Comparing TFP Catching-up and Capital Deepening in US and European Growths: A Directional Distance Function Approach

In Solow’s model the income convergence between countries arises from two main sources: a capital deepening effect resulting from the diminishing returns of the production technology and a technological transfer/diffusion effect related to Total Factor Productivity (TFP) differences. A large literature has been devoted to analyze these effects but most of the studies suffer from three weaknesses by defining the US as the a priori technological leader, by using a parametric functional form and by assuming constant returns to scale for the technology. Our paper offers an alternative approach based on a non-parametric programming framework and the estimation of directional distance functions. We explicitly separate country TFP differences into two components: a technology effect and a scale effect to study the catching-up process on each of them. We also analyze the role of the capital deepening effect by introducing a relevant measure of the structural efficiency which reveals inefficiencies due to changes in input-ratio differences. Our empirical work focuses on 15 European countries (EU) and the US over the period 1980-2004. We use time series procedures to test for convergence for individual countries or sub-sets of countries.TFP Catching-up, Capital Deepening, Convergence, Directional Distance Function. Running title: Comparing TFP Catching-up and Capital Deepening

Linear programming solutions and distance functions under a constant returns to scale technology

This note generalizes analytical relationships among activity variables of DEA models previously derived by Boussemart, Briec and Leleu (2007). We relax the asumption of constant returns to scale by showing that the key results hold under a weaker asumption of homogeneity. We use the notion of alpha-returns to scale to extend the analysis to strictly increasing and decreasing returns, covering now the whole range of returns to scale for multi-output homogenous technologies.Data envelopment analysis, Methodology, Production

More evidence on technological catching-up in the manufacturing sector

Production frontiers for the manufacturing sector are estimated to determine a “country specific” catching-up process of Total Factor Productivity (TFP).TFP gains are gauged at the manufacturing industry level for 14 OECD countries over the 1970-2001 period. Our TFP measure does not assume technical or allocative efficiency which are inherent drawbacks of usual TFP indices. We show that catching-up processes can be very different between sub-periods and across countries. A significant catching-up process was at work in the manufacturing sector between 1970 and 1986 then it overturned over the period 1987-2001. During the first sub-period, the speed of technological catching-up of the euro-zone countries is definitely higher than those of the other European or OECD nations whereas the divergence noted in second sub-period has the same order of magnitude among the three groups.Catching-up; TFP change index; Technology adoption; Production Frontier

Could Society’s willingness to reduce pesticide use be aligned with Farmers’ economic self-interest?

agricultural intensification (AI), agricultural extensification (AE), pesticide reduction, environmental performance, non parametric cost-functions

Convergence et performances des systèmes bancaires des pays de l’OCDE

L’internationalisation et la déréglementation des systèmes bancaires rendent indispensable l’analyse de la convergence de leurs performances. Dans cet article nous nous focalisons sur l’évolution des performances productives et des coûts de production des secteurs bancaires au sein des principaux pays de l’OCDE. En vue d’étudier la convergence des niveaux de ces indicateurs, nous proposons des méthodes d’estimation de la technologie de référence et de la fonction de coût basées sur la notion de fonction distance. Ces approches permettent de comparer les performances des systèmes bancaires non seulement à leur propre passé mais aussi aux meilleures pratiques observées dans le groupe sans imposer a priori trop d’hypothèses restrictives comme l’absence d’inefficacité technique et/ou allocative et les rendements d’échelle constants. Notre étude empirique concerne 17 pays, dont 8 appartenant à la zone euro, sur la période 1988-1998. Si nos résultats indiquent que le processus de convergence des performances bancaires est un phénomène complexe, ils révèlent indéniablement des effets de rattrapage des secteurs nationaux vis-à-vis des leaders situés sur leur frontière d’efficacité productive et de coût.The internationalization and deregulation of banking systems make convergence analysis of their performance essential. In the present article, we focus on the evolution of production performance and costs of banking sectors in major OECD countries. The convergence of these indicator levels is assessed using methods based on distance functions. This approach not only provides a historical perspective of banking system performance but also enables to compare it with the best practices within the sample without imposing too restrictive assumptions such as technical or allocative efficiency or constant returns to scale. The empirical study concerns seventeen countries, eight of which in the Eurozone, over the period 1988-1998. The results show statistical evidence of catching-up with leading countries situated on the frontiers of production and cost efficiency. If our results indicate that the convergence process of banking system performance is a complex phenomenon, it undeniably reveals catching up effects of the national sectors with the leaders located on their production and cost frontiers

Productivité agricole et rattrapage technologique : le cas des exploitations de grandes cultures du Nord-Pas-de-Calais

Un des principaux objectifs des différentes réformes successives de la PAC est de soumettre davantage l’offre agricole européenne aux signaux des marchés. De fait, la recherche de compétitivité devient une préoccupation majeure des agriculteurs. Les moins performants doivent rattraper les plus efficaces en essayant d’adopter progressivement les meilleures pratiques. Notre étude tente de révéler et de mesurer ces éventuels phénomènes de convergence des performances productives entre les exploitations agricoles. Elle porte sur 178 exploitations spécialisées en grandes cultures et situées dans un même bassin de production (Nord-Pas-de-Calais), au cours de la période 1994-2001 (période d’application de la réforme Mac Sharry et des premières mesures d’Agenda 2000).À partir d’estimations des niveaux de la productivité globale des facteurs basées sur la notion de fonction de distance, nos résultats indiquent clairement des processus de rattrapage, à la fois technique, et d’échelle entre les exploitationsagriculture, catch-up process, distance function, production technology, total factor productivity

Technology Adoption in French Agriculture and the Role of Financial Constraints

Successive CAP reforms have increased the exposure of European agriculture to market forces. As a result, farmers have become preoccupied with their competitiveness and have progressively adopted best practices. However, these long-run technological adjustments could be slowed down by eventual shortrun financial constraints. This contribution measures the role of these financial constraints on the catching-up component of total factor productivity for a panel of French farmers in Nord-Pas-de-Calais region during 1994-2001. For TFP estimates based on non-parametric distance functions, the second stage econometric results indicate that the technological adaptation is significantly conditioned by financial constraints.TFP catching-up, distance function, financial constraints, Agricultural Finance, Farm Management, Research and Development/Tech Change/Emerging Technologies,

Short- and Long-Run Credit Constraints in French Agriculture: A Directional Distance Function Framework Using Expenditure-Constrained Profit Functions

This empirical application investigates the eventual presence of credit constraints using a panel of French farmers. This is the first European application using a direct modelling approach based upon axiomatic production theory. The credit constrained profit maximisation model proposed by Färe, Grosskopf and Lee is extended in three ways. First, we rephrase the model in terms of directional distance functions to allow for duality with the profit function. Second, we model the presence of credit constraints in the short-run and investment constraints in the long-run using short- respectively long-run profit functions. Third, we lag the expenditure constraint one year to account for the separation between planning and production. We find empirical evidence of both credit and investment constraints, though their relative impact on the degree of financial inefficiency is rather low in the short-run. Financially unconstrained farmers are larger, perform better, and seem to benefit from a virtuous circle where access to financial markets allows better productive choices. In the long-run, almost all farms seem to suffer from credit constraints for financing their investments.proportional distance function, profit function, credit constraint

How can allocative inefficiency reveal risk preference? An empirical investigation on French wheat farms

We focus on a simple framework on wheat producer behaviour in a context of price output uncertainty. More precisely, we establish a relationship between ex post output price level and allocative inefficiency that allows to characterize farmers’ risk preferences. Given this analysis, the connection between risk aversion and other socioeconomic variables (such as degree of output specialisation, total asset, debts, farmer’s age…) can furthermore empirically be explored. This relationship is empirically tested on an unbalanced panel including about 650 wheat producers located in the French Department of Meuse over 1992- 2003.Producer behaviour, allocative inefficiency, risk aversion, Crop Production/Industries, Risk and Uncertainty,