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Business and Economics > Production and Operations Management

You are looking at 1 - 10 of 12 items for :

  • Type: Journal Issue x
  • Industry Studies: Transportation and Utilities: General x
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Cover IMF Working Papers
Distribution Costs
Alessandra Peter
We provide the first direct estimates of distribution expenses incurred by manufacturing plants and assess their importance for aggregate output. Using a novel measure from the Indian Annual Survey of Industries, we document three key facts: (1) distribution expenses are large – they amount to over half of labor costs; (2) plants in the largest decile – relative to the smallest – spend over three times as much on distribution as a share of sales; and (3) between 2000 and 2010, distribution costs as a share of sales declined by one third. We develop a model of heterogeneous manufacturing firms that rely on the distribution sector to sell their goods across space. We quantify the model using the facts on size and systematic heterogeneity in distribution shares as well as newly constructed estimates of intranational trade. Accounting for firm heterogeneity in distribution requirements is important: welfare losses from low TFP in the distribution sector are amplified 1.5-fold. From 2000 to 2010, India saw an increase in intranational trade hand in hand with a decrease in the distribution share. In combination with the model, these trends suggest largescale decreases in both variable and fixed costs of distribution, leading to welfare gains of 58% over this ten year period.
Keywords:
Distribution; transportation costs; aggregate productivity; welfare loss; distribution sector; distribution share; share of sales; distribution expense; Manufacturing; Productivity; Total factor productivity; Consumption; Labor costs
Cover IMF Working Papers
Transport Infrastructure, City Productivity Growth and Sectoral Reallocation: Evidence from China
Yang Yang
This paper examines the impact of highway expansion on aggregate productivity growth and sectoral reallocation between cities in China. To do so, I construct a unique dataset of bilateral transportation costs between Chinese cities, digitized highway network maps, and firm-level census. I first derive and estimate a market access measure that summarizes all direct and indirect impact of trade costs on city productivity. I then construct an instrumental variable to examine the causal impact of highways on economic outcomes and the underlying channels. The results suggest that highways promoted aggregate productivity growth by facilitating firm entry, exit and reallocation. I also find evidence that the national highway system led to a sectoral reallocation between cities in China.
Keywords:
WP; market access; dependent variable; transportation cost; Transport infrastructure; trade; highway; productivity; China; firm TFP; logistics company; census data; production efficiency; Transportation; Total factor productivity; Infrastructure; Global; City productivity growth; evidence from China; sectoral reallocation; C. firm Productivity; Manufacturing
Cover IMF Staff Country Reports
Malta: Selected Issues
International Monetary Fund. European Dept.
This paper discusses infrastructure gaps vis-à-vis other EU countries that are most striking in road and energy networks, both in quality and quantity. This is reflected in an unparalleled gap in the approximated public capital stock. Long-term GDP benefits from increasing public investment are estimated to be substantial, ranging between 5¼ and 18¼ percent in net present value over 30 years. Malta’s authorities have started to tackle these challenges by upgrading and diversifying the energy system and by launching a comprehensive transport strategy. These efforts go in the right direction and should be implemented in a budget-neutral manner to support a further decline in the public debt-to-GDP ratio. Malta’s fiscal position has improved considerably in recent years, yet further buildup of fiscal buffers is needed against possible adverse macroeconomic conditions. Therefore, reallocating public spending from current to capital expenditure, as well as making public investment more efficient would help boosting infrastructure.
Keywords:
ISCR; CR; Malta; loan; IMF staff calculation; financing; gaming industry; loan financing; efficiency frontier; intercompany loan; Public investment and public-private partnerships (PPP); Infrastructure; Public investment spending; Loans; Capital spending; Global; Europe
Cover IMF Working Papers
Product Market Deregulation and Growth: New Country-Industry-Level Evidence
Romain Bouis
,
Mr. Romain A Duval
, and
Johannes Eugster
The paper investigates the economic effects of major product market reforms in some of the historically most protected non-manufacturing industries. It relies on a unique mapping between new annual data on reform shocks and sector-level outcomes for five network industries (electricity and gas, land transport, air transport, postal services, and telecommunications) in twenty-six countries spanning over three decades. The use of a threedimensional panel and careful instrumentation of reform shocks using external instruments enables us to control for economy-wide macroeconomic shocks and address possible sources of omitted variable bias more broadly. Using a local projection method, we find that major reductions in barriers to entry yield large increases in output and labor productivity over a five-year horizon, concomitant with a relative price decline. By contrast, there is only a weak positive effect on sectoral employment, and investment is essentially unaffected, suggesting that output gains from reform primarily reflect higher total factor productivity. It takes some time for these gains to materialize: effects become statistically significant two to three years after the reform, as prices start dropping, and productivity and output increase significantly. However, there is no evidence of any negative short-term cost from reform, including under weak macroeconomic conditions. These findings provide a clear case for intensifying product market reform efforts in advanced economies at the current juncture of weak growth.
Keywords:
WP; panel dataset; country-time-industry panel data; EU country; OECD indicator; time series; Structural reforms; deregulation; competition; entry barriers; product market; growth; sector observation; product market deregulation; labor productivity effect; land transport; Commodity markets; Transportation; Electricity; Employment; Labor productivity; Global
Cover IMF Working Papers
The Role of Productivity, Transportation Costs, and Barriers to Intersectoral Mobility in Structural Transformation
Cem Karayalcin
and
Mihaela Pintea
The process of economic development is characterized by substantial reallocations of resources across sectors. In this paper, we construct a multi-sector model in which there are barriers to the movement of labor from low-productivity traditional agriculture to modern sectors. With the barrier in place, we show that improvements in productivity in modern sectors (including agriculture) or reductions in transportation costs may lead to a rise in agricultural employment and through terms-oftrade effects may harm subsistence farmers if the traditional subsistence sector is larger than a critical level. This suggests that policy advice based on the earlier literature needs to be revised. Reducing barriers to mobility (through reductions in the cost of skill acquisition and institutional changes) and improving the productivity of subsistence farmers needs to precede policies designed to increase the productivity of modern sectors or decrease transportation costs.
Keywords:
WP; subsistence farming; terms of trade; Structural transformation; Subsistence agriculture; multi-sector models; Economic development; Transportation costs; transportation cost; agriculture sector; productivity improvement; modern agriculture; productivity difference; excess demand; improvement result; Agricultural sector; Productivity; Transportation; Manufacturing; Sub-Saharan Africa
Cover IMF Working Papers
The Level of Productivity in Traded and Non-Traded Sectors for a Large Panel of Countries
Rui Mano
and
Marola Castillo
This paper explains in detail the construction of series for productivity in the traded and nontraded sectors for a panel of 56 countries spanning 1989–2012. The level of productivity in each sector is defined as real value added per worker in constant 2005 Purchasing Power Parity (PPP) U.S. dollars. To construct these series, we collect industry-level data from several sources, and classify individual industries as traded/non-traded using their ratio of exports to value added. Finally, we aggregate the industry data up to a traded sector and a non-traded sector, accordingly. This new dataset has two main advantages relative to existing datasets: (i) it defines more finely the traded/non-traded sectors, by drawing on much more disaggregated industry source data; and (ii) it allows for meaningful comparisons of the level of productivity across countries/sectors because sectoral productivity is adjusted by its own price level.
Keywords:
WP; productivity differential; Sectoral Productivity; Traded and Non-Traded Sectors; Purchasing Power Parity; industry classification; industry level; manufacturing Nec; industries ISIC Rev.; traded industry; sector productivity; EU KLEMS; industry d; Productivity; Transportation; Public expenditure review; Public investment and public-private partnerships (PPP); Asia and Pacific; Africa
Cover IMF Working Papers
Japan out of the Lost Decade: Divine Wind or Firms’ Effort?
Mr. Ichiro Tokutsu
,
Mr. Kazuo Ogawa
, and
Mika Saito
A surge of exports in the 2000s helped Japan exit the severe decade-long stagnation known as the lost decade. Using panel data of Japanese exporting firms, we examine the sources of the export surge during this period. One view argues that the so-called "divine wind" or exogenous external demand boosted Japanese exports. The other view emphasizes the role of supply factors such as productivity gains, materialized after long-fought restructuring efforts during the lost decade. Estimating the firm-level export function allows us to assess the relative importance of these demand and supply factors. Evidence shows that firms' efforts were more important than the divine wind.
Keywords:
WP; Lost Decade; Export; Total Factor Productivity; Price-Cost Margin; export function; margin equation; export growth; margin variable; B. equilibrium export price; Exports; Export performance; Productivity; Transportation; Asia and Pacific; North America; Global
Cover IMF Working Papers
Export Versus FDI in Services
International Monetary Fund
In the literature on exports and investment, most productive firms are seen to invest abroad. In the Helpman et al. (2004) model, costs of transportation play a critical role in the decision about whether to serve foreign customers by exporting, or by producing abroad. We consider the case of tradable services, where the marginal cost of transport is near zero. We argue that in the purchase of services, buyers face uncertainty about product quality, especially when production is located far away. Firm optimisation then leads less productive firms to self-select themselves for FDI. We test this prediction with data from the Indian software industry and find support for it.
Keywords:
WP; technical efficiency; fixed cost; FDI; Exports; Productivity; Heterogeneous firms; Software; Uncertainty; services company; firms export; firm productivity; firms lie; software firm; Foreign direct investment; Transportation; Service exports; Europe
Cover IMF Working Papers
Firm Heterogeneity and Weak Intellectual Property Rights
Mr. Stanley B Watt
In weak intellectual property rights (IPR) environments, the imitation of proprietary technology by domestic firms has become a deterrent for foreign investment. Different multinationals may view this deterrent differently. This paper develops a model where firms with more technology are less likely to invest in weak IPR environments. If imitation is costly, the model predicts that multinationals with the lowest level and highest level of technology will invest in weak IPR environments, and multinationals with a moderate level of technology will invest only in strong IPR environments. Empirical analysis with firm level data is consistent with this non-monotonicity result.
Keywords:
WP; dependent variable
Cover IMF Working Papers
Can the Standard International Business Cycle Model Explain the Relation Between Trade and Comovement?
Kei-Mu Yi
and
Mr. Ayhan Kose
Recent empirical research finds that pairs of countries with stronger trade linkages tend to have more highly correlated business cycles. We assess whether the standard international business cycle framework can replicate this intuitive result. We employ a three-country model with transportation costs. We simulate the effects of increased goods market integration under two asset market structures, complete markets and international financial autarky. Our main finding is that under both asset market structures the model can generate stronger correlations for pairs of countries that trade more, but the increased correlation falls far short of the empirical findings. Even when we control for the fact that most country-pairs are small with respect to the rest of the world, the model continues to fall short. We also conduct additional simulations that allow for increased trade with the third country or increased TFP shock comovement to affect the country pair's business cycle comovement. These simulations are helpful in highlighting channels that could narrow the gap between the empirical findings and the predictions of the model.
Keywords:
WP; trade intensity; business cycle; transport cost; free trade; international trade; international business cycle comovement; GDP correlation; log trade specification; intensity level; Transportation; Plurilateral trade; Total factor productivity; Business cycles; Consumption