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Textile manufacturing in eight developing countries:How far does the business environment explain firms’ productive inefficiency?

Author

Listed:
  • Patrick PLANE

    () (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Tidiane KINDA

    () (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Mohamed CHAFFAI

    ()

Abstract

Production frontiers and inefficiency determinants are estimated by using stochastic models. Textile manufacturing is considered for a sample of eight developing countries encompassing about one thousand firms. We find that the most influential individual inefficiency determinants relate to in-house organization. Both access to financing and infrastructural services (e.g. power supply, modern information technologies…) also matter. Information about determinants is then regrouped into three broad categories (e.g. managerial organization, economic environment, institutions) by using principal component analyses. Results do not reject the hypothesis that managerial know-how and the quality of institutions are the most important determinants. The impact of the external economic environment is of less importance although statistically significant. Sector-based simulations are then proposed in order to assess productivity gains which would occur if firms had the opportunity to evolve in most favorable environments within the sample. Domestic and international production contexts are considered, respectively. When referring to domestic benchmarks, the contribution of in-house organization prevails as the main source of gains for the eight countries. The role of institutions proves dominant for Egypt and India when focusing on international simulations.

Suggested Citation

  • Patrick PLANE & Tidiane KINDA & Mohamed CHAFFAI, 2009. "Textile manufacturing in eight developing countries:How far does the business environment explain firms’ productive inefficiency?," Working Papers 200923, CERDI.
  • Handle: RePEc:cdi:wpaper:1100
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    References listed on IDEAS

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    1. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2006. "Investment climate and international integration," World Development, Elsevier, vol. 34(9), pages 1498-1516, September.
    2. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, January.
    3. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    4. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    5. Hung-jen Wang & Peter Schmidt, 2002. "One-Step and Two-Step Estimation of the Effects of Exogenous Variables on Technical Efficiency Levels," Journal of Productivity Analysis, Springer, vol. 18(2), pages 129-144, September.
    6. David Dollar & Edward N. Wolff, 1993. "Competitiveness, Convergence, and International Specialization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262041359, January.
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    Cited by:

    1. Fethi AMRI & Rim MOUELHI, 2013. "Productivity Growth And Competition In Tunisian Manufacturing Firms," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 37, pages 37-64.

    More about this item

    Keywords

    Textile; Firms; Technical efficiency; Organizational know-how; Productivity; Institutions; External economic environment; One step stochastic frontier method;

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