A dynamic metafrontier estimation of productivity and technology gaps

Dolan, David (2005) A dynamic metafrontier estimation of productivity and technology gaps The University of Queensland:

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Author Dolan, David
Title of report A dynamic metafrontier estimation of productivity and technology gaps
Formatted title

Publication date 2005
Place of publication The University of Queensland
Total pages 86
Language eng
Subjects 1503 Business and Management
Formatted abstract
The concept of measuring productivity based on the radial distance between an input / output combination and a frontier generates measures of productivity that account for the contribution of all inputs. Metafrontiers provide an analytical framework for the comparison of production entities operating under different technologies. The approach involves estimation of a metafrontier and group frontiers, in relation to which productivity change is calculated. This allows construction of the Technology Gap Ratio (TGR) that is a measure of the technology gap between production entities free of efficiency effects that enable better quantification of the underlying technology gap between production entities. However the metafrontier approach has essentially been static in nature as it fails to fully account for the effects of time. A fully dynamic analytical framework for the metafrontier approach is developed which removes temporal effects. The Malmquist Productivity Index is utilised to derive dynamic expressions for productivity change, technical efficiency change, technical change and the TGR. Further, this study has derived a number of useful decompositions highlighting, in a dynamic framework, the interrelationships between the various components of the MPI and utilises the TGR to link the metafrontier and group frontier productivity estimates. These derivations show that omitting the effects of time introduces possible sources of bias in the measurement of productivity. An empirical illustration utilizing Data Envelopment Analysis is provided based on a cross-country data set compiled by lyer et al. (2004).

Document type: Research Report
Collection: MBA reports
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Created: Wed, 15 Dec 2010, 10:47:18 EST by Muhammad Noman Ali on behalf of The University of Queensland Library