IDEAS home Printed from https://ideas.repec.org/a/pid/journl/v46y2007i1p1-18.html
   My bibliography  Save this article

Technical Efficiency of Pakistan s Manufacturing Sector: A Stochastic Frontier and Data Envelopment Analysis

Author

Listed:
  • Musleh-ud Din

    (Pakistan Institute of Development Economics, Islamabad)

  • Ejaz Ghani

    (Pakistan Institute of Development Economics, Islamabad)

  • Tariq Mahmood

    (Pakistan Institute of Development Economics, Islamabad)

Abstract

This paper examines the efficiency of the large-scale manufacturing sector of Pakistan using parametric as well as non-parametric frontier techniques. Production frontiers are estimated for two periods-1995-96 and 2000-01-for 101 industries at the 5-digit PSIC. The results show that there has been some improvement in the efficiency of the large-scale manufacturing sector, though the magnitude of improvement remains small. The results are mixed at the disaggregated level: whereas a majority of industrial groups have gained in terms of technical efficiency, some industries have shown deterioration in their efficiency levels. The results from both the approaches are consistent, and in line with similar studies.

Suggested Citation

  • Musleh-ud Din & Ejaz Ghani & Tariq Mahmood, 2007. "Technical Efficiency of Pakistan s Manufacturing Sector: A Stochastic Frontier and Data Envelopment Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(1), pages 1-18.
    • Handle: RePEc:pid:journl:v:46:y:2007:i:1:p:1-18
    as

    Download full text from publisher

    File URL: http://www.pide.org.pk/pdf/PDR/2007/Volume1/1-18.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-598, October.
    2. repec:aer:wpaper:133 is not listed on IDEAS
    3. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    4. Jajri, Idris & Ismail, Rahmah, 2006. "Technical efficiency, technological change and total factor productivity growth in Malaysian manufacturing sector," MPRA Paper 1956, University Library of Munich, Germany.
    5. Banker, Rajiv D. & Gadh, Vandana M. & Gorr, Wilpen L., 1993. "A Monte Carlo comparison of two production frontier estimation methods: Corrected ordinary least squares and data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 67(3), pages 332-343, June.
    6. Stevenson, Rodney E., 1980. "Likelihood functions for generalized stochastic frontier estimation," Journal of Econometrics, Elsevier, vol. 13(1), pages 57-66, May.
    7. Jeong Yeon Lee & Jung Woo Kim, 2006. "Total Factor Productivity and R&D Capital in Manufacturing Industries," Economics Study Area Working Papers 89, East-West Center, Economics Study Area.
    8. Greene, William H., 1990. "A Gamma-distributed stochastic frontier model," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 141-163.
    9. 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.
    10. Alvarez, Roberto & Crespi, Gustavo, 2003. "Determinants of Technical Efficiency in Small Firms," Small Business Economics, Springer, vol. 20(3), pages 233-244, May.
    11. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    12. 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.
    13. Burki, Abid A. & Khan, Mahmood-ul-Hasan, 2004. "Effects of allocative inefficiency on resource allocation and energy substitution in Pakistan's manufacturing," Energy Economics, Elsevier, vol. 26(3), pages 371-388, May.
    14. Ousmanou Njikam, 2003. "Trade reform and efficiency in Cameroon's manufacturing industries," Research Papers RP_133, African Economic Research Consortium.
    15. 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.
    16. Erol Taymaz & Gülin Saatci, 1997. "Technical Change and Efficiency in Turkish Manufacturing Industries," Journal of Productivity Analysis, Springer, vol. 8(4), pages 461-475, November.
    17. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lamees Al-Durgham & Mohammad Adeinat, 2021. "Assessing the Relative Efficiency for Listed Manufacturing Firms in Jordan Using Data Envelopment Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 11(1), pages 135-139.
    2. Agostino, Mariarosaria & Nifo, Annamaria & Trivieri, Francesco & Vecchione, Gaetano, 2016. "Total factor productivity heterogeneity: channelling the impact of institutions," MPRA Paper 72759, University Library of Munich, Germany.
    3. Ipatova, Irina, 2015. "The dynamics of total factor productivity and its components: Russian plastic production," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 21-40.
    4. Tariq Mahmood & Ejaz Ghani & Musleh Ud Din, 2015. "Are Our Export-Oriented Industries Technically More Efficient?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(2), pages 97-121.
    5. Md. Abul Kalam Azad & Susila Munisamy & Kwek Kian Teng & Muzalwana Binti Abdul Talib & Paolo Saona, 2018. "Productivity Changes of Pharmaceutical Industry in Bangladesh: Does Process Patent Matter?," Global Business Review, International Management Institute, vol. 19(4), pages 1013-1025, August.
    6. Matthew McCartney, 2016. "Costs, Capabilities, Conflict and Cash: The Problem of Technology and Sustainable Economic Growth in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 65-98, September.
    7. Ipatova, Irina & Peresetsky, Аnatoly, 2013. "Technical efficiency of Russian plastic and rubber production firms," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 32(4), pages 71-92.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tariq Mahmood & Ejaz Ghani & Musleh-Ud Din, 2006. "Efficiency of Large-scale Manufacturing in Pakistan: A Production Frontier Approach," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(4), pages 689-700.
    2. Tariq Mahmood & Ejaz Ghani & Musleh Ud Din, 2015. "Are Our Export-Oriented Industries Technically More Efficient?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(2), pages 97-121.
    3. Tim J. Coelli, 1995. "Recent Developments In Frontier Modelling And Efficiency Measurement," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 39(3), pages 219-245, December.
    4. Zuniga-Gonzalez, C.A, 2009. "Analisis de la eficiencia tecnica de la unidad de VPN UNAN-LEON utilizando funcion de produccion stochastic frontier, 2007-2008 [Technical efficiency analysis of the PNV unit UNAN-Leon using produc," MPRA Paper 110950, University Library of Munich, Germany, revised 14 Jan 2009.
    5. Luis R. Murillo‐Zamorano, 2004. "Economic Efficiency and Frontier Techniques," Journal of Economic Surveys, Wiley Blackwell, vol. 18(1), pages 33-77, February.
    6. Edward Ebo ONUMAH & Bernhard BRÜMMER & Gabriele HÖRSTGEN-SCHWARK, 2010. "Productivity of the hired and family labour and determinants of technical inefficiency in Ghana's fish farms," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 56(2), pages 79-88.
    7. Mai, Nhat Chi, 2015. "Efficiency of the banking system in Vietnam under financial liberalization," OSF Preprints qsf6d, Center for Open Science.
    8. Emvalomatis, Grigorios & Oude Lansink, Alfons G.J.M. & Stefanou, Spiro E., 2008. "An Examination of the Relationship Between Subsidies on Production and Technical Efficiency in Agriculture: The Case of Cotton Producers in Greece," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6673, European Association of Agricultural Economists.
    9. Gauri Khanna, 2006. "Technical Efficiency in Production and Resource Use in Sugar Cane: A Stochastic Frontier Production Function Analysis," IHEID Working Papers 15-2006, Economics Section, The Graduate Institute of International Studies.
    10. Kassem, Mohammad & EL-Moussaw, Chawki i & Awdeh, Ali, 2014. "Measuring the Cost Efficiency of Banks Operating in the MENA Region," MPRA Paper 119125, University Library of Munich, Germany.
    11. Roy, Manish & Mazumder, Ritwik, 2016. "Technical Efficiency of Fish Catch in Traditional Fishing: A Study in Southern Assam," Journal of Regional Development and Planning, Rajarshi Majumder, vol. 5(1), pages 55-68.
    12. Mulwa, Richard & Kabubo-Mariara, Jane, 2017. "Productive Efficiency and Its Determinants in a Changing Climate: A Monotonic Translog Stochastic Frontier Analysis," EfD Discussion Paper 17-6, Environment for Development, University of Gothenburg.
    13. Sickles, Robin C. & Song, Wonho & Zelenyuk, Valentin, 2018. "Econometric Analysis of Productivity: Theory and Implementation in R," Working Papers 18-008, Rice University, Department of Economics.
    14. Seog-Chan Oh & Alfred J. Hildreth, 2014. "Estimating the Technical Improvement of Energy Efficiency in the Automotive Industry—Stochastic and Deterministic Frontier Benchmarking Approaches," Energies, MDPI, vol. 7(9), pages 1-27, September.
    15. Maira Caño- Guiral, 1995. "Competitividad y eficiencia técnica. Un modelo de datos panel para la industria láctea uruguaya," Documentos de Trabajo (working papers) 0795, Department of Economics - dECON.
    16. Amer Ait Sidhoum & K Hervé Dakpo & Laure Latruffe, 2022. "Trade-offs between economic, environmental and social sustainability on farms using a latent class frontier efficiency model: Evidence for Spanish crop farms," PLOS ONE, Public Library of Science, vol. 17(1), pages 1-17, January.
    17. Graziella Bonanno & Domenico De Giovanni & Filippo Domma, 2017. "The ‘wrong skewness’ problem: a re-specification of stochastic frontiers," Journal of Productivity Analysis, Springer, vol. 47(1), pages 49-64, February.
    18. William Greene, 2003. "Simulated Likelihood Estimation of the Normal-Gamma Stochastic Frontier Function," Journal of Productivity Analysis, Springer, vol. 19(2), pages 179-190, April.
    19. Léopold Simar & Paul W. Wilson, 2015. "Statistical Approaches for Non-parametric Frontier Models: A Guided Tour," International Statistical Review, International Statistical Institute, vol. 83(1), pages 77-110, April.
    20. Voigt, Peter, 2004. "Russlands Weg vom Plan zum Markt: Sektorale Trends und regionale Spezifika. Eine Analyse der Produktivitäts- und Effizienzentwicklungen in der Transformationsphase," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 28, number 93021.

    More about this item

    Keywords

    Manufacturing Industries; Technical Efficiency; Stochastic Frontier Analysis; Data Envelopment Analysis;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:46:y:2007:i:1:p:1-18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Khurram Iqbal (email available below). General contact details of provider: https://edirc.repec.org/data/pideipk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.