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Production Losses Due to Technical Inefficiency: A Panel Data Analysis on the Case of BRICS-T Countries

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  • Nadide YiÄŸiteli

    (Sosyal Güvenlik Kurumu, Ankara, Türkiye.)

Abstract

This study aims to estimate the efficiency of using the available resources and technology of BRICS-T countries. In this context, the production limit is modelled using stochastic frontier analysis (SFA) within the scope of a panel data set consisting of six countries from 1990-2019. The production frontier and technical inefficiency determinants are estimated by a one-stage method. In addition, the technical inefficiency in the model and the variances related to technical inefficiency and statistical error are defined as a function of the variables of countries’ population and export-import ratios. The study has determined these variables to have no significant impact on technical inefficiency. The results show the average level of technical efficiency during the analysis period to be 91% and countries to have lost 9% of their potential output. Turkey was determined as the country to rank first and Russia to rank last during the analyzed period in terms of the average coefficient of technical efficiency. Turkey’s production loss due to inefficiency was 3.4%, while Russia’s was 23.3%. On the other hand, technical efficiency decreased an average of 0.064% annually during the analysis period. This finding indicates countries’ adaptation to existing technologies to gradually decrease and production losses due to inefficiency to increase. The production losses due to inefficiency and the efficiency decreases observed during the analysis period reveal an important opportunity for BRICS-T countries to use their potential more effectively in terms of sustainable economic growth.

Suggested Citation

  • Nadide YiÄŸiteli, 2023. "Production Losses Due to Technical Inefficiency: A Panel Data Analysis on the Case of BRICS-T Countries," EKOIST Journal of Econometrics and Statistics, Istanbul University, Faculty of Economics, vol. 0(38), pages 53-73, June.
    • Handle: RePEc:ist:ekoist:v:0:y:2023:i:38:p:53-73
    DOI: 10.26650/ekoist.2023.38.1116692
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    Efficiency; Production; Growth;
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