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

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.