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Technical Efficiency of Pakistan’s Manufacturing Sector: A Stochastic Frontier and Data Envelopment Analysis

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Author Info
Musleh-ud Din (Pakistan Institute of Development Economics, Islamabad)
Ejaz Ghani (Pakistan Institute of Development Economics, Islamabad)
Tariq Mahmood (Pakistan Institute of Development Economics, Islamabad)

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Abstract

This paper examines the efficiency of the large-scale manufacturing sector of Pakistan using parametric as well as non-parametric frontier techniques. Production frontiers are estimated for two periods-1995-96 and 2000-01-for 101 industries at the 5-digit PSIC. The results show that there has been some improvement in the efficiency of the large-scale manufacturing sector, though the magnitude of improvement remains small. The results are mixed at the disaggregated level: whereas a majority of industrial groups have gained in terms of technical efficiency, some industries have shown deterioration in their efficiency levels. The results from both the approaches are consistent, and in line with similar studies.

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Publisher Info
Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

Volume (Year): 46 (2007)
Issue (Month): 1 ()
Pages: 1-18
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:pid:journl:v:46:y:2007:i:1:p:1-18

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Related research
Keywords: Manufacturing Industries; Technical Efficiency; Stochastic Frontier Analysis; Data Envelopment Analysis;

Find related papers by JEL classification:
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity
L6 - Industrial Organization - - Industry Studies: Manufacturing
O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects

References listed on IDEAS
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  1. Banker, Rajiv D. & Gadh, Vandana M. & Gorr, Wilpen L., 1993. "A Monte Carlo comparison of two production frontier estimation methods: Corrected ordinary least squares and data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 67(3), pages 332-343, June. [Downloadable!] (restricted)
  2. Battese, George E. & Corra, Greg. S., 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(03), December. [Downloadable!]
  3. Greene, William H., 1990. "A Gamma-distributed stochastic frontier model," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 141-163. [Downloadable!] (restricted)
  4. 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, vol. 20(2), pages 325-32.
  5. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July. [Downloadable!] (restricted)
  6. Alvarez, Roberto & Crespi, Gustavo, 2003. " Determinants of Technical Efficiency in Small Firms," Small Business Economics, Springer, vol. 20(3), pages 233-44, May. [Downloadable!] (restricted)
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