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.

Technical Efficiency (TE) in Malaysia Electric and Electronic Manufacturing Industry: A Stochastic Frontier Analysis (SFA) Approach

2021 ◽  
Vol 12 (1) ◽  
pp. 98-98
Author(s):  
Norayati Hashim ◽  
Mohd Fahmy Abdullah
Keyword(s):  
Technical Efficiency ◽  
Manufacturing Industry ◽  
Stochastic Frontier Analysis ◽  
Developing Economies ◽  
Stochastic Frontier ◽  
Value Added ◽  
The United States ◽  
Average Growth ◽  
Frontier Analysis ◽  
Major Player

The Electric and Electronic (E&E) manufacturing industry is becoming more important for Malaysia economy that contributes to the Gross Domestic Product (GDP) and provide huge in job creation. Hence, real GDP grew at an average rate of 6.1% per year over 1970 to 2018 period, higher than the average growth of the advanced countries (OECD Economic Surveys: Malaysia 2019, 2019). Furthermore, Malaysia is a major player in the fast-expanding E&E market, of which major export destinations include Singapore, Hong Kong, the USA, PRC, Japan and Europe. In 2019, 37.8% of Malaysia total exports were from E&E industry, which accounted for RM372.67 billion worth of exports or 44.7 per cent of all manufacturing goods exported (MITI, 2019). However, the E&E manufacturing industry is fluctuating and was inconsistent in Malaysia (MITI, 2014). Furthermore, the external environment continued to be affected by global economic uncertainty in 2012, dampening demand for the E&E manufacturing industry exports to decrease by 2.5 percent to RM231.2 billion and had an impact on the labour market with total retrenchments increased by 35.2 percent to 7616, due mainly to higher layoffs in the manufacturing industry (MITI, 2012). This effect is due to the sovereign debt crisis in Europe, the United States (US) economic recovery was modest, dampened by both domestic and external weaknesses and the stagnant economy in Japan had an impact on the export performance. In addition that growing competition from manufacturers in developing economies such as China and ASEAN member countries, particularly in higher value-added assembly (Bank Negara Malaysia, 2012). Hence, Malaysia economic landscape year 2012 became more challenging to uncertainty affected by an increasingly competitive global environment. Keywords: Technical Efficiency, Electric and Electronics, Stochastic Frontier Analysis (SFA), Translog, Panel Data.

scholarly journals Does foreign investment improve technical efficiency of manufacturing: Evidence from the Republic of Serbia

Industrija ◽  
2021 ◽  
Vol 49 (2) ◽  
pp. 43-55
Author(s):  
Ivan Nikolić
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Manufacturing Sector ◽  
Stochastic Frontier ◽  
Motor Vehicles ◽  
Random Effects Model ◽  
Frontier Analysis ◽  
Beneficial Impact ◽  
The Republic ◽  
High Share

This paper offers significant evidence for the presence of a beneficial impact of foreign direct investment on technical efficiency based on a balanced panel data on a sample of 92 manufacturing groups over the period 2010-2019. Throughout this period Serbia lost 28% of the potential output of the manufacturing sector due to technical inefficiency. The finding is directly supported by the results at the level of the observed groups. Thus, the greatest increase in technical efficiency is in branches with a high share of foreign ownership, such as: production of motor vehicles, production of chemicals, and production of wire and cable equipment. The methodology is based on stochastic frontier analysis - within that, 'true' random effects model. The paper contributes to a better understanding of the possible consequences of foreign-invested enterprises on the domestic economy and, in particular, the performance of local businesses. As a result, it is helpful to policymakers in developing counties, where FDI is thought to have technological spillovers on native businesses.

To export or not to export? The link between the exporter status of a firmand its technical efficiency in Russia’s manufacturing sector

2016 ◽  
pp. 123-146 ◽  
Author(s):  
N. Krasnopeeva ◽  
E. Nazrullaeva ◽  
A. Peresetsky ◽  
E. Shchetinin
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Manufacturing Sector ◽  
Stochastic Frontier ◽  
Marginal Effect ◽  
Frontier Analysis ◽  
Exporting Firms ◽  
Status Effect ◽  
The Relationship ◽  
Generally True

Is it generally true that being an exporter for a firm is associated with a higher productivity? We study the relationship between firms’ export status and their technical efficiency in Russian manufacturing sector in 2004-2013 using the data from the Bureau van Dijk database “Ruslana”. To estimate the exporter status effect we apply two methods, both based on the stochastic frontier analysis. The first approach estimates the effect as the marginal effect of the exporter status on technical efficiency. The second approach is based on the propensity score matching of exporting firms with nonexporting firms. We obtain robust results which suggest that the relationship between the exporter status and technical efficiency is positive. In both cases the exporter status’ effect is up to 0.03 (3 p. p.).

scholarly journals Technical Efficiency of Smallholder Tomato Production in Semi-Urban Farms in Cameroon: A Stochastic Frontier Production Approach

2017 ◽  
Vol 7 (4) ◽  
pp. 27 ◽  
Author(s):  
Martin Paul Jr. Tabe-Ojong ◽  
Ernest L. Molua
Keyword(s):  
Technical Efficiency ◽  
Stochastic Frontier Analysis ◽  
Smallholder Farmers ◽  
Research Question ◽  
Stochastic Frontier ◽  
Negative Influence ◽  
Farm Size ◽  
Primary Data ◽  
Tomato Production ◽  
Frontier Analysis

Agriculture is the mainstay of Cameroon’s economy as it serves the purposes of food, livelihood and employment. Nevertheless, the country’s agriculture is plagued by low productivity and inefficiency in production. One of the main reasons for low productivity is the inability of farmers to fully exploit available technologies and production techniques. An important research question that comes to mind is, what are the major factors that hinder the technical efficiency of smallholder farmers? This study thus aimed to determine the level of technical efficiency in the production of tomato in smallholder farms, relying on primary data collected using a structured survey instrument administered to 80 tomato farmers in the Buea municipality of Cameroon. Data was analyzed using descriptive statistics and a stochastic frontier analysis method in the Cobb-Douglas production function. The STATA.14 software was used to obtain both stochastic frontier estimates and the determinants of technical efficiency. The results indicate that farmers are not fully technically efficient with a mean technical efficiency score of 0.68 with one farmer operating on the frontier. The study also revealed that most of the farmers irrespective of the size of the holdings have shown technical inefficiency problems. The older farmers were observed with the best measures of technical efficiency. Education, age and the adoption and practice of agronomic techniques had a positive and significant influence on technical efficiency while the nearest distance to the extension agent had a rather negative influence on technical efficiency. The input-output relationship showed that the area of tomato cultivation and the quantity of improved seed used were positive and significantly related to output at the 5% level of probability. As a result, it is recommended that farmers should increase their farm size, use of improved seeds and the adoption and practice of novel techniques in production. More emphasis should be placed on extension agents as they have a significant role to play in terms of improving and augmenting farmers’ education and information base through on farm demonstrations and result oriented workshops as all this will ensure increased production and productivity thereby increasing technical efficiency and achieving food self-sufficiency.

Intellectual capital: a determinant of firms' operational efficiency

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kanishka Gupta ◽  
T.V. Raman
Keyword(s):  
Intellectual Capital ◽  
Stochastic Frontier Analysis ◽  
Stock Exchange ◽  
Stochastic Frontier ◽  
Value Added ◽  
Financial Sector ◽  
Operational Efficiency ◽  
Content Type ◽  
Frontier Analysis ◽  
The Impact

PurposeIntellectual capital (IC) has been recognized in improving the efficiency of businesses and gaining competitive edge in the developed world. The present study offers perspectives into the effect of IC on the efficiency of the Indian financial sector companies.Design/methodology/approachFor the purpose of evaluating efficiency, the research has used stochastic frontier analysis (SFA). All Indian financial sector companies listed in National Stock Exchange (NSE-500) for the timeframe of ten years (2008–2018) have been considered. The paper has employed modified Pulic's Value Added Intellectual Coefficient (VAICTM) as a proxy to measure IC. Correlation and panel data regression have been used in order to examine the relationship.FindingsThe results of the study indicate positive and significant relationship between IC and efficiency of the firm. The results also show that all the components of IC, that is, human capital, relational capital, process capital and capital employed have a significant impact on firms' efficiency. Additionally, it has been seen that sample companies do not invest in research and development leading to no innovation capital.Practical implicationsThe research will assist managers in managing and controlling the IC, investors in matters related to investment and financial experts in improving the company's IC and value creation.Originality/valueThe current research is one of the pioneering studies in the context of Indian financial sector that examines the impact of modified VAIC on operational efficiency calculated using SFA.

scholarly journals Technical Efficiency and Small Scale Maize Producers in Mwanza Region: A Stochastic Frontier Analysis

2021 ◽  
Vol 9 (3) ◽  
Author(s):  
Mukole Kongolo
Keyword(s):  
Technical Efficiency ◽  
Best Practice ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Likelihood Estimation ◽  
Estimation Procedure ◽  
Farm Size ◽  
Small Scale ◽  
Maize Production ◽  
Frontier Analysis

This study measured technical efficiency and its determinants in maize production by small-scale producers in Mwanza region, using a stochastic frontier production function approach. A randomly selected sample of participants in the two districts was used. The Maximum Likelihood estimation procedure was followed to obtain the determinants of technical efficiency and technical efficiency levels of small-scale maize producers. The minimum and maximum values of technical efficiency were between 20% and 91%, indicating that the least practices of specific producer operates at a minimum level of 20%, while the best practice producers  operate  at 91% technical efficiency  level respectively. The summary results of the mean technical efficiency was 63%. The main determinants of technical efficiency were labour, farm size, producer’s experience, producer’s age, family size which were all positive and statistically significant. The findings suggest that the average efficiency of small-scale maize producers could be improved by 37% through better use of existing resources and technology. These findings highlight the need for action by government to assist small-scale maize producers improve efficiency.

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