Prague Economic Papers 2010, 19(2):169-182 | DOI: 10.18267/j.pep.370

Sources of Economical Growth in the Czech Food Processing

Lukáš Čechura1, Heinrich Hockmann2
1 Department of Agricultural Economics, Czech University of Live Sciences, Kamýcká 129, CZ - 165 21, Praha 6 - Suchdol (cechura@pef.czu.cz).
2 Leibniz-Institute of Agricultural Development in Central and Eastern Europe (IAMO), TheodorLieser-Straße 2, 06120 Halle (Saale), Germany (hockmann@iamo.de).

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 fitted 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.

Keywords: transition, Czech Republic, efficiency, food processing, TFP (Total Factor Productivity), SFA (Stochastic Frontier Analysis)
JEL classification: D24, O12, P27

Published: January 1, 2010  Show citation

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Čechura, L., & Hockmann, H. (2010). Sources of Economical Growth in the Czech Food Processing. Prague Economic Papers, 19(2), 169-182. doi: 10.18267/j.pep.370
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