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How Efficient are Firms in Transition Countries? Firm-Level Evidence from Bulgaria and Romania


  • Konings, Jozef
  • Repkin, Alexander


Stochastic frontier production functions are estimated for Bulgarian (1993–5) and Romanian (1994–5) manufacturing industries using firm-level panel data. The technical efficiency of firms is found to vary significantly both within and across industrial sectors in each country. We find strong evidence of a positive relationship between firm technical efficiency levels and their profitability, which suggests the reforms have succeeded in creating hard budget constraints. The relationship between firm efficiency and size is also found to be positive, suggesting big industrial firms in the former planned economies are not necessarily inefficient.

Suggested Citation

  • Konings, Jozef & Repkin, Alexander, 1998. "How Efficient are Firms in Transition Countries? Firm-Level Evidence from Bulgaria and Romania," CEPR Discussion Papers 1839, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1839

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    References listed on IDEAS

    1. Yingyi Qian, 1996. "Enterprise reform in China: agency problems and political control," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 4(2), pages 427-447, October.
    2. Yingyi Qian & Barry R. Weingast, 1996. "China's transition to markets: market-preserving federalism, chinese style," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 1(2), pages 149-185.
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    Cited by:

    1. Hanousek, Jan & Kočenda, Evžen & Mašika, Michal, 2012. "Firm efficiency: Domestic owners, coalitions, and FDI," Economic Systems, Elsevier, vol. 36(4), pages 471-486.
    2. Gabor Korosi & Laszlo Halpern, 2000. "Efficiency and Market Share in Hungarian Corporate Sector," IEHAS Discussion Papers 0009, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    3. Earle, John S. & Telegdy, Almos, 2002. "Privatization Methods and Productivity Effects in Romanian Industrial Enterprises," Journal of Comparative Economics, Elsevier, vol. 30(4), pages 657-682, December.
    4. Jan Hanousek & Evžen Kočenda & Michal Mašika, 2012. "Firemní efektivita: vliv vlastnických struktur a finančních ukazatelů
      [Corporate Efficiency: Effect of Ownership Structures and Financial Indicators]
      ," Politická ekonomie, University of Economics, Prague, vol. 2012(4), pages 459-483.

    More about this item


    Efficiency; Firm Size; stochastic production frontier;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L0 - Industrial Organization - - General


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