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THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND TOTAL FACTOR PRODUCTIVITY: EVIDENCE FROM THE CZECH AGRICULTURAL SECTOR

Year 2014, Volume: 6 Issue: 2, 57 - 67, 01.12.2014

Abstract

Agriculture is an important sector of the economy which is often monitored by the government and which is often subject of international disputes. Given the importance of this sector, it is necessary to measure its performance. In this article, we calculated and compared the development of two measures of performance of the agricultural sector of the Czech Republic: the total factor productivity measured by the Fisher index of productivity, and the financial performance measured by three profitability ratios: return on equity, return on assets and return on sales. It is considered that productivity and financial performance do not necessarily move in the same direction. However, we observed a connection between these measures and suggested that this dependence is due to the data interrelatedness. We suggest that total factor productivity, when measured by monetary aggregates such as value added, will be positively correlated to the financial profitability ratios when measured on the basis of the same data. However, for the Czech sector, data are not available due to the transition from the centrally-planned economy to the market economy in 1989 and a turbulent development since that time

References

  • Bašek, Václav (2010), Czech Agriculture Six Years after EU Accession (in Czech language), Prague: Institute of Agricultural Economics and Information.
  • Caves, Douglas W, Christensen, Laurits R, Diewert, Erwin W (1982),
  • “Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers”, Economic Journal, Vol. 2, pp.73-86. Čechura, Lukáš (2012), “Technical efficiency and total factor productivity in
  • Czech agriculture”, Agricultural economics, Vol. 58, No. 4, 2012, pp.147–156.
  • Coelli, Timothy J, Prasada Rao, Dodla S, O’Donnell, Chris (2005), An introduction to Efficiency and Productivity Analysis, New York: Springer.
  • Fisher, Irving (1922), The Making of Index Numbers, Boston: Houghton-Mifflin.
  • Machek, Ondřej (2012), “Data Issues in Total Factor Productivity Benchmarking:
  • A Central European Perspective”, The Annals of the University of Oradea. Economic Sciences, Vol. 21, No. 2, 2012, pp.224–230.
  • Machek, Ondřej, Hnilica, Jiří (2012), “Total Factor Productivity Approach in
  • Competitive and Regulated World”, Procedia – Social and Behavioral Sciences, Vol. 57, 2012, pp.223–230.
  • Ministry of Agriculture (2010), Czech Republic, Final Report on the Agricultural Sector 2011, http://eagri.cz/public/web/file/191660/Zprava_o_stavu_zemedelstvi_CR_za_rok_ pdf, [Accessed 3.9.2013].
  • OFGEM (2003), Productivity Improvements in Distribution Network, London:
  • Cambridge Economic Policy Associates. Špička, Jindřich, Boudný, Jan, Janotová, Bohdana (2009), “The Role of Subsidies in Managing the Operating Risk of Agricultural Enterprises,” Agricultural
  • Economics - Zemedelska ekonomika, Vol. 55, No. 4, pp.169–179. Törnqvist, Leo (1936), “The Bank of Finland's Consumption Price Index”, Bank of Finland Monthly Bulletin, Vol. 10, 1936, pp.1-8.
Year 2014, Volume: 6 Issue: 2, 57 - 67, 01.12.2014

Abstract

References

  • Bašek, Václav (2010), Czech Agriculture Six Years after EU Accession (in Czech language), Prague: Institute of Agricultural Economics and Information.
  • Caves, Douglas W, Christensen, Laurits R, Diewert, Erwin W (1982),
  • “Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers”, Economic Journal, Vol. 2, pp.73-86. Čechura, Lukáš (2012), “Technical efficiency and total factor productivity in
  • Czech agriculture”, Agricultural economics, Vol. 58, No. 4, 2012, pp.147–156.
  • Coelli, Timothy J, Prasada Rao, Dodla S, O’Donnell, Chris (2005), An introduction to Efficiency and Productivity Analysis, New York: Springer.
  • Fisher, Irving (1922), The Making of Index Numbers, Boston: Houghton-Mifflin.
  • Machek, Ondřej (2012), “Data Issues in Total Factor Productivity Benchmarking:
  • A Central European Perspective”, The Annals of the University of Oradea. Economic Sciences, Vol. 21, No. 2, 2012, pp.224–230.
  • Machek, Ondřej, Hnilica, Jiří (2012), “Total Factor Productivity Approach in
  • Competitive and Regulated World”, Procedia – Social and Behavioral Sciences, Vol. 57, 2012, pp.223–230.
  • Ministry of Agriculture (2010), Czech Republic, Final Report on the Agricultural Sector 2011, http://eagri.cz/public/web/file/191660/Zprava_o_stavu_zemedelstvi_CR_za_rok_ pdf, [Accessed 3.9.2013].
  • OFGEM (2003), Productivity Improvements in Distribution Network, London:
  • Cambridge Economic Policy Associates. Špička, Jindřich, Boudný, Jan, Janotová, Bohdana (2009), “The Role of Subsidies in Managing the Operating Risk of Agricultural Enterprises,” Agricultural
  • Economics - Zemedelska ekonomika, Vol. 55, No. 4, pp.169–179. Törnqvist, Leo (1936), “The Bank of Finland's Consumption Price Index”, Bank of Finland Monthly Bulletin, Vol. 10, 1936, pp.1-8.
There are 14 citations in total.

Details

Other ID JA94FP43HY
Journal Section Articles
Authors

Ondřej Machek This is me

Publication Date December 1, 2014
Published in Issue Year 2014 Volume: 6 Issue: 2

Cite

APA Machek, O. (2014). THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND TOTAL FACTOR PRODUCTIVITY: EVIDENCE FROM THE CZECH AGRICULTURAL SECTOR. International Journal of Economics and Finance Studies, 6(2), 57-67.
AMA Machek O. THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND TOTAL FACTOR PRODUCTIVITY: EVIDENCE FROM THE CZECH AGRICULTURAL SECTOR. IJEFS. December 2014;6(2):57-67.
Chicago Machek, Ondřej. “THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND TOTAL FACTOR PRODUCTIVITY: EVIDENCE FROM THE CZECH AGRICULTURAL SECTOR”. International Journal of Economics and Finance Studies 6, no. 2 (December 2014): 57-67.
EndNote Machek O (December 1, 2014) THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND TOTAL FACTOR PRODUCTIVITY: EVIDENCE FROM THE CZECH AGRICULTURAL SECTOR. International Journal of Economics and Finance Studies 6 2 57–67.
IEEE O. Machek, “THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND TOTAL FACTOR PRODUCTIVITY: EVIDENCE FROM THE CZECH AGRICULTURAL SECTOR”, IJEFS, vol. 6, no. 2, pp. 57–67, 2014.
ISNAD Machek, Ondřej. “THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND TOTAL FACTOR PRODUCTIVITY: EVIDENCE FROM THE CZECH AGRICULTURAL SECTOR”. International Journal of Economics and Finance Studies 6/2 (December 2014), 57-67.
JAMA Machek O. THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND TOTAL FACTOR PRODUCTIVITY: EVIDENCE FROM THE CZECH AGRICULTURAL SECTOR. IJEFS. 2014;6:57–67.
MLA Machek, Ondřej. “THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND TOTAL FACTOR PRODUCTIVITY: EVIDENCE FROM THE CZECH AGRICULTURAL SECTOR”. International Journal of Economics and Finance Studies, vol. 6, no. 2, 2014, pp. 57-67.
Vancouver Machek O. THE RELATIONSHIP BETWEEN FINANCIAL PERFORMANCE AND TOTAL FACTOR PRODUCTIVITY: EVIDENCE FROM THE CZECH AGRICULTURAL SECTOR. IJEFS. 2014;6(2):57-6.