Project Management

The Estimation Of Technical Efficiency Effects Models With An Example Applied To The Thai Manufacturing Sector

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Executive Summary

This paper does two things. First, it presents alternative approaches to the standard methods of estimating productive efficiency using a production function. It favours a parametric approach (viz. the stochastic production frontier approach) over a nonparametric approach (e.g. data envelopment analysis); and, further, one that provides a statistical explanation of efficiency, as well as an estimate of its magnitude. Second, it illustrates the favoured approach (i.e. the 'Single stage procedure') with estimates of two models of explained inefficiency, using data from the Thai manufacturing sector, after the crisis of 1997.

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