TIs Globalization Driving Efficiency? A Threshold Stochastic Frontier Panel Data Modelling Approach

Camilla Mastromarco (), Laura Serlenga () and Yongcheol Shin

No 40, SERIES from Dipartimento di Economia e Finanza - Università degli Studi di Bari "Aldo Moro"

Abstract: Recently, Mastromarco, Serlenga and Shin (2010) propose a two-step approach to examine dynamic transmission mechanism under which globalization factors fos- ter technology efficiency. In this paper, we extend the MSS model by combining panel threshold regression technique advanced by Hansen (1999). This threshold stochastic frontier panel data model enables us to analyze regime-specific stochas- tic frontiers and complex time-varying patterns of technical efficiencies in a robust manner. Using a dataset of 44 countries over 1970-2007, we find that income elas- ticities of labour and capital and time-varying common efficiencies are substantially different under superior and inferior frontiers. Capital and labour inputs are more productive under superior frontier. More importantly, common efficiencies have steadily increased under superior frontier, but technical efficiency has monotoni- cally decreased for low income countries, supporting the so-called club convergence hypothesis. Furthermore, the VAR-based impulse response analyses suggest that openness factors through FDI and trade help the countries improve production technology and efficiency position relative to the frontier only after the country has reached a certain level of development.

Keywords: Threshold Stochastic Frontier Models in Heterogeneous Panels; Globalization Factors and Unobserved Factors; Time-Varying Efficiencies; Impulse Response Analyses (search for similar items in EconPapers)
JEL-codes: C13 C33 D24 O47 (search for similar items in EconPapers)
Pages: 277
Date: 2011-10, Revised 2011-10
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Journal Article: Is Globalization Driving Efficiency? A Threshold Stochastic Frontier Panel Data Modeling Approach (2012)
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