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Sources of Economical Growth in the Czech Food Processing


  • Lukáš Čechura
  • Heinrich Hockmann


The paper attempts to assess the development path of the Czech food processing and to identify the presence of idiosyncratic developments in industries. We elaborate it by using a fi tted production function for the construction of TFP and by decomposing TFP into a scale effect, a technical change effect and an efficiency effect for total food processing and its selected branches. The results suggest that despite more than one decade of transition, serious adjustment problems exist, including problems on the capital market. Furthermore, contrary to the large differences among firms in the whole sample, the various sectors are rather homogeneous. TFP shows that although individual sectors have a few frontrunners, the majority of companies perform quite poorly. The scale effect is relatively small in food processing. Technical change has contributed positively to TFP in recent years, and the efficiency effect varies rather strongly. Whereas scale effect and technical change have a similar pattern across industries, the efficiency effect differs significantly. There is also some indication that the efficiency effect is affected by different sources. Finally, in addition to systemic effects, industry developments are characterized by idiosyncratic factors, especially in the Dairy industry.

Suggested Citation

  • Lukáš Čechura & Heinrich Hockmann, 2010. "Sources of Economical Growth in the Czech Food Processing," Prague Economic Papers, University of Economics, Prague, vol. 2010(2), pages 169-182.
  • Handle: RePEc:prg:jnlpep:v:2010:y:2010:i:2:id:370:p:169-182

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    References listed on IDEAS

    1. Willam Greene, 2005. "Fixed and Random Effects in Stochastic Frontier Models," Journal of Productivity Analysis, Springer, vol. 23(1), pages 7-32, January.
    2. Darla Munroe, 2001. "Economic Efficiency in Polish Peasant Farming: An International Perspective," Regional Studies, Taylor & Francis Journals, vol. 35(5), pages 461-471.
    3. Zoltán Bakucs, Lajos & Fertő, Imre & Fogarasi, József, 2007. "Technical Efficiency of Hungarian Farms Before and After Accession," 100th Seminar, June 21-23, 2007, Novi Sad, Serbia and Montenegro 162366, European Association of Agricultural Economists.
    4. Key, Nigel & McBride, William & Mosheim, Roberto, 2008. "Decomposition of Total Factor Productivity Change in the U.S. Hog Industry," Journal of Agricultural and Applied Economics, Cambridge University Press, pages 137-149.
    5. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    6. Hockmann, Heinrich & Pieniadz, Agata & Goraj, Lech, 2007. "Modeling heterogeneity in production models: empirical evidence from individual farming in Poland
      [Modellierung der Heterogenität der Faktorqualitäten in Produktionsfunktionen: Empirische Ergebniss
      ," IAMO Discussion Papers 109, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
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    Cited by:

    1. Cechura, Lukas & Hockmann, Heinrich & Mala, Zdenka & Maly, Michal, 2014. "Productivity And Efficiency Differences Between Czech And Slovak Milk Producers," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra Provider-Homepage:;Association of Agricultural Economists in Slovakia (APES), vol. 17(2).
    2. Cechura, Lukas & Grau, Aaron & Hockmann, Heinrich & Levkovych, Inna & Kroupova, Zdenka, 2014. "Catching up or falling behind in Eastern European agriculture – the case of milk production," 142nd Seminar, May 29-30, 2014, Budapest, Hungary 168927, European Association of Agricultural Economists.
    3. Tomáš Volek & Martina Novotná, 2015. "Gross Value Added and Total Factor Productivity In Czech Sectors," Contemporary Economics, University of Finance and Management in Warsaw.
    4. Cechura, Lukas, 2012. "Technological change in the Czech food processing industry: What did we experience in the last decade?," 131st Seminar, September 18-19, 2012, Prague, Czech Republic 135782, European Association of Agricultural Economists.
    5. Å piÄ ka, JindÅ™ich, 2015. "The Efficiency Improvement of Central European Corporate Milk Processors in 2008 - 2013," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 7(4), December.
    6. Cechura, Lukas & Hockmann, Heinrich, 2014. "Heterogeneity in Technology and Efficiency – Specifics of the Food Processing Industry in the Visegrád Countries," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182662, European Association of Agricultural Economists.

    More about this item


    transition; Czech Republic; efficiency; food processing; TFP (Total Factor Productivity); SFA (Stochastic Frontier Analysis);

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects


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