The Technical Efficiency Analyses of Manufacturing Sector in Malaysia: Evidence From the First Industrial Master Plan (1986-1995)

Abstract

This paper attempts to estimates the technical efficiency for all manufacturing industries in Malaysia for the periods of 1986 up to 1995. By utilizing the stochastic frontier model (SFM), it is shows that the technical efficiency for all sectors constantly increases at 0.01 percentage points each year. The Malaysian manufacturing industry during the stipulated periods was classified as input-driven, largely dominated by labour and capital. It was found that the technical efficiency over time across industries is rising over time at a decreasing rate and the resource based industries (RBI) found to be technically efficient compared to non-RBI groups.