Technical innovation in industrial production

New techniques in manufacturing, popularly referred to as mechanization and automation, have been a preoccupation of social and economic theorists since the industrial revolution. A selection of relevant literature is reviewed, including the neoclassical economic treatment of technical change. This incorporates alterations to the mathematical production function and an associated increase in the efficiency with which the factors of production are converted into output. Other work emphasises the role of research and development and the process of diffusion, whereby new production techniques are propagated throughout industry. Some sociological writings attach importance to the type of production technology and its effect on the organisational structure and social relations within the factory. Nine detailed case studies are undertaken of examples of industrial innovation in the rubber, automobile, vehicle components, confectionery and clothing industries. The old and new techniques are compared for a range of variables, including capital equipment, labour employed, raw materials used, space requirements and energy consumption, which in most cases exhibit significant change with the innovation. The rate of output, labour productivity, product quality, maintenance requirements and other aspects are also examined. The process by which the change in production method was achieved is documented, including the development of new equipment and the strategy of its introduction into the factory, where appropriate. The firm, its environment, and the attitude of different sectors of the workforce are all seen to play a part in determining the motives for and consequences which flow from the innovations. The traditional association of technical progress with its labour-saving aspect, though an accurate enough description of the cases investigated, is clearly seen to afford an inadequate perspective for the proper understanding of this complex phenomenon, which also induces change in a wide range of other social, economic and technical variables.

The impact of Islamic banking on the cost efficiency and productivity change of Malaysian commercial banks

This study employs Stochastic Frontier Analysis (SFA) to analyse Malaysian commercial banks during 1996–2002, and particularly focuses on determining the impact of Islamic banking on performance. We derive both net and gross efficiency estimates, thereby demonstrating that differences in operating characteristics explain much of the difference in costs between Malaysian banks. We also decompose productivity change into efficiency, technical, and scale change using a generalized Malmquist productivity index. On average, Malaysian banks experience moderate scale economies and annual productivity change of 2.68%, with the latter driven primarily by Technical Change (TC), which has declined over time. Our gross efficiency estimates suggest that Islamic banking is associated with higher input requirements. However, our productivity estimates indicate that full-fledged Islamic banks have overcome some of these cost disadvantages with rapid TC, although this is not the case for conventional banks operating Islamic windows. Merged banks are found to have higher input usage and lower productivity change, suggesting that bank mergers have not contributed positively to bank performance. Finally, our results suggest that while the East Asian financial crisis had a short-term costreducing effect in 1998, the crisis triggered a long-lasting negative impact by increasing the volume of nonperforming loans.

Productive efficiency and regulatory reform: The case of vehicle inspection services

Measuring productive efficiency provides information on the likely effects of regulatory reform. We present a Data Envelopment Analysis (DEA) of a sample of 38 vehicle inspection units under a concession regime, between the years 2000 and 2004. The differences in efficiency scores show the potential technical efficiency benefit of introducing some form of incentive regulation or of progressing towards liberalization. We also compute scale efficiency scores, showing that only units in territories with very low population density operate at a sub-optimal scale. Among those that operate at an optimal scale, there are significant differences in size; the largest ones operate in territories with the highest population density. This suggests that the introduction of new units in the most densely populated territories (a likely effect of some form of liberalization) would not be detrimental in terms of scale efficiency. We also find that inspection units belonging to a large, diversified firm show higher technical efficiency, reflecting economies of scale or scope at the firm level. Finally, we show that between 2002 and 2004, a period of high regulatory uncertainty in the sample’s region, technical change was almost zero. Regulatory reform should take due account of scale and diversification effects, while at the same time avoiding regulatory uncertainty.

The international trade as the sole engine of growth for an economy

Can international trade act as the sole engine of growth for an economy? If yes, what are the mechanisms through which trade operates in transmitting permanent growth? This paper answers these questions with two simple two-country models, in which only one country enjoys sustained growth in autarky. The models differ in the assumptions on technical change, which is either labour- or capital-augmenting. In both cases, the stagnant economy imports growth by trading. In the first model, growth is transmitted because of permanent increases in the trade volume. In the alternative framework, the stagnant economy imports sustained growth because its terms of trade permanently improve.

Devolution dynamics of Spanish local government

Over the last few years, ther has been a devolutionary tendency in many developed and developing countries. In this article we propose a methodology to decompose whether the benefits in terms of effciency derived from transfers of powers from higher to municipal levels of government "the "economic dividend" of devolution) might increase over time. This methodology is based on linear programming approaches for effciency measurement. We provide anapplication to Spanish municipalities, which have had to adapt to both the European Stability and Growth Pact as well as to domestic regulation seeking local governments balanced budget. Results indicate that efficiency gains from enhaced decentralization have increased over time. However, the way through which these gains accrue differs across municipalities -in some cases technical change is the main component, whereas in others catching up dominates.

Organizational form and business performance

This project deals with the generation of profitability and the distribution of its benefits. Inspired by Davis (1947, 1955), we define profitability as the ratio of revenue to cost. Profitability is not as popular a measure of business financial performance as profit, the difference between revenue and cost. Regardless of its popularity, however, profitability is surely a useful financial performance measure. Our primary objective in this project is to identify the factors that generate change in profitability. One set of factors, which we refer to as sources, consists of changes in quantities and prices of outputs and inputs. Individual quantity changes aggregate to the overall impact of quantity change on profitability change, which we call productivity change. Individual price changes aggregate to the overall impact of price change on profitability change, which we call price recovery change. In this framework profitability change consists exclusively of productivity change and price recovery change. A second set of factors, which we refer to as drivers, consists of phenomena such as technical change, change in the efficiency of resource allocation, and the impact of economies of scale. The ability of management to harness these factors drives productivity change, which is one component of profitability change. Thus the term sources refers to quantities and prices of individual outputs and inputs, whose changes influence productivity change or price recovery change, either of which influences profitability change. The term drivers refers to phenomena related to technology and management that influence productivity change (but not price recovery change), and hence profitability change.

Feasibility of replacing multiple ADSL connections with Multi-Dwelling Access

This final project was made for the Broadband/Implementation department of TeliaSonera Finland. The question to be examined is if the operator should replace multiple ADSL connections implemented over a leased line with Multi-Dwelling access based on an Ethernet/Optical Fibre access network. The project starts with describing the technology related to these access network solu-tions and presents the technology that is used in TeliaSonera Finland's access network. It continues from the technology to describe the problem with some of the ADSL implemen-tations of TeliaSonera. The problem is the implementations done over a leased line that can cost TeliaSonera over years as much as a possible investment to extend network when there is several lines leased to the same building. The project proposes a Multi-Dwelling access as a solution to this problem and defines the circumstances when to use it. After a satisfactory solution has found the project takes a view how implementation of the solution might alter the network and a new problem is found. When used commonly to replace need of ADSL implementation Multi-Dwelling access would significantly increase optical cable congestion near operators POP. As a final deed this project also proposes a technical change to existing way to implement multi-dwelling access with EPON technology.

The Impact of Trade on Technology and Skill Upgrading Evidence from Argentina

In the last 20 years, wage inequality has increased in many developing countries. Most research on this topic focuses on two alternative causes: trade or skill-biased technical change. Several empirical studies in both developed and developing countries document increases in skill intensity within all sectors, favoring the technological change explanation over trade. Instead, I present and test a model where bilateral trade liberalization increases exporting revenues inducing more firms to enter the export market and to adopt skilled-biased new technologies. I find that the increase in the relative demand of skilled labor does not come from labor reallocation across sectors or firms but from skill upgrading within firms. Firms that upgrade technology faster also upgrade skill faster. Finally, firms entering the export market after liberalization become more skill and technology-intensive than non exporters.

Globalization, Divergence and Stagnation

In a world where poor countries provide weak protection for intellectual property rights, market integration shifts technical change in favor of rich nations. Through this channel, free trade may amplify international income differences. At the same time, integration with countries where intellectual property rights are weakly protected can slow down the world growth rate. A crucial implication of these results is that protection of intellectual property is most beneficial in open countries. This prediction, which is novel in the literature, finds support in the data on a panel of 53 countries observed in the years 1965-1990.

Measuring and explaining farm inefficiency in a panel data set of mixed farms

This paper aims to estimate a translog stochastic frontier production function in the analysis of a panel of 150 mixed Catalan farms in the period 1989-1993, in order to attempt to measure and explain variation in technical inefficiency scores with a one-stage approach. The model uses gross value added as the output aggregate measure. Total employment, fixed capital, current assets, specific costs and overhead costs are introduced into the model as inputs. Stochasticfrontier estimates are compared with those obtained using a linear programming method using a two-stage approach. The specification of the translog stochastic frontier model appears as an appropriate representation of the data, technical change was rejected and the technical inefficiency effects were statistically significant. The mean technical efficiency in the period analyzed was estimated to be 64.0%. Farm inefficiency levels were found significantly at 5%level and positively correlated with the number of economic size units.

Increasing returns, imperfect competition and factor prices

We show how, in general equilibrium models featuring increasing returns, imperfectcompetition and endogenous markups, changes in the scale of economic activity affectincome distribution across factors. Whenever final goods are gross-substitutes (gross-complements), a scale expansion raises (lowers) the relative reward of the scarce factoror the factor used intensively in the sector characterized by a higher degree of product differentiation and higher fixed costs. Under very reasonable hypothesis, our theory suggests that scale is skill-biased. This result provides a microfoundation for the secular increase in the relative demand for skilled labor. Moreover, it constitutes an important link among major explanations for the rise in wage inequality: skill-biased technical change, capital-skill complementarities and international trade. We provide new evidence on the mechanism underlying the skill bias of scale.

International Standardisation and Local Participatory Dynamics : The INTERNORM Project

This paper presents a pilot project (INTERNORM) funded by the University of Lausanne (2010 - 2013) to support the involvement of civil society organisations (CSO) in international standard setting bodies such as the ISO. It analyses how a distinct participatory mechanism can influence the institutional environment of technical diplomacy in which standards are shaped. The project is an attempt to respond to the democratic deficit attested in the field of international standardisation, formally open to civil society participation, but still largely dominated by expert knowledge and market players. Many international standards have direct implications on society as a whole, but CSOs (consumers and environmental associations, trade unions) are largely under-represented in negotiation arenas. The paper draws upon international relations literature on new institutional forms in global governance and studies of participation in science and technology. It argues that there are significant limitations to the rise of civil society participation in such global governance mechanisms. The INTERNORM project has been designed as a platform of knowledge exchange between CSO and academic experts, with earmarked funding and official membership to a national standardisation body. But INTERNORM cannot substitute for a long- established lack of resources in time, money and expertise of CSOs. Despite high entry costs into technical diplomacy, participation thus appears as less a matter of upstream engagement, or of procedure only, than of dedicated means to shift the geometry of actors and the framing of socio-technical change.

Extending the Kuznets Curve

[cat] Les darreres dècades s’han caracteritzat per un intens augment de les desigualtats salarials a nivell mundial. Aquest article allarga la hipòtesi clàssica de la Corba de Kuznets per cobrir les economies post-industrials i tractar d’explicar aquest fenomen. Segons la hipòtesi de la Corba de Kuznets Allargada, les desigualtats salarials podrien evolucionar segons una corba en forma d’N. La U-inverida d’aquesta corba seria deguda al procés de canvi estructural que acompanya a un procés de industrialització. I l’extrem dret de la mateixa, associada al creixement explosiu de la formació de capital humà en les economies modernes i post-industrials. En aquest sentit, els principals candidats per explicar el recent augment de les desigualtats: el canvi tècnic esbiaixat a favor del treball qualificat, la globalització (comerç i migracions) i els factors institucionals, estarien ja incorporats en l’evolució de la composició de la força de treball en termes de qualificacions. La limitada evidència empírica sobre aquest tema, tendeix a donar suport a la Corba de Kuznets Allargada.

Extending the Kuznets Curve

[cat] Les darreres dècades s’han caracteritzat per un intens augment de les desigualtats salarials a nivell mundial. Aquest article allarga la hipòtesi clàssica de la Corba de Kuznets per cobrir les economies post-industrials i tractar d’explicar aquest fenomen. Segons la hipòtesi de la Corba de Kuznets Allargada, les desigualtats salarials podrien evolucionar segons una corba en forma d’N. La U-inverida d’aquesta corba seria deguda al procés de canvi estructural que acompanya a un procés de industrialització. I l’extrem dret de la mateixa, associada al creixement explosiu de la formació de capital humà en les economies modernes i post-industrials. En aquest sentit, els principals candidats per explicar el recent augment de les desigualtats: el canvi tècnic esbiaixat a favor del treball qualificat, la globalització (comerç i migracions) i els factors institucionals, estarien ja incorporats en l’evolució de la composició de la força de treball en termes de qualificacions. La limitada evidència empírica sobre aquest tema, tendeix a donar suport a la Corba de Kuznets Allargada.

Agricultural productivity and structural transformation. Evidence from Brazil

We study the effects of the adoption of new agricultural technologies on structural transformation. To guide empirical work, we present a simple model where the effect of agriculturalproductivity on industrial development depends on the factor bias of technical change. We testthe predictions of the model by studying the introduction of genetically engineered soybeanseeds in Brazil, which had heterogeneous effects on agricultural productivity across areas withdifferent soil and weather characteristics. We find that technical change in soy production wasstrongly labor saving and lead to industrial growth, as predicted by the model.