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2.3 Recent Development on Efficiency and Productivity Analysis....

Analysis

Since British economist Farrell proposed piecewise linear envelopment analysis

approach to frontier estimation, which establishes the basis of measuring and

evaluating efficiency and productivity, the relevant methods are further developed.

Today, there are four main frequently used methods to estimate efficiency and

productivity: Least-squares (LS) econometric production models; Stochastic

Frontier Analysis (SFA), Data Envelopment Analysis (DEA), and Total Factor

Productivity (TFP) index (see Fig.2.4). Thefirst two methods are parametric, DEA

is non-parametric, and TFP index is mainly used in evaluating productivity change.
Econometric production models are to express economic relationship based on

production function or cost function. They express output as a function of some

inputs (namely the production function), or cost as a function of some input prices

Economy

of Scope

AE

SE

TE

PTE

Efficiency

ProducƟvity

TFP PFP

Efficiency Improvement

Scale Change

Technical Change

Cost FuncƟon

ProducƟon

FuncƟon

ProducƟvity

Growth

Economy

of Scale

Fig. 2.3 Types of efficiency and productivity and their path to improvement

Efficiency and ProducƟvity Analysis

Parametric methods Non-parametric methods Index

LS SFA DEA Malmquist Index

Fig. 2.4 Methods in efficiency and productivity analysis

16 2 Evaluation on University Research Efficiency and Productivity...