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Are Our Export-Oriented Industries Technically More Efficient?

Listed author(s):
  • Tariq Mahmood

    (Pakistan Institute of Development Economics (PIDE), Islamabad.)

  • Ejaz Ghani

    (Pakistan Institute of Development Economics (PIDE), Islamabad.)

  • Musleh Ud Din

    (Pakistan Institute of Development Economics (PIDE), Islamabad.)

Registered author(s):

    This paper makes a comparison of technical efficiency scores between groups of exporting and non-exporting industries. Using data from Census of Manufacturing Industries in Pakistan (2005-06), technical efficiency scores of 102 large scale manufacturing industries are estimated. Stochastic Frontier Analysis as well as Data Envelopment Analysis technique are used to estimate technical efficiency scores. In Stochastic Frontier Analysis Translog and Cobb-Douglass Production Functions are specified, whereas in Data Envelopment Analysis technique, efficiency scores are computed under the assumptions of Constant Returns to Scale as well as Variable Returns to Scale. Industries showing high technical efficiency include Tobacco Products, Refined Petroleum Products, Carpets and Rugs, and Meat and Meat Products. Industries showing low technical efficiency include Refractory Ceramic Products, Electricity Distribution and Control Apparatus, Fish and Fish Products, Basic Precious Metals and Aluminum and its Products. Comparison of mean efficiency scores between exporting and non-exporting industries does not indicate any significant difference between efficiency scores across types of industries.

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    File URL: http://www.pide.org.pk/pdf/PDR/2015/Volume2/97-121.pdf
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    Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

    Volume (Year): 54 (2015)
    Issue (Month): 2 ()
    Pages: 97-121

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    Handle: RePEc:pid:journl:v:54:y:2015:i:2:p:97-121
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    1. James R. Tybout, 2000. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 11-44, March.
    2. Stevenson, Rodney E., 1980. "Likelihood functions for generalized stochastic frontier estimation," Journal of Econometrics, Elsevier, vol. 13(1), pages 57-66, May.
    3. Robert Russell, R., 1990. "Continuity of measures of technical efficiency," Journal of Economic Theory, Elsevier, vol. 51(2), pages 255-267, August.
    4. Kankana Mukherjee & Subhash C. Ray, 2005. "Technical Efficiency And Its Dynamics In Indian Manufacturing: An Inter State Analysis," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 40(2), pages 101-125, December.
    5. Greene, William H., 1990. "A Gamma-distributed stochastic frontier model," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 141-163.
    6. 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.
    7. Alvarez, Roberto & Crespi, Gustavo, 2003. "Determinants of Technical Efficiency in Small Firms," Small Business Economics, Springer, vol. 20(3), pages 233-244, May.
    8. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    9. 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.
    10. Musleh-ud Din & Ejaz Ghani & Tariq Mahmood, 2007. "Technical Efficiency of Pakistan s Manufacturing Sector: A Stochastic Frontier and Data Envelopment Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(1), pages 1-18.
    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. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    13. 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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