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Assessing dynamic efficiency of the Spanish construction sector pre- and post-financial crisis

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  • Kapelko, Magdalena
  • Oude Lansink, Alfons G.J.M.
  • Stefanou, Spiro E.

Abstract

This paper estimates dynamic efficiency in the Spanish construction industry before and during the current financial crisis over the period 2001-2009. Static efficiency measures are biased in a context of a significant economic crisis with large investments and disinvestments as they do not account for costs in the adjustment of quasi-fixed factors. The results show that overall dynamic cost inefficiency is very high with technical inefficiency being the largest component, followed by allocative and scale inefficiency. Moreover, overall dynamic cost inefficiency is significantly larger before the beginning of the financial crisis than during the financial crisis. Results also show that larger firms are on average less technically and scale inefficient than smaller firms, but have more problems in choosing the mix of inputs that minimizes their long-term costs. Firms that went bankrupt, on average have a higher overall dynamic cost inefficiency and scale inefficiency than firms that did not go bankrupt.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 131st Seminar, September 18-19, 2012, Prague, Czech Republic with number 135790.

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Date of creation: 18 Sep 2012
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Handle: RePEc:ags:eaa131:135790

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Keywords: dynamic efficiency; construction sector; Agribusiness; Agricultural and Food Policy;

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  1. Stefanou, Spiro E. & Silva, Elvira, 2007. "AJAE Appendix: Dynamic Efficiency Measurement: Theory and Application," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 89(2), May.
  2. Taewoo You & Hongmin Zi, 2007. "The economic crisis and efficiency change: evidence from the Korean construction industry," Applied Economics, Taylor & Francis Journals, vol. 39(14), pages 1833-1842.
  3. Serra, Teresa & Stefanou, Spiro E. & Oude Lansink, Alfons G.J.M., 2010. "Measurement of dynamic efficiency, a directional distance function parametric approach," 114th Seminar, April 15-16, 2010, Berlin, Germany 61107, European Association of Agricultural Economists.
  4. Rungsuriyawiboon, Supawat & Stefanou, Spiro E., 2007. "Dynamic Efficiency Estimation: An Application to U.S. Electric Utilities," Journal of Business & Economic Statistics, American Statistical Association, vol. 25, pages 226-238, April.
  5. Simar, Leopold & Zelenyuk, Valentin, 2004. "On testing equality of distributions of technical efficiency scores," MPRA Paper 28003, University Library of Munich, Germany.
  6. Mohamed Abdel-Wahab & Bernard Vogl, 2011. "Trends of productivity growth in the construction industry across Europe, US and Japan," Construction Management and Economics, Taylor & Francis Journals, vol. 29(6), pages 635-644.
  7. Jorge Bielsa & Rosa Duarte, 2011. "Size and linkages of the Spanish construction industry: key sector or deformation of the economy?," Cambridge Journal of Economics, Oxford University Press, vol. 35(2), pages 317-334.
  8. Elvira Silva & Spiro E. Stefanou, 2007. "Dynamic Efficiency Measurement: Theory and Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 398-419.
  9. Horta, I.M. & Camanho, A.S. & Moreira da Costa, J., 2012. "Performance assessment of construction companies: A study of factors promoting financial soundness and innovation in the industry," International Journal of Production Economics, Elsevier, vol. 137(1), pages 84-93.
  10. Yan Li & Chunlu Liu, 2010. "Malmquist indices of total factor productivity changes in the Australian construction industry," Construction Management and Economics, Taylor & Francis Journals, vol. 28(9), pages 933-945.
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