Prospects from Efficiency Analysis of Exporting and Non-Exporting Pakistani Firms

Mamona Sadaf, null; Arshia Ishaq, null

doi:10.13169/polipers.15.2.0025

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Policy Perspectives: The Journal of the Institute of Policy Studies

Volume 15, Issue 2

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Prospects from Efficiency Analysis of Exporting and Non-Exporting Pakistani Firms

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Author(s): Mamona Sadaf , Arshia Ishaq

Publication date (Print): 2018

Journal: Policy Perspectives: The Journal of the Institute of Policy Studies

Publisher: Pluto Journals

Keywords: Efficiency, Economic Integration, Input-Output, Growth

Abstract

In the wake of global competition with greater economic and regional integration, a country's economic growth is largely determined by industrial efficiency. Operating and staying within market under cut throat competition appears as an unprecedented challenge for exporting and non-exporting firms. A data of 403 firms from World Bank Enterprise Survey 2013 is used for estimation of technical and scale efficiencies between and within exporting and non-exporting firms. Data Envelopment Analysis (DEA) is applied for constant returns to scale (CRS) and variable returns to scale (VRS) efficiency scores. It has been found that the average technical efficiency scores for non-exporting firms is slightly greater than the exporting firms. But majority of the firm's technical efficiency remained the same for both type of firms. Industries with highest technical efficiency comprise of chemicals, food, garments and non-metals. Efficiency scores of some firms depict interesting results and found efficient in either of exporting and non-exporting firms. The efficiency analysis can help to identify potential changes which industry may require for its consistent growth in current surge of global competition and nationalization.

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Author and article information

Journal

Journal ID (doi): 10.13169

Journal ID (publisher-id): polipers

Title: Policy Perspectives: The Journal of the Institute of Policy Studies

Publisher: Pluto Journals

ISSN (Print): 18121829

ISSN (Electronic): 18127347

Publication date (Print): 2018

Volume: 15

Issue: 2

Pages: 25-39

Affiliations

Mamona Sadaf and Arshia Ishaq are Lecturers of Economics at University of Management and Technology, Sialkot.

Article

Publisher ID: polipers.15.2.0025

DOI: 10.13169/polipers.15.2.0025

SO-VID: 5d2a1d0f-e162-4a2e-823a-48c9a804e160

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All content is freely available without charge to users or their institutions. Users are allowed to read, download, copy, distribute, print, search, or link to the full texts of the articles in this journal without asking prior permission of the publisher or the author. Articles published in the journal are distributed under a http://creativecommons.org/licenses/by/4.0/.

History

ScienceOpen disciplines: Education,Religious studies & Theology,Social & Behavioral Sciences,Law,Economics

Keywords: Efficiency,Growth,Economic Integration,Input-Output

References

Matthew Mccartney, “Pakistan, Growth, Dependency, and Crisis,” The Lahore Journal of Economics, (September 2011): 71–94, http://repec:lje:journl:v:16:y:2011:i:sp:p:71-94.
ibid.
Hallward-Driemeier, Mary, Giuseppe Iarossi, and Kenneth Sokoloff, “Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data” NBER Working Paper no. 8894 (2002). doi:10.3386/w8894.
Hallward-Driemeier, Mary, Giuseppe Iarossi, and Kenneth Sokoloff. “Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data” National Bureau of Economic Research , (April 2002). doi:10.3386/w8894.
Encarnación Moral-Pajares, Adoración Mozas-Moral, Enrique Bernal-Jurado, and Miguel Jesús Medina-Viruel, “Efficiency and Exports: Evidence from Southern European Companies,” Journal of Business Research 68, no. 7 (July 2015): 1506–1511.
Traiq Mahmood, Ejaz Ghani, and Musleh Ud Din, “Are Our Export-Oriented Industries Technically More Efficient?,” Pakistan Development Review 2, no. Summer (2015): 97–121, http://www.pide.org.pk/pdf/PDR/2015/Volume2/97-121.pdf.
Coelli, Tim J. Coelli and George E. Battese, “Identification Of Factors Which Influence The Technical Inefficiency Of Indian Farmers,” Australian Journal of Agricultural Economics 40, no. 2 (August 1996): 103–128.
Ibid.
Paul Krugman, “Scale Economies, Product Differentiation, and the Pattern of Trade,” The American Economic Review 70, no. 5 (1980): 950–59.
Elhanan Helpman, “The Structure of Foreign Trade,” Journal of Economic Perspectives 1-13, no. 2 (1999): 121–44.
Abraham Charnes et al., “Foundations of Data Envelopment Analysis for Pareto-Koopmans Efficient Empirical Production Functions,” Journal of Econometrics 30, no. 1–2 (1985): 91–107
William W. Cooper, Lawrence M. Seiford, and Joe Zhu. “A Unified Additive Model Approach for Evaluating Inefficiency and Congestion with Associated Measures in DEA,” Socio-Economic Planning Sciences 34, no. 1 (2000): 1–25.
Fried, Harold O., C. A. Knox Lovell, and Shelton S. Schmidt, eds. The Measurement of Productive Efficiency and Productivity Change (London: Oxford University Press, February 1, 2008).
Cooper, William W., Lawrence M. Seiford, and Joe Zhu, eds. “Handbook on Data En velopment Analysis,” International Series in Operations Research & Management Scie nce (2011).
Harold O., Fried, C. A. Knox Lovell, and Shelton S. Schmidt, eds. “The Measuremen t of Productive Efficiency and Productivity Change” (February 1, 2008).
Tjalling C. Koopmans, “Efficient Allocation of Resources,” Econometrica 19, no. 4 (1951): 455.
Gerard Debreu, “The Coefficient of Resource Utilization,” Econometrica 19, no. 3 (July 1951): 273.
R. D. Banker, A. Charnes, and W. W. Cooper, “Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis,” Management Science 30, no. 9 (September 1984): 1078–1092.
Coelli and Tese, “Identification of Factors Which Influence the Technical Inefficiency of Indian Farmers.” Australian Journal of Agricultural Economics , Vol. 40, No. 2 (August 1996), pp. 103–128
Zhong Qin, Vinod Mishra, and Smyth Russell, “An Empirical Examination of Endogenous Ownership in Chinese Private Enterprises,” Journal of the Asia Pacific Economy 21, no. 4 (2016): 513–30.
Rizal Edy Halim, “Marketing Productivity and Profitability of Indonesian Public Listed Manufacturing Firms An Application of Data Envelopment Analysis(DEA),” Benchmarking: An International Journal 17, no. 6 (2010): 842–57,
Roberto Alvarez and Gustavo Crespi, “Determinants of Tehnical Efficiecny of Small Firms,” Small Business Economics 20, no. 3 (2003): 233–44.
Fukunari Kimura and Kozo Kiyota, “Foreign-owned versus Domestically-owned Firms: Economic Performance in Japan.,” Review of Development Economics 11, no. 1 (2007): 31–48.
Thi Bich Tran, R Quentin Grafton, and Tom Kompas, “Firm Efficiency in a Transitional Economy: Evidence from Vietnam,” Asian Economic Journal 22, no. 1 (2008): 47–66, https://doi.org/10.1111/j.1467-8381.2008.00268.x.
Dilling-Hansen et al., “‘Efficiency, R&D and Ownership–some Empirical Evidence.,’” International Journal of Production Economics 83, no. 1 (2003): 85–94.
Ehsan H. Feroz, And Sungsoo Kim, and Raymond L. Raab., “Financial Statement Analysis: A Data Envelopment Analysis Approach,” The Journal of Operational Research Society 54, no. 1 (2013): 48–58.
Garrick Blalock and Paul J. Gertler, “‘Learning from Exporting Revisited in a Less Developed Setting,” Journal of Development Economics 75, no. 2 (2004): 397–416.
Alvarez and Crespi, “Determinants of Tehnical Efficiecny of Small Firms,” Small Business Economics 20, no. 3 (2003): 233–244.
Arun Kumaraswamy and Ram Mudambi, “Catch-up Strategies in the Indian Auto Components Industry: Domestic Firms’ Responses to Market Liberalization,” Journal of International Business Studies 43, no. 4 (2012): 368–95, https://doi.org/10.1057/jibs.2012.4
Abid A Burki and Dek Terrell, “‘Measuring Production Efficiency of Small Firms in Pakistan,’” World Development 26, no. 1 (1998): 155–69; Mahmood Ghani Ud Din, “Are Our Export-Oriented Industries Technically More Efficient?”; Mehran Ali Memon and Izah Mohd Tahir, “‘Performance Analysis of Manufacturing Companies in Pakistan,’” Business Management Dynamics 1, no. 7 (2012): 12–21.
Mahmood Ghani, and Ud Din, “Are Our Export-Oriented Industries Technically More Efficient?” Pakistan Development Review , no.2 (2015): 91–121.
A Granér Mats and Anders Isaksson, “‘Firm Efficiency and the Destination of Exports: Evidence from Kenyan Plant-level Data,’” The Developing Economies 47, no. 3 (2009): 279–306.
Coelli and Tese, “Identification of Factors Which Influence the Technical Inefficiency of Indian Farmers,” Australian Journal of Agriculture Economics 40, no. 2 (1996): 103–128.
Chuen Tse and Kuan Yew, “Procedia Computer Science Efficiency Assessment of Universities through Data Envelopment Analysis,” Procedia Computer Science 3 (2011): 499–506.
Charnes, A., W.W. Cooper, and E. Rhodes. “Measuring the Efficiency of Decision Making Units,” European Journal of Operational Research 2, no. 6 (November 1978): 429–444.
Adopted from Tim Coelli, “A Guide to Deap Version 2.1: A Data Envelopment Analysis (Computer) Program,” Centre for Efficiency and Productivity Analysis, University of New England, Australia (1996).
World Bank, Enterprises Surveys. http://www.enterprisesurveys.org/
Farooq, O., and S. E. Wasti, “Agriculture, Pakistan Economic Survey 2014–15,” Report by Ministry of Finance, Government of Pakistan (2015). URL: http://finance.gov.pk/survey/chapters_15/02_Agricultre.pdf
Traiq Mahmood, Ejaz Ghani, and Musleh Ud Din, “Are Our Export-Oriented Industries Technically More Efficient?” Pakistan Development Review 2, no. Summer (2015): 97–121, http://www.pide.org.pk/pdf/PDR/2015/Volume2/97-121.pdf; Tariq Mahmood Din, Musleh-ud, Ejaz Ghani, “‘Technical Efficiency of Pakistan's Manufacturing Sector: A Stochastic Frontier and Data Envelopment Analysis,’” The Pakistan Development Review 46, no.1 (2007):01–18. https://www.jstor.org/stable/pdf/41260785.pdf
Marc Lavoie, “‘The Kaleckian Model of Growth and Distribution and Its Neo-Ricardian and Neo-Marxian Critiques,’” Cambridge Journal of Economics 19, no. 6 (1995): 789–818.
Mahmood Ghani, Ud Din, “Are Our Export-Oriented Industries Technically More Efficient? The Pakistan Development Review , (Summer 2015) pp. 97–121

Comments

Comment on this article

[1] Matthew Mccartney, “Pakistan, Growth, Dependency, and Crisis,” The Lahore Journal of Economics, (September 2011): 71–94, http://repec:lje:journl:v:16:y:2011:i:sp:p:71-94.

[2] ibid.

[3] Hallward-Driemeier, Mary, Giuseppe Iarossi, and Kenneth Sokoloff, “Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data” NBER Working Paper no. 8894 (2002). doi:10.3386/w8894.

[4] Hallward-Driemeier, Mary, Giuseppe Iarossi, and Kenneth Sokoloff. “Exports and Manufacturing Productivity in East Asia: A Comparative Analysis with Firm-Level Data” National Bureau of Economic Research , (April 2002). doi:10.3386/w8894.

[5] Encarnación Moral-Pajares, Adoración Mozas-Moral, Enrique Bernal-Jurado, and Miguel Jesús Medina-Viruel, “Efficiency and Exports: Evidence from Southern European Companies,” Journal of Business Research 68, no. 7 (July 2015): 1506–1511.

[6] Traiq Mahmood, Ejaz Ghani, and Musleh Ud Din, “Are Our Export-Oriented Industries Technically More Efficient?,” Pakistan Development Review 2, no. Summer (2015): 97–121, http://www.pide.org.pk/pdf/PDR/2015/Volume2/97-121.pdf.

[7] Coelli, Tim J. Coelli and George E. Battese, “Identification Of Factors Which Influence The Technical Inefficiency Of Indian Farmers,” Australian Journal of Agricultural Economics 40, no. 2 (August 1996): 103–128.

[8] Ibid.

[9] Paul Krugman, “Scale Economies, Product Differentiation, and the Pattern of Trade,” The American Economic Review 70, no. 5 (1980): 950–59.

[10] Elhanan Helpman, “The Structure of Foreign Trade,” Journal of Economic Perspectives 1-13, no. 2 (1999): 121–44.

[11] Abraham Charnes et al., “Foundations of Data Envelopment Analysis for Pareto-Koopmans Efficient Empirical Production Functions,” Journal of Econometrics 30, no. 1–2 (1985): 91–107

[12] William W. Cooper, Lawrence M. Seiford, and Joe Zhu. “A Unified Additive Model Approach for Evaluating Inefficiency and Congestion with Associated Measures in DEA,” Socio-Economic Planning Sciences 34, no. 1 (2000): 1–25.

[13] Fried, Harold O., C. A. Knox Lovell, and Shelton S. Schmidt, eds. The Measurement of Productive Efficiency and Productivity Change (London: Oxford University Press, February 1, 2008).

[14] Cooper, William W., Lawrence M. Seiford, and Joe Zhu, eds. “Handbook on Data En velopment Analysis,” International Series in Operations Research & Management Scie nce (2011).

[15] Harold O., Fried, C. A. Knox Lovell, and Shelton S. Schmidt, eds. “The Measuremen t of Productive Efficiency and Productivity Change” (February 1, 2008).

[16] Tjalling C. Koopmans, “Efficient Allocation of Resources,” Econometrica 19, no. 4 (1951): 455.

[17] Gerard Debreu, “The Coefficient of Resource Utilization,” Econometrica 19, no. 3 (July 1951): 273.

[18] R. D. Banker, A. Charnes, and W. W. Cooper, “Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis,” Management Science 30, no. 9 (September 1984): 1078–1092.

[19] Coelli and Tese, “Identification of Factors Which Influence the Technical Inefficiency of Indian Farmers.” Australian Journal of Agricultural Economics , Vol. 40, No. 2 (August 1996), pp. 103–128

[20] Zhong Qin, Vinod Mishra, and Smyth Russell, “An Empirical Examination of Endogenous Ownership in Chinese Private Enterprises,” Journal of the Asia Pacific Economy 21, no. 4 (2016): 513–30.

[21] Rizal Edy Halim, “Marketing Productivity and Profitability of Indonesian Public Listed Manufacturing Firms An Application of Data Envelopment Analysis(DEA),” Benchmarking: An International Journal 17, no. 6 (2010): 842–57,

[22] Roberto Alvarez and Gustavo Crespi, “Determinants of Tehnical Efficiecny of Small Firms,” Small Business Economics 20, no. 3 (2003): 233–44.

[23] Fukunari Kimura and Kozo Kiyota, “Foreign-owned versus Domestically-owned Firms: Economic Performance in Japan.,” Review of Development Economics 11, no. 1 (2007): 31–48.

[24] Thi Bich Tran, R Quentin Grafton, and Tom Kompas, “Firm Efficiency in a Transitional Economy: Evidence from Vietnam,” Asian Economic Journal 22, no. 1 (2008): 47–66, https://doi.org/10.1111/j.1467-8381.2008.00268.x.

[25] Dilling-Hansen et al., “‘Efficiency, R&D and Ownership–some Empirical Evidence.,’” International Journal of Production Economics 83, no. 1 (2003): 85–94.

[26] Ehsan H. Feroz, And Sungsoo Kim, and Raymond L. Raab., “Financial Statement Analysis: A Data Envelopment Analysis Approach,” The Journal of Operational Research Society 54, no. 1 (2013): 48–58.

[27] Garrick Blalock and Paul J. Gertler, “‘Learning from Exporting Revisited in a Less Developed Setting,” Journal of Development Economics 75, no. 2 (2004): 397–416.

[28] Alvarez and Crespi, “Determinants of Tehnical Efficiecny of Small Firms,” Small Business Economics 20, no. 3 (2003): 233–244.

[29] Arun Kumaraswamy and Ram Mudambi, “Catch-up Strategies in the Indian Auto Components Industry: Domestic Firms’ Responses to Market Liberalization,” Journal of International Business Studies 43, no. 4 (2012): 368–95, https://doi.org/10.1057/jibs.2012.4

[30] Abid A Burki and Dek Terrell, “‘Measuring Production Efficiency of Small Firms in Pakistan,’” World Development 26, no. 1 (1998): 155–69; Mahmood Ghani Ud Din, “Are Our Export-Oriented Industries Technically More Efficient?”; Mehran Ali Memon and Izah Mohd Tahir, “‘Performance Analysis of Manufacturing Companies in Pakistan,’” Business Management Dynamics 1, no. 7 (2012): 12–21.

[31] Mahmood Ghani, and Ud Din, “Are Our Export-Oriented Industries Technically More Efficient?” Pakistan Development Review , no.2 (2015): 91–121.

[32] A Granér Mats and Anders Isaksson, “‘Firm Efficiency and the Destination of Exports: Evidence from Kenyan Plant-level Data,’” The Developing Economies 47, no. 3 (2009): 279–306.

[33] Coelli and Tese, “Identification of Factors Which Influence the Technical Inefficiency of Indian Farmers,” Australian Journal of Agriculture Economics 40, no. 2 (1996): 103–128.

[34] Chuen Tse and Kuan Yew, “Procedia Computer Science Efficiency Assessment of Universities through Data Envelopment Analysis,” Procedia Computer Science 3 (2011): 499–506.

[35] Charnes, A., W.W. Cooper, and E. Rhodes. “Measuring the Efficiency of Decision Making Units,” European Journal of Operational Research 2, no. 6 (November 1978): 429–444.

[36] Adopted from Tim Coelli, “A Guide to Deap Version 2.1: A Data Envelopment Analysis (Computer) Program,” Centre for Efficiency and Productivity Analysis, University of New England, Australia (1996).

[37] World Bank, Enterprises Surveys. http://www.enterprisesurveys.org/

[38] Farooq, O., and S. E. Wasti, “Agriculture, Pakistan Economic Survey 2014–15,” Report by Ministry of Finance, Government of Pakistan (2015). URL: http://finance.gov.pk/survey/chapters_15/02_Agricultre.pdf

[39] Traiq Mahmood, Ejaz Ghani, and Musleh Ud Din, “Are Our Export-Oriented Industries Technically More Efficient?” Pakistan Development Review 2, no. Summer (2015): 97–121, http://www.pide.org.pk/pdf/PDR/2015/Volume2/97-121.pdf; Tariq Mahmood Din, Musleh-ud, Ejaz Ghani, “‘Technical Efficiency of Pakistan's Manufacturing Sector: A Stochastic Frontier and Data Envelopment Analysis,’” The Pakistan Development Review 46, no.1 (2007):01–18. https://www.jstor.org/stable/pdf/41260785.pdf

[40] Marc Lavoie, “‘The Kaleckian Model of Growth and Distribution and Its Neo-Ricardian and Neo-Marxian Critiques,’” Cambridge Journal of Economics 19, no. 6 (1995): 789–818.

[41] Mahmood Ghani, Ud Din, “Are Our Export-Oriented Industries Technically More Efficient? The Pakistan Development Review , (Summer 2015) pp. 97–121