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Technical Efficiency and Productivity Potential of Firms Using a Stochastic Metaproduction Frontier

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  • Battese, George
  • Rao, D.S. Prasada
  • Walujadi, Dedi

Abstract

This paper presents an empirical study of the technical efficiencies of firms in the Indonesian garment industry using panel data from the annual Census of Manufacturing Industries during 1990 to 1995. Different stochastic frontier models are used for firms in five different regions of Indonesia because of differing technologies involved. However, a stochastic metaproduction frontier is applied to obtain alternative estimates for the technical efficiencies of firms in the different regions. The mean productivity potential of firms in a given region is also estimated, using a decomposition result obtained by using both the regional and the metaproduction frontiers. The technical inefficiency effects in the stochastic frontiers are assumed to have the time-varying structure proposed by Battese and Coelli (1992).

Suggested Citation

  • Battese, George & Rao, D.S. Prasada & Walujadi, Dedi, 2001. "Technical Efficiency and Productivity Potential of Firms Using a Stochastic Metaproduction Frontier," Efficiency Series Papers 2001/08, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    • Handle: RePEc:oeg:wpaper:2001/08
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    References listed on IDEAS

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    1. Yujiro Hayami, 1969. "Sources of Agricultural Productivity Gap Among Selected Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 51(3), pages 564-575.
    2. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    3. George E. Battese, 1997. "A Note On The Estimation Of Cobb‐Douglas Production Functions When Some Explanatory Variables Have Zero Values," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1‐3), pages 250-252, January.
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    Cited by:

    1. Enver H. KRASNIQI & Esat A. DURGUTI & Dea E. KRASNIQI, 2020. "The Innovations and Entrepreneurship – Evidence from Kosovo’s SME Sector," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 1, pages 22-27.
    2. Rodríguez-Álvarez, Ana & Del Rosal, Ignacio & Baños, José, 2002. "Rent-Seeking Measurement in Coal Mining by Means of Labour Unrest: An Application of the Distance Function," Efficiency Series Papers 2002/02, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    3. Margono, Heru & Sharma, Subhash C., 2006. "Efficiency and productivity analyses of Indonesian manufacturing industries," Journal of Asian Economics, Elsevier, vol. 17(6), pages 979-995, December.
    4. Coll Serrano, V. & Blasco Blasco, O.Mª., 2009. "Evolución de la eficiencia técnica de la industria textil española en el periodo 1995-2005. Análisis mediante un modelo frontera estocástica/Technical Efficiency In The Textile Industry Of Spain In Th," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 27, pages 779(32á)-77, Diciembre.
    5. Arunsawadiwong, Suwanee & Reid, Gavin C, 2009. "The Estimation of Technical Efficiency Effects Models with an Example Applied to the Thai Manufacturing Sector," SIRE Discussion Papers 2009-04, Scottish Institute for Research in Economics (SIRE).
    6. Kevin Sylwester, 2002. "Democracy and Changes in Income Inequality," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 1(2), pages 167-178, August.
    7. George Battese & D. Rao & Christopher O'Donnell, 2004. "A Metafrontier Production Function for Estimation of Technical Efficiencies and Technology Gaps for Firms Operating Under Different Technologies," Journal of Productivity Analysis, Springer, vol. 21(1), pages 91-103, January.
    8. George E. Battese & D. S. Prasada Rao, 2002. "Technology Gap, Efficiency, and a Stochastic Metafrontier Function," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 1(2), pages 87-93, August.
    9. Worku, Gebeyehu, 2006. "Is the Ethiopian Leather industry on the right track?: an Empirical investigation," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 10(2), pages 103-103, April.

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