid consolidation of ownership. Our findings support the view that the main objective of privatization programs should be the speedy transformation of ownership, not the selection of perfect owners.http://deepblue.lib.umich.edu/bitstream/2027.42/39463/3/wp73.pd