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Technical Efficiency and Its Determinants in the Manufacturing Sector: What We Know and What We Should Know

In: Handbook of Production Economics

Author

Listed:
  • Sumon Kumar Bhaumik

    (University of Sheffield
    IZA – Institute of Labor Economics
    Global Labor Organization)

Abstract

There is a larges literature on technical efficiency (TE) of manufacturing sector firms in developing country contexts, much less so for developing country contexts. Most of empirical research use either data envelopment analysis (DEA) or stochastic frontier analysis (SFA) to estimate TE. Available evidence suggests that TE of firms is low in developing countries, and there is considerable inter-firm heterogeneity in TE. Firm-level TE is correlated with (or influenced by) external factors such as liberalization of trade and foreign direct investment (FDI) and overall economic liberalization, as also by internal factors such as firm size, ownership, whether or not they operate in the formal sector, and use and adoption of ICT. However, there is mixed evidence about the extent to which liberal economic policies and firm characteristics such as size and ownership are associated with higher TE. Future research should focus on the impact of the institutional environment in which firms operate and their managerial capability on firm-level TE.

Suggested Citation

  • Sumon Kumar Bhaumik, 2022. "Technical Efficiency and Its Determinants in the Manufacturing Sector: What We Know and What We Should Know," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 36, pages 1411-1432, Springer.
    • Handle: RePEc:spr:sprchp:978-981-10-3455-8_36
    DOI: 10.1007/978-981-10-3455-8_36
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    Cited by:

    1. Subhash C. Ray, 2022. "Choice of Inputs and Outputs for Production Analysis," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 26, pages 1083-1116, Springer.

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