Efficiency and productivity of Singapore’s manufacturing sector 2001-2010: An analysis using Simar and Wilson’s (2007) bootstrapped truncated approach

This paper seeks to explain the lagging productivity in Singapore’s manufacturing noted in the statements of the Economic Strategies Committee Report 2010. Two methods are employed: the Malmquist productivity to measure total factor productivity change and Simar and Wilson’s (J Econ, 136:31–64, 2007) bootstrapped truncated regression approach. In the first stage, the nonparametric data envelopment analysis is used to measure technical efficiency. To quantify the economic drivers underlying inefficiencies, the second stage employs a bootstrapped truncated regression whereby bias-corrected efficiency estimates are regressed against explanatory variables. The findings reveal that growth in total factor productivity was attributed to efficiency change with no technical progress. Most industries were technically inefficient throughout the period except for ‘Pharmaceutical Products’. Sources of efficiency were attributed to quality of worker and flexible work arrangements while incessant use of foreign workers lowered efficiency.

Efficiency and productivity of Singapore's manufacturing sector 2001-2010 : an analysis using bootstrapped truncated approach

This paper seeks to explain the lagging productivity in Singapore’s manufacturing noted in the statements of the Economic Strategies Committee Report 2010. Two methods are employed: the Malmquist productivity to measure total factor productivity (TFP) change and Simar and Wilson’s (2007) bootstrapped truncated regression approach which first derives bias-corrected efficiency estimates before being regressed against explanatory variables to help quantify sources of inefficiencies. The findings reveal that growth in total factor productivity was attributed to efficiency change with no technical progress. Sources of efficiency were attributed to quality of worker and flexible work arrangements while the use of foreign workers lowered efficiency.

Evaluation of research in efficiency and productivity:a survey and analysis of the first 30 years of scholarly literature in DEA

Since the original Data Envelopment Analysis (DEA) study by Charnes et al. [Measuring the efficiency of decision-making units. European Journal of Operational Research 1978;2(6):429–44], there has been rapid and continuous growth in the field. As a result, a considerable amount of published research has appeared, with a significant portion focused on DEA applications of efficiency and productivity in both public and private sector activities. While several bibliographic collections have been reported, a comprehensive listing and analysis of DEA research covering its first 30 years of history is not available. This paper thus presents an extensive, if not nearly complete, listing of DEA research covering theoretical developments as well as “real-world” applications from inception to the year 2007. A listing of the most utilized/relevant journals, a keyword analysis, and selected statistics are presented.

Has DRG payment influenced the technical efficiency and productivity of diagnostic technologies in Portuguese public hospitals? An empirical analysis using parametric and non‐parametric methods

The use of Diagnosis Related Groups (DRG) as a mechanism for hospital financing is a currently debated topic in Portugal. The DRG system was scheduled to be initiated by the Health Ministry of Portugal on January 1, 1990 as an instrument for the allocation of public hospital budgets funded by the National Health Service (NHS), and as a method of payment for other third party payers (e.g., Public Employees (ADSE), private insurers, etc.). Based on experience from other countries such as the United States, it was expected that implementation of this system would result in more efficient hospital resource utilisation and a more equitable distribution of hospital budgets. However, in order to minimise the potentially adverse financial impact on hospitals, the Portuguese Health Ministry decided to gradually phase in the use of the DRG system for budget allocation by using blended hospitalspecific and national DRG casemix rates. Since implementation in 1990, the percentage of each hospitals budget based on hospital specific costs was to decrease, while the percentage based on DRG casemix was to increase. This was scheduled to continue until 1995 when the plan called for allocating yearly budgets on a 50% national and 50% hospitalspecific cost basis. While all other nonNHS third party payers are currently paying based on DRGs, the adoption of DRG casemix as a National Health Service budget setting tool has been slower than anticipated. There is now some argument in both the political and academic communities as to the appropriateness of DRGs as a budget setting criterion as well as to their impact on hospital efficiency in Portugal. This paper uses a twostage procedure to assess the impact of actual DRG payment on the productivity (through its components, i.e., technological change and technical efficiency change) of diagnostic technology in Portuguese hospitals during the years 1992–1994, using both parametric and nonparametric frontier models. We find evidence that the DRG payment system does appear to have had a positive impact on productivity and technical efficiency of some commonly employed diagnostic technologies in Portugal during this time span.

Farm-level efficiency and productivity measurement using panel data: wool production in south-west Victoria

In this article we explore some issues surrounding the use of farm-level efficiency and productivity estimates for benchmarking studies. Using an eight-year balanced panel of Victorian wool producers we analyse annual variation between estimates of farm-level technical efficiency derived using Data Envelopment Analysis and Malmquist estimates of Total Factor Productivity. We find that farms change their relative rank in terms of efficiency across years. Also, unlike aggregate studies of Total Factor Productivity, we find at best erratic and modest growth, a worrying result for this industry. However, caution is needed when interpreting these results, and for that matter, benchmarking analysis as currently practised when using frontier estimation techniques like Data Envelopment Analysis.

Impact of liberalization on efficiency and productivity of sugar industry in Kenya

Purpose – The data used in this study is for the period 1980-2000. Almost midway through this period (in 1992), the Kenyan government liberalized the sugar industry and the role of the market increased, while the government's role with respect to control of prices, imports and other aspects in the sector declined. This exposed the local sugar manufacturers to external competition from other sugar producers, especially from the COMESA region. This study aims to find whether there were any changes in efficiency of production between the two periods (pre and post-liberalization). Design/methodology/approach – The study utilized two methodologies to efficiency estimation: data envelopment analysis (DEA) and the stochastic frontier. DEA uses mathematical programming techniques and does not impose any functional form on the data. However, it attributes all deviation from the mean function to inefficiencies. The stochastic frontier utilizes econometric techniques. Findings – The test for structural differences in the two periods does not show any statistically significant differences between the two periods. However, both methodologies show a decline in efficiency levels from 1992, with the lowest period experienced in 1998. From then on, efficiency levels began to increase. Originality/value – To the best of the authors' knowledge, this is the first paper to use both methodologies in the sugar industry in Kenya. It is shown that in industries where the noise (error) term is minimal (such as manufacturing), the DEA and stochastic frontier give similar results.

Measurement efficiency and productivity in SAS/OR

This paper explores the use of the optimisation procedures in SAS/OR software with application to the measurement of efficiency and productivity of decision-making units (DMUs) using data envelopment analysis (DEA) techniques. DEA was originally introduced by Charnes et al. [J. Oper. Res. 2 (1978) 429] is a linear programming method for assessing the efficiency and productivity of DMUs. Over the last two decades, DEA has gained considerable attention as a managerial tool for measuring performance of organisations and it has widely been used for assessing the efficiency of public and private sectors such as banks, airlines, hospitals, universities and manufactures. As a result, new applications with more variables and more complicated models are being introduced. Further to successive development of DEA a non-parametric productivity measure, Malmquist index, has been introduced by Fare et al. [J. Prod. Anal. 3 (1992) 85]. Employing Malmquist index, productivity growth can be decomposed into technical change and efficiency change. On the other hand, the SAS is a powerful software and it is capable of running various optimisation problems such as linear programming with all types of constraints. To facilitate the use of DEA and Malmquist index by SAS users, a SAS/MALM code was implemented in the SAS programming language. The SAS macro developed in this paper selects the chosen variables from a SAS data file and constructs sets of linear-programming models based on the selected DEA. An example is given to illustrate how one could use the code to measure the efficiency and productivity of organisations.

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

This study employs stochastic frontier analysis to analyze 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 generalised Malmquist productivity index. On average, Malaysian banks experience moderate scale economies and annual productivity change of 2.68 percent, with the latter driven primarily by technical change, 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 technical change, 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 cost-reducing effect in 1998, the crisis triggered a more lasting negative impact by increasing the volume of non-performing loans.

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.

The efficiency and productivity of Malaysian banks:an output distance function approach

This study employs stochastic frontier analysis to analyze 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 outputs between Malaysian banks. We also decompose productivity change into efficiency, technical, and scale change using a generalised Malmquist productivity index. On average, Malaysian banks experience mild decreasing return to scale and annual productivity change of 2.37 percent, with the latter driven primarily by technical change, which has declined over time. Our gross efficiency estimates suggest that Islamic banking is associated with higher input requirements. In addition, our productivity estimates indicate that the potential for full-fledged Islamic banks and conventional banks with Islamic banking operations to overcome the output disadvantages associated with Islamic banking are relatively limited. 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 an interim output-increasing effect in 1998, the crisis prompted a continuing negative impact on the output performance by increasing the volume of non-performing loans.

Indian bank efficiency and productivity changes with undesirable outputs: A disaggregated approach

The objective of this study is to examine technical efficiency and productivity growth in the Indian banking sector over the period from 2004 to 2011. We apply an innovative methodological approach introduced by Chen et al. (2011) and Barros et al. (2012), who use a weighted Russell directional distance model to measure technical inefficiency. We further modify and extend that model to measure TFP change with NPLs. We find that the inefficiency levels are significantly different among the three ownership structure of banks in India. Foreign banks have strong market position in India and they pull the production frontier in a more efficient direction. SPBs and domestic private banks show considerably higher inefficiency. We conclude that the restructuring policy applied in the late 1990s and early 2000s by the Indian government has not had a long-lasting effect.

Increase water use efficiency and productivity, and reduce energy and water usage and costs, of dairy and fodder enterprises, to reduce costs of milk production

Increase water use efficiency and productivity, and reduce energy and water usage and costs, of dairy and fodder enterprises, to reduce costs of milk production.