Efficiency Analysis of Selected Manufacturing Industries

The appropriateness of technologies that should be used in industries in developed countries is a major research area in development economics. Empirical research by economists in the developed countries has firmly established and made us aware of the role of R&D in fostering technological advances in industry, which in turn help achieve faster productivity growth in their countries.1 The less developed countries often bothered little about the long-run cost of the outright introduction of advanced capital-intensive technology available to them, and did not pay any heed to their domestic factor endowment and the efficiency of resource use. Increasing interest in advanced technology under the prevailing institutional frameworks stems, among other things, mainly from three important considerations. First, given the scarcity of capital, to get rid of the short-run cost of R&D and related uncertainties in developing appropriate technology, outright import of foreign technology is considered to be the better option. Second, by doing this, the LDCs have been able to introduce wide varieties of new products for their rising middle class. Third, with an increasing reliance on capital-intensive methods the producers have been able to bypass to some extent labor troubles in organized sectors of these industries.