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Efficiency of Indian Manufacturing Firms: Textile Industry as a Case Study

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  • Anup Kumar Bhandari

    (Economic Research Unit, Indian Statistical Institute, India)

  • Pradip Maiti

    (Economic Research Unit, Indian Statistical Institute, India)

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    Abstract

    Translog stochastic frontier production functions are fit to firm-level cross-sectional data on India's textile firms for each of five selected years to estimate technical efficiency (TE) of firms. We find that average TE varies between 68 to 84% across these years and that individual TEs vary with firm-specific characteristics such as size and age. Further, public sector firms are found to be relatively less efficient.

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    Bibliographic Info

    Article provided by College of Business, and College of Finance, Feng Chia University, Taichung, Taiwan in its journal International Journal of Business and Economics.

    Volume (Year): 6 (2007)
    Issue (Month): 1 (April)
    Pages: 71-88

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    Handle: RePEc:ijb:journl:v:6:y:2007:i:1:p:71-88

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    Related research

    Keywords: textile industry; technical efficiency; stochastic frontier; Cobb Douglas production function; translog production function;

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    References

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    1. Battese, George E. & Coelli, Tim J., 1988. "Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data," Journal of Econometrics, Elsevier, Elsevier, vol. 38(3), pages 387-399, July.
    2. Kalirajan, K P & Obwona, M B, 1994. "Frontier Production Function: The Stochastic Coefficients Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(1), pages 87-96, February.
    3. Kodde, David A & Palm, Franz C, 1986. "Wald Criteria for Jointly Testing Equality and Inequality Restriction s," Econometrica, Econometric Society, Econometric Society, vol. 54(5), pages 1243-48, September.
    4. Karl Lundvall & George Battese, 2000. "Firm size, age and efficiency: Evidence from Kenyan manufacturing firms," Journal of Development Studies, Taylor & Francis Journals, vol. 36(3), pages 146-163.
    5. Tsionas, E.G., 2001. "Stochastic Frontier Models with Random Coefficients," DEOS Working Papers 130, Athens University of Economics and Business.
    6. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, Elsevier, vol. 6(1), pages 21-37, July.
    7. Lall, Somik V. & Rodrigo, G. Chris, 2000. "Perspectives on the sources of heterogeneity in Indian industry," Policy Research Working Paper Series 2496, The World Bank.
    8. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June.
    9. Ho-chuan Huang, 2004. "Estimation of Technical Inefficiencies with Heterogeneous Technologies," Journal of Productivity Analysis, Springer, Springer, vol. 21(3), pages 277-296, May.
    10. Page, John Jr., 1984. "Firm size and technical efficiency : Applications of production frontiers to Indian survey data," Journal of Development Economics, Elsevier, vol. 16(1-2), pages 129-152.
    11. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, Springer, vol. 20(2), pages 325-32.
    12. T. A. Bhavani, 1991. "Technical Efficiency in Indian Modern Small Scale Sector: An Application of Frontier Production function," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 26(2), pages 149-166, July.
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    Cited by:
    1. Coll Serrano, V. & Blasco Blasco, O.Mª., 2009. "Evolución de la eficiencia técnica de la industria textil española en el periodo 1995-2005. Análisis mediante un modelo frontera estocástica/Technical Efficiency In The Textile Industry Of Spain In Th," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 27, pages 779 (32 pág, Diciembre.
    2. Md. Shakil Ahmed & M. Daud Ahmed, 2013. "Efficiency Variation of Manufacturing Firms: A Case Study of Seafood Processing Firms in Bangladesh," Review of Economics & Finance, Better Advances Press, Canada, vol. 3, pages 45-56, May.

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