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Technical Efficiency of Some Selected Manufacturing Industries in Bangladesh: A Stochastic Frontier Analysis

Author

Listed:
  • Md. Azizul Baten

    (Department of Statistics, Shah Jalal University of Science and Technology, Sylhet-3114, Bangladesh.)

  • Masud Rana

    (Department of Statistics, Shah Jalal University of Science and Technology, Sylhet-3114, Bangladesh.)

  • Sumonkanti Das

    (Department of Statistics, Shah Jalal University of Science and Technology, Sylhet-3114, Bangladesh.)

  • Md. Abdul Khaleque

    (Department of Statistics and Computer, Dhaka Commerce College, Dhaka, Bangladesh.)

Abstract

This paper investigates the technical efficiency of selected manufacturing industries of Bangladesh using a stochastic frontier production function approach suggested by Battese and Coelli (1992) applied to panel data. A feasible Cobb-Douglas stochastic frontier production function, which has time-varying technical inefficiency effects, was estimated. Two alternative distributions were used to model the random inefficiency term: a truncated normal distribution and a half-normal distribution. The estimated average technical efficiency for four groups of industries of Bangladesh overthe reference period was 40.22% of potential output for the truncated normal distribution, whereas it was 55.57% of potential output for the half-normal distribution.

Suggested Citation

  • Md. Azizul Baten & Masud Rana & Sumonkanti Das & Md. Abdul Khaleque, 2006. "Technical Efficiency of Some Selected Manufacturing Industries in Bangladesh: A Stochastic Frontier Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 11(2), pages 23-41, Jul-Dec.
    • Handle: RePEc:lje:journl:v:11:y:2006:i:2:p:23-41
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    References listed on IDEAS

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    1. George E. Battese & Sohail J. Malik & Manzoor A. Gill, 1996. "An Investigation Of Technical Inefficiencies Of Production Of Wheat Farmers In Four Districts Of Pakistan," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1‐4), pages 37-49, January.
    2. Kumbhakar, Subal C., 1990. "Production frontiers, panel data, and time-varying technical inefficiency," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 201-211.
    3. Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 1993. "The Measurement of Productive Efficiency: Techniques and Applications," OUP Catalogue, Oxford University Press, number 9780195072181.
    4. George E. Battese & Sohail J. Malik & Sumiter Broca, 1993. "Production Functions for Wheat Farmers in Selected Districts of Pakistan: An Application of a Stochastic Frontier Production Function with Time-varying Inefficiency Effects," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(3), pages 233-268.
    5. Pitt, Mark M. & Lee, Lung-Fei, 1981. "The measurement and sources of technical inefficiency in the Indonesian weaving industry," Journal of Development Economics, Elsevier, vol. 9(1), pages 43-64, August.
    6. George E. Battese & Greg S. Corra, 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 169-179, December.
    7. Kumbhakar, Subal C & Ghosh, Soumendra & McGuckin, J Thomas, 1991. "A Generalized Production Frontier Approach for Estimating Determinants of Inefficiency in U.S. Dairy Farms," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(3), pages 279-286, July.
    8. Battese, George E. & Corra, Greg S., 1977. "Estimation Of A Production Frontier Model: With Application To The Pastoral Zone Of Eastern Australia," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(3), pages 1-11, December.
    9. Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990. "Production frontiers with cross-sectional and time-series variation in efficiency levels," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 185-200.
    10. 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.
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    Cited by:

    1. Hery Purnomo Tunggal & Tati Suhartati Joesron, 2019. "Technical Efficiency Analysis Of Indonesian Small And Micro Industries: A Stochastic Frontier Approach," Working Papers in Economics and Development Studies (WoPEDS) 201903, Department of Economics, Padjadjaran University, revised Nov 2019.
    2. Mogoseanu Daniela Bianca, 2013. "Comparative Study On The Level Of Efficiency And Its Determinants For The Manufacturing Industry In Central And Eastern Europe," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(41), pages 186-196.

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