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

Md. Azizul Baten (), Masud Rana (), Sumonkanti Das () and Md. Abdul Khaleque ()
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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.

Lahore Journal of Economics, 2006, vol. 11, issue 2, 23-41

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.

Keywords: Stochastic frontier; Production function; Technical efficiency (search for similar items in EconPapers)
Date: 2006
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