International Journal of Business and Economics Volume 6, No. 1 April​, 2007

Efficiency of Indian Manufacturing Firms: Textile Industry as a Case Study

Anup Kumar Bhandari

Economic Research Unit, Indian Statistical Institute, India

Pradip Maiti

Economic Research Unit, Indian Statistical Institute, India

Abstract

Translog stochastic frontier production functions are fit to firm-level cross-sectional data on India's textile firms for each of five selected years to estimate technical efficiency (TE) of firms. We find that average TE varies between 68 to 84% across these years and that individual TEs vary with firm-specific characteristics such as size and age. Further, public sector firms are found to be relatively less efficient.

Keywords：textile industry, technical efficiency, stochastic frontier, Cobb Douglas production function, translog production function.

JEL Classifications：C12, C13, L25.

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