Effects of Input Composition on Technical Efficiencies of Textile Industries in Pakistan

Abstract

This paper studies the technical efficiencies of the textile manufacturing industries in Pakistan using 5-digit level industry data. Technical efficiencies are computed by the Data Envelopment Analysis technique assuming constant as well as variable returns to scale. The efficiency scores thus obtained are analysed by the TOBIT regression technique to determine how input composition influences these efficiency scores. It is found that imported raw material and machinery exercises a positive effect, whereas non-industrial costs affect technical efficiencies in a negative way. Electricity does not play its due role in affecting technical efficiencies. JEL Classification: C24, D24, L6, O14 Keywords: Technical Efficiency, Data Envelopment Analysis, TOBIT Analysis, Manufacturing Industries