Efficiency Issues in Transitional Economies : An Application to Hungary

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  • Format: Hardcover
  • Copyright: 1999-02-01
  • Publisher: Ashgate Pub Co

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This book uses a number of approaches to measure the performance of firms in the transition economies of Central and Eastern Europe during the early stages of reform. There is considerable controversy about the level of productivity in this period, as is evident by contradictory evidence quoted in the literature and a high degree of inconsistency in published national statistics. Indeed, the disagreement extends to the measurement approach and the results for this group of countries. Particularly difficult is any analysis at the firm level, as data is inconsistent, incomplete and based on pre-reform accounting systems. The information used in the book is a unique panel data set of 64 items collected from 1000 firms across 25 industry sectors in Hungary. Productive efficiency is measured and the reasons for poor performance are discussed. It was found that industrial sectors differ in their average performance levels and in the factors most likely to account for this. Finally recommendations are developed to help to reverse the decline in productivity.

Table of Contents

List of Tablesp. ix
List of Figuresp. xi
Acknowledgementsp. xii
Introductionp. 1
The Transition, Production Theory, Hungarian Accounting and Datap. 5
Measurement in Periods of Transitionp. 7
Introductionp. 7
The Characteristics of Economies in Transitionp. 9
Why Measuring Efficiency in Production is Worthwhilep. 11
Conclusion: The Contribution of this Studyp. 14
The Economics of Transitionp. 16
Introductionp. 16
An Overview of the Process of Reformp. 16
Enterprise Reformp. 21
Performance Measurement: A Selective Surveyp. 24
Industrial Policy and Structural Transformationp. 29
Conclusionp. 31
Parametric and Nonparametric Measures of Efficiency and Total Factor Productivity: Theoretical Relationshipsp. 32
Introductionp. 32
The Measurement of Productive Efficiencyp. 34
Productivity Indices Derived from Parametric Functionsp. 41
Nonparametric Production Modelsp. 46
Productivity Indices Derived from Nonparametric Functionsp. 49
Parametric vs Nonparametric Models of Efficiency and Productivity Measurementp. 51
Conclusionp. 52
The Contribution of Accounting Information in Efficiency Measurement: Hungarian Firm Level Datap. 55
Introductionp. 55
The Characteristics of Accounting Informationp. 56
Comparative Accounting Systemsp. 57
Development of the Hungarian Accounting Systemp. 59
Reconciling Accounting Definitionsp. 60
Datap. 62
Some Comments on Decision-Useful Accounting Informationp. 72
Conclusionp. 73
Reconciliation of Accounting Datap. 75
Models, Estimation and Resultsp. 81
Introductionp. 83
Primal and Dual Approaches and Functional Forms: Production Function Estimation and Explanationp. 85
Introductionp. 85
Primal and Dual Functions and Choice of Functional Formp. 86
Single Industry Level Elasticities and Factor Sharesp. 89
Yearly Cross Section Results: Industry Comparisonsp. 91
Cross-ownership Comparisonsp. 98
Conclusionp. 104
Firm and Industry Level Efficiency Measurement using Parametric and Nonparametric, Deterministic and Stochastic Frontiersp. 106
Introductionp. 106
Frontier Production Functions and Efficiency Measurementp. 107
Firm Level Efficiency Measurementp. 115
Industry Level Efficiency Measurementp. 120
The Frontier and Factor Proportionsp. 122
Comparative Methodologiesp. 125
Conclusionp. 128
The Importance of Firm Size: Estimates of Returns to Scale and the Decomposition of Technical and Scale Efficiencyp. 131
Introductionp. 131
The Problem of an Optimal Firm Sizep. 132
A Review of Enterprise Statisticsp. 135
The Identification of Scale Economiesp. 137
The Programming Approach: Pure Technical and Scale Efficienciesp. 139
Comparison of Industry Scale Effectsp. 141
Conclusionp. 145
Inter-temporal Consistency, Panel Data Estimation, One and Two-Factor Error Component Modelsp. 147
Introductionp. 147
The Value of Panel Data Modelsp. 148
Panel Data Model Specificationp. 151
Inter-temporal Consistencyp. 153
Inter-temporal Dynamicsp. 156
Error Component Regressionsp. 158
Short and Long Run Elasticitiesp. 165
Conclusionp. 166
Inter-temporal Effectsp. 167
The Index Number Approach to Productivity, Efficiency and Technical Change; An Application to Structural Transformationp. 171
Introductionp. 173
Examining Changes Over Time Using Parametric and Nonparametric TFP Indicesp. 174
Introductionp. 174
An Index of Total Factor Productivityp. 176
Technical Progress and the Multilateral Malmquist Indexp. 186
Comparative Performance Indicatorsp. 188
Conclusionp. 193
Decomposing Productivity into Efficiency and Technical Change: Leading Sectors and the Transformationp. 195
Introductionp. 195
Reversing the Course of the Structural Transformation in Hungaryp. 196
New Evidence on Old Questionsp. 197
The Malmquist Index: Comparative Sector Performance in Hungaryp. 202
Leading Sectors and Structural Transformationp. 210
Conclusionp. 213
Conclusionp. 216
Summary and Major Findingsp. 216
Concluding Remarksp. 221
Bibliographp. 226
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