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Efficiency of Large-scale Manufacturing in Pakistan: A Production Frontier Approach

Author

Listed:
  • Tariq Mahmood

    (Pakistan Institute of Development Economics, Islamabad.)

  • Ejaz Ghani

    (Pakistan Institute of Development Economics, Islamabad.)

  • Musleh-Ud Din

    (Pakistan Institute of Development Economics, Islamabad.)

Abstract

This paper examines the efficiency of the large scale manufacturing sector of Pakistan using the stochastic production frontier approach. A stochastic production frontier is 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.
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Suggested Citation

  • Tariq Mahmood & Ejaz Ghani & Musleh-Ud Din, 2006. "Efficiency of Large-scale Manufacturing in Pakistan: A Production Frontier Approach," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 689-700.
  • Handle: RePEc:pid:journl:v:45:y:2006:i:4:p:689-700
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    References listed on IDEAS

    as
    1. Stevenson, Rodney E., 1980. "Likelihood functions for generalized stochastic frontier estimation," Journal of Econometrics, Elsevier, vol. 13(1), pages 57-66, May.
    2. 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, vol. 38(3), pages 387-399, July.
    3. Greene, William H., 1990. "A Gamma-distributed stochastic frontier model," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 141-163.
    4. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-598, October.
    5. ALVARO ANGERIZ & JOHN McCOMBIE & MARK ROBERTS, 2006. "Productivity, Efficiency And Technological Change In European Union Regional Manufacturing: A Data Envelopment Analysis Approach," Manchester School, University of Manchester, vol. 74(4), pages 500-525, July.
    6. Alvarez, Roberto & Crespi, Gustavo, 2003. "Determinants of Technical Efficiency in Small Firms," Small Business Economics, Springer, vol. 20(3), pages 233-244, May.
    7. 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.
    8. Burki, Abid A. & Khan, Mahmood-ul-Hasan, 2004. "Effects of allocative inefficiency on resource allocation and energy substitution in Pakistan's manufacturing," Energy Economics, Elsevier, vol. 26(3), pages 371-388, May.
    9. Ousmanou Njikam, 2003. "Trade reform and efficiency in Cameroon's manufacturing industries," Research Papers RP_133, African Economic Research Consortium.
    10. Erol Taymaz & Gülin Saatci, 1997. "Technical Change and Efficiency in Turkish Manufacturing Industries," Journal of Productivity Analysis, Springer, vol. 8(4), pages 461-475, November.
    11. 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.
    12. Jajri, Idris & Ismail, Rahmah, 2006. "Technical efficiency, technological change and total factor productivity growth in Malaysian manufacturing sector," MPRA Paper 1956, University Library of Munich, Germany.
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    Cited by:

    1. Ahmed, Gulzar & Arshad Khan, Muhammad & Afzal, Muhammad, 2015. "Trade Liberalization and Industrial Productivity: Evidence from Pakistan," MPRA Paper 70744, University Library of Munich, Germany, revised 15 Mar 2016.

    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O14 - Economic Development, Innovation, 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

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