Productivity measures and effects from subsidies and trade: An empirical analysis for Japan's forestry

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Abstract

Several techniques have been proposed in the literature to measure productivity. While allowing for inefficiency of the production unit, we provide a methodological comparison of alternative approaches to measure total factor productivity. This article evaluates the effects of unintended policy outcomes such as government subsidies and foreign trade. Empirically, we analyse the forest productivity of timber in Japan by using panel data on 46 regions. The results suggest substantial variation in productivity between these two techniques although average trends are similar. We find that subsidies impede competition since the government is ready to rescue a loss-making firm with subsidies rather than allow it to close. In contrast, trade is shown to have positive effects on productivity.

Original languageEnglish
Pages (from-to)3871-3883
Number of pages13
JournalApplied Economics
Volume42
Issue number30
DOIs
Publication statusPublished - Dec 1 2010

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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