No. 345

OCTOBER 2006

Vol LXXXVI

ISSN0019-5170

The Indian Journal of
Economics
 

University of Allahabad

Contents


 

Estimating Efficiency in Commercial Banking
in Nigeria : A Translog Cost
Function Analysis


M. A.Y. Rahji*


The study analyzed the scale and scope efficiency in commercial banks operations in Nigeria- It adopted the production function approach in modeling a cost function for the banks to provide an assessment of their efficiency. The system of equation was estimated using the pooled time series data for four major commercial banks in Nigeria. Empirical evidence indicates that the banks enjoy both product specific and over all economies of scale. The implication of this finding is that there exists scope for the banks to expand their operations at declining marginal cost. The banks' production technology is characterized by cost complementary. This gives rise to cost savings through the joint production of the outputs. The elasticity of substitution between capital and labour is low but positive. This indicates that these inputs are substitutes. The price elasticities are inelastic in all cases. Based on the results obtained, the following recommendations are made; commercial banks should handle more loans, find means of attaining optimal utilization of their resources, in terms of products-specific economies of scale, and introduction of other output such as consultancy services.
 

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Returns to Scale in Agricultural Production :
Evidence from Cocoa and Maize
Production in Ghana

I. K. Acheampong*
and
J. Anoff**


 

This paper examines returns to scale and productivity in Ghanaian agriculture with particular reference to cocoa and maize production in the Assin Fosu district in the Central region of Ghana after the implementation of the agricultural reform that was implemented between 1991-2000. The paper utilises cross-sectional survey data and ordinary least square estimation technique to estimate the parameters of the double-log Cobb-Douglas production function for the analysis.

The results show that cocoa production exhibits increasing returns to scale while maize production exhibits constant returns to scale. The results also reveal that the marginal productivities of the inputs for both cocoa and maize are all positive and statistically significant except that for labour that are negative but these are not statistically significant. Maize production exhibits managerial efficiency and this is statistically significant while cocoa production exhibits managerial inefficiency but this is not statistically significant. The estimated elasticities for both cocoa and maize show that output is less responsive to the inputs and used in production.

The policy implications are that there is scope for increasing cocoa production but government could consider establishing larger plantations in cocoa production to make production cost efficient. Government could consider replicating maize production since maize production exhibits constant return and is cost efficient. In addition, producers could be given appropriate training to offset the seemingly negative productivity of labour for both cocoa and maize production and managerial inefficiency associated with cocoa production.
 

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World Trade Organization vis-a-vis
Indian Seed Industry

M. S. Sidhu*


 

The GATT accord on TRIPS has raised apprehensions in the country, especially for the future of patenting of seeds and genes. It was feared that the farmers would have to buy their seeds every year from the MNCs and they could not exchange seeds with fellow farmers and so on. Nonetheless, a careful perusal of the GATT (1994) agreement would reveal that some of these apprehension are unfounded. The TRIPS agreement covered eight types of intellectual property of which. it is only in the area of patents that most furious controversy gripped the Indian mind. It is in this section (TRIPS) of GATT that the advanced countries have a distinct advantage and a decisive lead over the developing countries. In India, a pre-ponderant majority of farmers use self-retained seeds for most of the crops. The other important source is exchanges with fellow farmers. Even under the TRIPS regime, the Indian farmers can continue to avail of this facility. In India, there is a well-organized government seed research and distribution system, and a new entrant has to offer reasonably priced seeds of proven quality to break into the Indian seed market. We have excellent plant breeding capacities in the country. The ICAR is the apex organization for sponsoring, coordinating and promoting plant-breeding research in India. Our crop improvement programmes have been acknowledged not only in India but in many of the developed and developing countries, as evidenced by the utilization of some of our high yielding varieties and hybrids at the global level. The TRIPS regime will provide an opportunity to the Indian farmers to get first rate seed technology, although at a little higher price. This will give a boost to agricultural production in the country, which has somehow shown a showdown in recent years.
 

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Foreign Direct Investment and Foreign Trade
in India : What Causes What ? 

K. Sham Bhat*
and
K. Durai Raj**

 

Hsiao's sequential approach based on the concept of Granger causality and Akaike's Final Prediction Error criterion was employed to examine the short-run causal nexus between foreign direct investment and foreign trade (imports and exports) in India. The data bases were on monthly basis and it covered from July 1992 to October 2003. By and large, the analysis reveals:

(i) an independent relationship between foreign direct investments and imports due to the fact that time period after .liberalization of foreign direct investment is not sufficient enough and the size of tile foreign direct investment is also very meager in India compared to other developing countries,

(ii) there is a unidirectional causality from export to foreign direct investment and it may be due to the outward oriented export led development policy which will attract foreign direct investment inflow in India in the short-run, and

(iii) Aggregate imports and exports are bi-directional in 'India in tile short-run during the period of our study.

This is due to the fact that India has to export and earn sufficient foreign exchange resources in order to finance to import from trading partners.
 

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Factors Affecting Cotton Productivity
in Punjab : An Application of
Discriminant Analysis

 

Nirmal Singh, Sukhpal Singh
and *.
Satwinder Singh**

 

Cotton is an important cash crop of India which provides livelihood to about sixty million people of the country. Punjab has been leading the country both in cotton productivity and its share in national production. But the state witnessed many ups and downs during the last one decade in area as well as its productivity. Although recent trends in area and productivity are (encouraging but there existed significant variation in the yield of cotton from, farm to farm. In this context it is not only important to identify the factors that are associated with inter-farm variability in productivity but also to understand the contribution of these factors. The present study is, therefore,
designed to examine the contribution of some factors in discriminating the productivity levels of the two cotton-growing populations i.e. population with higher productivity and the population with lower productivity. In order to find out the relative importance of various characteristics of the cotton producers, which could help in discriminating between the two categories of farms the data collected from 100 cotton growers for tile year 2004-05, were put to discriminatory analysis i.e. Mahalanobis Distance (D2). The comparison of the products (Iidi) establishes tllat lion's share in (D2) is due to the adoption of new cotton production technologies. Next in importance is the education level of the decision maker in the family, the non-farm income and expenditure on plant protection. Adoption of hybrid technology and fertilizer use although are important variables which affect the productivity but their contribution was less than one per cent because both groups under study have adopted them to large extent. The study concludes that to increase the cotton productivity on sustainable basis in the state, the farmers need to be educated regarding new cotton production technologies like Integrated Pest Management, Insecticide Resistance Management and Integrated Nutrient Management.

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Evaluating the Efficiency of Taiwanese Hospital using Analytic Hierarchy Process
and Data Envelopment Analysis  

Pi-Fang Hsu*
and
Hui-Chen Hu**

The extremely competitive medical market sector in Taiwan and National Health Insurance scheme have led to the implementation of a Global Budget System. The Data Envelopment Analysis (DEA) model is used to determine the operational efficiency of each hospital and identify an improved direction for allocating resources. The weight of DEA mode! is replaced with that of the Analytic Hierarchy Process (AHP). Additionally, the performances of different hospital types are compared using the Kruskal-Wallis test. The operational efficiency ranking by ownership refers to corporation hospitals, private hospitals, municipal hospitals, and department of health hospitals, veteran's hospitals and armed forces hospitals.

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An Empirical Note on Testing the Safe-Haven Hypothesis for Selected African Currencies 

Hsu-Ling Chang*, Hsiao-Ping Chu**
and
Chi-Wei Su**


 

In this empirical note, we test whether the U. S. dollar increases in value during times of uncertainty. Our test of this "safe-haven" hypothesis is based on an ARMA-GJR-GARCH-M model for the currencies of twenty-two selected Africa countries. We examine the period from January 1980 to May 2004. Our empirical results support the safe-haven hypothesis for Botswana, Central African Republic, South Africa, Zimbabwe, Burundi and Burkina Faso six countries only.


 

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The Primary Sectors of the Economy
and the Dutch Disease in Nigeria

J. O. Olusi*
and
M. A. Olagunju**
 

This study examined whether the Dutch Disease -a resource boom leading to the decline of the erstwhile tradable sector -is present in Nigeria in the light of the rejection of the Dutch Disease thesis in other studies on Nigeria, Quarterly data for our variables of interest were predomi!1antly sourced from the International Financial Statistics of the IMF. The data were analyzed through the use of vector autoregressive modeling consisting of impulse response functions and variance decomposition analyses. Our result showed that the Dutch Disease was diagnosed, albeit, delayed. This Suggests that the government should lay more emphasis on the agricultural sector
hitherto not given deserved attention.
 

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Extent of Absolute Poverty Among the
Different Socio-Economic Groups in the
Rural Areas of Himachal Pradesh:
A Nutrition and Nutrition
Plus Approach


Dalip S. Thakur*
and
Sarbjeet Singh

 

In this paper an attempt has been made to work out the extent of absolute poverty with the help of 'Nutrition' as well as 'Nutrition Plus' approach among the different socio-economic groups i.e. general caste, scheduled caste and scheduled tribe households in the rural areas of Himachal Pradesh. The present empirical investigation reveals that the percentage expenditure on food items shows a decreasing tendency whereas contrary to it, the percentage expenditure on non-food items indicates an increasing tendency with an increase in the size of holdings. This study further reveals that the percentage of poor is highest on the marginal size of holdings followed by the small size of holdings mainly due to the reason of higher illiteracy and dependency ratio, inferior and infertile land holdings, meagre household income, low paid occupations. lack of gainful employment, higher burden of debt payments etc. whereas the percentage of poor is lowest on the medium size of holdings on account of higher literacy, well paid occupations as well as availability of gainful employment on their farms etc.

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University of Allahabad