Firm efficiency, industry performance and the economy: three-way decomposition with an application to Andalusia
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An economy may perform better because the firms become more efficient, the industries are better organized, or the allocation between industries is improved. In this paper we extend the literature on the measurement of industry efficiency (a decomposition in firm contributions and an organizational effect) to a third level, namely that of the economy. The huge task of interrelating the performance of an economy to industrial firm data is accomplished for Andalusia.
KeywordsInput–output Industrial organization Comparative advantage Allocative efficiency Efficiency decomposition
JEL ClassificationL10 D24 O47
Firstly, we thank Jose M. Rueda-Cantuche (IPTS-Joint Research Center EU and Pablo de Olavide University) for his essential help in building the database. We also thank the feedback from: Mikuláš Luptáčik (WU Vienna University of Economics and Business) during the 24th EURO Conference held in Lisbon, July 12th, 2010; Jan Oosterhaven, Erik Dietzenbacher and Bart Los (Groningen University), Geoffrey Hewings (REAL-University of Illinois) and Tobias Kronenberg (Forschungszentrum Jülich) during the 4th Spanish Input–Output Conference held in Madrid, September 2011. Additionally, the first author thanks Thanh Le Phuoc (University of Maastricht and MERIT) and very specially to Michael R. Bussiek (GAMS Corp.) for their precious cooperation in constructing the computational model; Mònica Serrano (University of Barcelona) and Michael C. Ferris (University of Wisconsin at Madison) for his help in early calculations. He also thanks CentER for hospitality and the financial support of Junta de Andalucía (Regional Government of Andalusia, Spain) and Pablo de Olavide University. We are grateful to two anonymous referees and an associate editor for critical comments that prompted many changes.
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