Technical Efficiency in Australian Textile and Clothing Firms: Evidence from the Business Longitudinal Survey

22 Pages Posted: 6 Oct 2004

See all articles by I.K.M. Mokhtarul Wadud

I.K.M. Mokhtarul Wadud

Deakin University - School of Accounting, Economics and Finance

Abstract

This paper estimates technical efficiency of Australian textile and clothing firms based on the data obtained from the Business Longitudinal Survey (BLS) conducted by the Australian Bureau of Statistics (ABS). Using a Cobb Douglas stochastic production frontier the paper examines firm level technical efficiency in the time varying inefficiency effect model with technical inefficiency effects assumed as an independently distributed truncated normal variable. Estimates of the production frontier revealed significant but small elasticities of labour and capital for textile and clothing firms, respectively, and a negative (but insignificant) Hicks neutral technical change for both. Estimated coefficients of the explanatory variables for inefficiency effects indicated that technical efficiency varied significantly according to firms' age, size, capital intensity, proportion of non-production to total workers and type of legal status. Predicted firm specific efficiency varied from 16 per cent to 95 per cent and mean efficiency ranged between 30 to 70 per cent. In view of these results policies have been suggested to improve technical efficiency of the firms as well as productivity growth of the sub sectors.

Suggested Citation

Wadud, I.K.M. Mokhtarul, Technical Efficiency in Australian Textile and Clothing Firms: Evidence from the Business Longitudinal Survey. Available at SSRN: https://ssrn.com/abstract=595030

I.K.M. Mokhtarul Wadud (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

221 Burwood Highway
Burwood, Victoria 3215
Australia
+61 3 522 72051 (Phone)

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