Relative National Efficiency and Country Size: Evidence for Developing Countries

The paper investigates the impact of country size on aggregate national efficiency, using a nonparametric programming methodology to measure output distance functions and relative national efficiency for a group of 85 developing countries over the period 1980-89. Tobit regression models are estimated in order to identify the influence of national and policy characteristics on intercountry differences in relative efficiency levels. The results indicate that there is a strong positive developmental-efficiency relationship and evidence of a positive impact of trade policy openness on aggregate efficiency. There is also some evidence of a country size constraint on efficiency when other influences are controlled for. Copyright Blackwell Publishing Ltd 2003