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Explaining the Differences in Firm Level Production Capacity Realization in Bangladesh Food Manufacturing: a Panel Data Study

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  • Ruhul A Salim

    (Curtin University of Technology, Australia)

Abstract

The aim of this paper is to examine the impact of a set of firm-specific and policy related variables such as size, age, ownership and effective rate of assistance on the rate of production capacity realization (PCR) of firms. This study uses a panel of 92 food manufacturing firms of Bangladesh over the periods 1992-1994 and 1997-1999. Firm size is found to have positive impact while capital intensity and age of firm have negative impact on PCR at the firm level. The striking result is that the policy related variables such as the effective rate of assistance (ERA) and outward orientation (OPN) do not have any significant impact on PCR. These results are confirmed by the extensive test of sensitivity analysis. The insignificance of ERA and OPN may be attributed to piecemeal and partial nature of policy reforms. The results suggests the need for further reform of trade policies, in particular, focusing on reducing nominal and effective protection levels in order to enhance competition and competitiveness so that an efficient production can take a firmer root in the industrial sector of the economy.

Suggested Citation

  • Ruhul A Salim, 2007. "Explaining the Differences in Firm Level Production Capacity Realization in Bangladesh Food Manufacturing: a Panel Data Study," Journal of Developing Areas, Tennessee State University, College of Business, vol. 40(2), pages 1-18, January-M.
    • Handle: RePEc:jda:journl:vol.40:year:2007:issue2:pp:1-18
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    Citations

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    Cited by:

    1. Goel, Rajeev K. & Nelson, Michael A., 2021. "Capacity utilization in emerging economy firms: Some new insights related to the role of infrastructure and institutions," The Quarterly Review of Economics and Finance, Elsevier, vol. 79(C), pages 97-106.
    2. Mohieddine Rahmouni, 2021. "Determinants of capacity utilisation by firms in developing countries: evidence from Tunisia," International Journal of Technological Learning, Innovation and Development, Inderscience Enterprises Ltd, vol. 13(3), pages 212-245.

    More about this item

    Keywords

    Productive Capacity realization; Economic Reform; Capital Intensity; Effective Rate of Assistance; Openness;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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