scholarly journals Technical inefficiency of the manufacturing sector in Laos: a case study of the firm survey

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vanxay Sayavong
Keyword(s):  
Technical Efficiency ◽  
Production Efficiency ◽  
Manufacturing Sector ◽  
Small Sample ◽  
Accounting System ◽  
Technical Inefficiency ◽  
Content Type ◽  
Credit Access ◽  
Frontier Analysis ◽  
Firm Survey

PurposeThis study aims to unlock the path of growth for sustainable economic development and accomplish the government's vision 2030 by ameliorating the productivity of the manufacturing sector in Laos.Design/methodology/approachThis study applied cross-sectional data of 2,009 firms from the national firm survey, namely the Economic Census Survey (ECS), in 2012/13 in addition to employing the stochastic frontier analysis (SFA) to assess the production frontier and factors behind the technical inefficiency to arrive at policy recommendations.FindingsThe study found that the efficiency level varied across subindustries with an average of 72.51% in full potential production. Out of the five classified groups, Sub4 (chemical and plastic) was found to be the most efficient manufacturer, while the rest in order are Sub1 (food and beverage), Sub5 (furniture and others), Sub2 (garment and textile), and Sub3 (paper and printing), providing the evidence to improve the technical efficiency. This study discovered that the firm's size, accounting system and credit access are crucial to enhancing the production efficiency of all sampling firms. However, these factors might be subject to specific industries.Practical implicationsFor the implication to the business community and policymakers, the findings of this study could be a reference in terms of which areas they should concentrate on to improve the technical efficiency as a part of productivity in the manufacturing industry. For instance, it suggests that firms could improve their production efficiency by introducing the accounting system, laborers' skills (education of managers) and engaging in international trade activities. Additionally, it asks policymakers to help private firms by improving the infrastructure, credit access, training and trade facilitation.Originality/valueIt is believed that, as the major contribution in Lao literature, this study is the first research applying the largest data from the national survey – the Lao ECS – examining the technical efficiency in the manufacturing sector in the country, and overcoming the gap of the previous research which recruited few policy variables and applied a small sample size in one specific industry. Therefore, the findings of this study impart more insights into the analysis, providing more effective and credible recommendations to policymakers and firms to improve their technical efficiency and, consequently, their competitiveness.

A Stochastic Frontier Analysis of Exporting Small and Medium Sized Enterprises in India

2016 ◽  
Vol 7 (3) ◽  
pp. 1-23
Author(s):  
Manoj Kumar
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Returns To Scale ◽  
Key Factors ◽  
Technical Inefficiency ◽  
Frontier Analysis ◽  
Efficiency Performance ◽  
Size Firm ◽  
Almost All

This study employs a stochastic frontier analysis (SFA) and technical inefficiency effects model to predict the technical efficiency of 3,168 Indian manufacturing and exporting SMEs, analyze their returns to scale and key factors impacting on their technical efficiency. Indian manufacturing and exporting SMEs extensively rely on labor rather than capital to increase their output, including almost all exporting SME groups, except those exporting to North & South America. The production of Indian manufacturing SMEs exporting to Oceania, however, has increasing returns to scale (1.1965). The inefficiency effects model reveals that firm size, firm age, foreign ownership, location and government assistance are firm-specific factors that significantly affect the technical inefficiency of production. Finally, evidence-based policies are also provided to facilitate improvement in the technical efficiency performance of Indian manufacturing and exporting SMEs.

Technical efficiency of Microfinance Institutions (MFIs)

2016 ◽  
Vol 15 (3) ◽  
pp. 224-239 ◽  
Author(s):  
Bereket Zerai Gebremichael ◽  
Hailemichael Tesfay Gessesse
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Credit Unions ◽  
Microfinance Institutions ◽  
Ownership Type ◽  
Data Set ◽  
Content Type ◽  
Frontier Analysis ◽  
Significant Difference ◽  
Efficiency Performance

Purpose The paper aims to evaluate the technical efficiency of African Microfinance Institutions (MFIs) and examine if there is performance difference by ownership type. Design/methodology/approach The paper applies stochastic frontier analysis (SFA) assuming that the translog production functions to estimate the technical efficiency of 134 Microfinance Institutions operating in 36 African countries. The parametric SFA is preferred over the non-parametric, as it captures the random and inefficiency effects. Though the suitable approach is SFA, for the purpose of consistency and robustness of the results, the alternative data envelopment analysis (DEA) approach is also run and the results are compared with those derived from SFA. Findings In our analysis we have found that African MFIs are technically inefficient. The average technical efficiency for the sample institutions is 0.489, which is quite low and suggests that on average, African MFIs are achieving only 48.9 per cent of the maximum achievable output. Our results also revealed the presence of significant technical inefficiencies with considerable differences in inefficiency among the MFIs. Further, we found statistically significant difference in the efficiency performance among the different ownership types of MFIs. More importantly, the NGO and non-bank financial institutions are relatively more efficient, while the cooperatives/credit unions are the least efficient. Research limitations/implications The study contributes to the continuing debate on the effect of ownership type on performance of institutions. Moreover, it indicates the importance of using certain approaches and complementing them with other alternatives for a better insight. Practical implications The study found that the least efficient type of MFIs are the cooperatives/credit unions. This might be related to the nature of these institutions where the members are owners and borrowers. This might affect efficiency negatively, although it may somehow address the agency problem. Originality/value This paper provides an evidence on efficiency performance of African MFIs, taking a large data set and applying SFA. DEA was also used to complement the SFA results. It provides useful empirical evidence and perspective on this important issue for policy makers and analysts.

scholarly journals Stochastic Frontier Analysis on Technical Efficiency of Strawberry Farming in Purbalingga Regency Indonesia

2020 ◽  
Vol 9 (2) ◽  
pp. 105
Author(s):  
Irene Kartika Eka Wijayanti, ◽  
Jamhari Jamhari, ◽  
Dwidjono, Hadi Darwanto ◽  
Any Suryantini
Keyword(s):  
Technical Efficiency ◽  
Formal Education ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Technical Inefficiency ◽  
Factors Affecting ◽  
Frontier Analysis ◽  
Central Java ◽  
Frontier Production Function ◽  
Central Java Province

The objective of this study is to determine technical efficiency and factors affecting technical inefficiency of strawberry farming in Purbalingga Regency. This study was conducted in Karangreja Subdistrict, Purbalingga Regency, Central Java Province. Purposive sampling method was utilized to select 100 farmers as the respondents. All of whom have been running their farm business for at least three years consecutively from 2015 to 2017. Stochastic frontier production function was applied to measure technical efficiency and factors affecting technical inefficiency. The findings show that strawberry farming in Purbalingga Regency, Central Java Province, is technically efficient with efficiency number varies between 26.50-99.40% and the average efficiency number of 77.80%. Furthermore, the results indicate that the farmers’ formal education and the number of household members significantly affect the technical efficiency of strawberry farming.

scholarly journals Risk Adjusted Production Efficiency of Maize Farmers in Ethiopia: Implication for Improved Maize Varieties Adoption

2017 ◽  
Vol 5 (9) ◽  
pp. 1099
Author(s):  
Sisay Diriba Lemessa ◽  
Molla Alemayehu Yismawu ◽  
Megersa Debela Daksa ◽  
Mulugeta Damie Watabaji
Keyword(s):  
Technical Efficiency ◽  
Production Efficiency ◽  
Stochastic Frontier ◽  
Returns To Scale ◽  
Stochastic Frontier Approach ◽  
Technical Inefficiency ◽  
Maize Production ◽  
Production Risk ◽  
Access To Credit ◽  
Maize Varieties

This study analyzes the technical efficiency and production risk of 862 maize farmers in major maize producing regions of Ethiopia. It employs the stochastic frontier approach (SFA) to estimate the level of technical efficiencies of stallholder farmers. The stochastic frontier approach (SFA) uses flexible risk properties to account for production risk. Thus, maize production variability is assessed from two perspectives, the production risk and the technical efficiency. The study also attempts to determine the socio-economic and farm characteristics that influence technical efficiency of maize production in the study area. The findings of the study showed the existence of both production risk and technical inefficiency in maize production process. Input variables (amounts per hectare) such as fertilizer and labor positively influence maize output. The findings also show that farms in the study area exhibit decreasing returns to scale. Fertilizer and ox plough days reduce output risk while labor and improved seed increase output risk. The mean technical efficiency for maize farms is 48 percent. This study concludes that production risk and technical inefficiency prevents the maize farmers from realizing their frontier output. The best factors that improve the efficiency of the maize farmers in the study area include: frequency of extension contact, access to credit and use of intercropping. It was also realized that altitude and terracing in maize farms had influence on farmer efficiency.

scholarly journals ECONOMIC ANALYSIS OF CONTRACT FARMING AND TECHNICAL EFFICIENCY OF BROILER FARMERS

2021 ◽  
Vol 53 (4) ◽  
pp. 426-433
Author(s):  
Luke ADEBISI ◽  
Oluwaremilekun ADEBISI ◽  
Marvellous OWOLABI ◽  
Edet HENSHAW ◽  
Olaide ASIYANBI
Keyword(s):  
Technical Efficiency ◽  
Production Efficiency ◽  
Sampling Technique ◽  
Least Square ◽  
Farm Income ◽  
Stochastic Production Frontier ◽  
Contract Farming ◽  
Credit Access ◽  
Access To Credit ◽  
Broiler Production

The study assessed the effect of contract farming on broiler production in Osun State, Nigeria. 120 farmers comprising of broiler farmers participating and not participating in contract farming were selected using multistage sampling technique. Information was elicited from the farmers with the aid of a structured questionnaire. The data were analyzed using descriptive statistics, Stochastic Production Frontier and Ordinary least square regression model. The findings of this study revealed that majority (75%) of the farmers rated the activities of contracting farming to be good and favorable, as the contract farmers earn more from broiler production than their counterparts. Average technical efficiency of the contract and non contract farmers were 0.8209 and 0.6803, respectively. The results also revealed that years of experience in broiler production, education of farmer, off-farm income, membership in farmers association, access to credit, access to veterinary services and participation in contract farming significantly affected technical efficiency of broiler farmers in the study area. Therefore, the study recommends that there should be increase in the awareness of the benefits associated with contract farming in agrarian communities, so that more farmers are encouraged to participate, as this will improve their production efficiency.

Parametric estimation of a gauge function and a measure of technical efficiency

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yongseung Han ◽  
Thomas Littlefield ◽  
Myeong Hwan Kim
Keyword(s):  
Technical Efficiency ◽  
Design Methodology ◽  
Profit Maximization ◽  
Gauge Function ◽  
Parametric Estimation ◽  
Distance Functions ◽  
Competitive Market ◽  
Technical Inefficiency ◽  
Content Type ◽  
Inputs And Outputs

PurposeThis paper proposes the use of a gauge function as a measure of technical efficiency. The measure of technical inefficiency from a gauge function is desirable as the estimation of a gauge function is not subject to the endogeneity problem under the behavioral assumption of profit maximization in the competitive market.Design/methodology/approachThe authors address three important properties of a gauge function, i.e. linear homogeneity, monotonicity and convexity in inputs and outputs, and show how such properties are utilized in its estimation. Then, the authors apply the estimation of a gauge function to US Blacksmiths in 1850 and 1880 to show that a failure to satisfy such properties may lead to an incorrect inference on the technical efficiency.FindingsThe authors find that the Blacksmiths in the 1850s were technically more efficient than the ones in the 1880s, indicating technical regress in Blacksmithing when the properties are satisfied.Originality/valueThis paper introduces a measure of technical inefficiency from a gauge function and shows how to estimate the gauge function parametrically for the measure. The authors show McFadden's gauge function and its properties, which differ from the properties of other distance functions. The authors emphasize linear homogeneity as well as monotonicity and convexity in inputs and outputs, which must be satisfied in the estimation of a gauge function.

The ripple effect of credit accessibility on the technical efficiency of maize farmers in Ghana

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anthony Siaw ◽  
Yuansheng Jiang ◽  
Martinson Ankrah Twumasi ◽  
Wonder Agbenyo ◽  
Gideon Ntim-Amo ◽  
...  
Keyword(s):  
Technical Efficiency ◽  
Farm Size ◽  
Farm Income ◽  
Agricultural Credit ◽  
Maize Production ◽  
Content Type ◽  
Frontier Analysis ◽  
Access To Credit ◽  
Variable Approach ◽  
The Impact

PurposeThe purpose of this study is to examine the impact of access to credit on technical efficiency (TE) of maize farmers in a developing country, Ghana.Design/methodology/approachThe study employed an instrumental variable approach and the stochastic frontier analysis (SFA) method for the estimation of the results.FindingsThe study found that farmers who have access to agricultural credit stand the chance of increasing TE by a margin of 8%, which also influences the maize production than those who did not have access to credit. The average TE score of the farmers was 74%. The study also found out that factors like membership, gender, farmers' access to credit, age and social network determine farmers' possibility of accessing agricultural credit. The study finds out that returns to size are increasing among the maize farmers and that significant improvement in efficiency can be realized by increasing the level of input used in production. Also, factors such as farm size, labor, seeds and fertilizer are the essential determinants of maize production output. Also, gender, extension, age, off-farm income, access to credit and membership were significant factors influencing technical inefficiency (TI).Originality/valueThe paper contributes to the existing literature on agricultural credit on rural agricultural development. The problem of endogeneity associated with access to credit, which has been considered by other researchers, is dealt with this study. This paper also provides information to government policymakers, practitioners and all other stakeholders in the maize sub-sectors and also will benefit small farmers outside the study area.

Stochastic Frontier Analysis and Measurement of Productivity and Technical Efficiency of Indian Manufacturing Sector

2017 ◽  
Vol 5 (1) ◽  
pp. 52-69
Author(s):  
Manoj Kumar
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Manufacturing Sector ◽  
Stochastic Frontier ◽  
Value Added ◽  
Frontier Analysis ◽  
Use Of Resources ◽  
Plant Level ◽  
Indian Manufacturing Sector ◽  
Factor Inputs

It is generally believed the structural reforms that usher in competition and force companies to become more efficient were introduced later in India following the macroeconomic crisis in 1991. However, whether or not the post-1991 growth is an outcome of more efficient use of resources or greater use of factor inputs, especially capital, remains an open empirical question. In this article the author uses plant-level data from 1990 and 2015 to address this question. The results indicate that while there was an increase in the productivity of factor inputs during the 1990s, most of the growth in value added is explained by growth in the use of factor inputs. The author also finds that median technical efficiency declined in all but one of the industries between the two years, and change in technical efficiency explains a very small proportion in the change in gross value added.

Structural change and technical efficiency: a study of Indian pulp and paper industry

2019 ◽  
Vol 13 (1) ◽  
pp. 207-226
Author(s):  
Vinish Kathuria
Keyword(s):  
Technical Efficiency ◽  
Paper Industry ◽  
Structural Break ◽  
Pulp And Paper Industry ◽  
High Energy ◽  
Pulp And Paper ◽  
Original Research ◽  
Content Type ◽  
Frontier Analysis ◽  
Technical Parameters

Purpose The pulp and paper industry has been the focus of government policies ever since independence. This is the only industry where government plays a multi-dimensional role – not only as the regulator but also as the supplier of raw material and as the buyer. Despite the government's omnipotent role, there is evidence that industry is not very competitive, as it has very high energy and water intensity and poor productivity. A potent factor identified in the literature for the underperformance of the industry or for that matter any economy is the kind of technology used by the firms in the sector. This paper aims to look into the role of government policy in affecting the growth of the industry and what role embodied technology has played in influencing the efficiency of firms in Indian pulp and paper industry. Design/methodology/approach For the first question, the study uses 66 years of production data of the industry from 1951 to 2016 and tests for the structural break. For the second question, the study uses cross-section plant-level data for the year 2011-2012 of 160 paper manufacturing units to first estimate the stochastic production frontier (stochastic frontier analysis [SFA]) and then uses the output of SFA to find an association between embodied technology gap (TG) and technical efficiency. A methodological problem in earlier literature is the use of the productivity gap as a proxy for embodied TG. The present study uses technical parameters of papermaking – machine deckle and operating speed – to construct an index of TG. Findings The results show a structural break in the production trend occurring in 1999 with the delicensing in July 1997 as the possible cause. The SFA results show that the average technical inefficiency (TE) of the firms in the sector is 74 per cent with half of the firms having TE higher than 76 per cent. The study, however, does not find any impact of embodied TG on technical efficiency; rather it is the age, size, ownership and location that have an impact on it. Originality/value This is an original research, as the author has not come across any study in Indian context or elsewhere using technical parameters to construct TG variable.

Technical efficiency and its determinants in the Indonesian micro and small enterprises

2019 ◽  
Vol 46 (6) ◽  
pp. 1157-1173
Author(s):  
Maman Setiawan ◽  
Nury Effendi ◽  
Ratni Heliati ◽  
Alfi Syahrin Ario Waskito
Keyword(s):  
Technical Efficiency ◽  
Manufacturing Sector ◽  
Standard Industrial Classification ◽  
Small Enterprises ◽  
Truncated Regression ◽  
Firm Level ◽  
Content Type ◽  
Small Industry ◽  
Micro And Small Enterprises ◽  
Using Data

Purpose The purpose of this paper is to investigate the technical efficiency (TE) of micro and small enterprises (MSEs) and its determinants in the Indonesian manufacturing sector covering comprehensive subsectors. Design/methodology/approach This research uses the data from the micro and small industry survey sourced from the Indonesian Bureau of Central Statistics for the period 2010–2015. The TE is estimated using data envelopment analysis (DEA) with bootstrapping approach. The TE is also estimated at the firm-level survey data, classified at the five-digit level of the International Standard Industrial Classification system. In addition, a truncated regression model is applied to estimate the effects of the determinants on the TE. Findings This research finds that there is a low average TE of the MSEs for the subsectors investigated. It is also found that the TE is associated with firm size, location, export orientations on domestic and world markets, firm age, level of technology, and owner education. Originality/value The literature investigating the TE of the MSEs and its determinants is still rare in Indonesia. Most of the previous research limited the studies for specific subsectors and/or specific small regions. Therefore, this research has a contribution in measuring the TE of the MSEs for comprehensive subsectors as well as its relation with the determinants in the Indonesian manufacturing sector. Also, the DEA with bootstrapping approach is applied to estimate the TE of the firms based on each relevant subsector, which is rare in the previous research of the Indonesian MSEs.

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