Technical efficiency measurement within the manufacturing sector in Cote d'Ivoire: A stochastic frontier approach

This article analyses the productive performance in four manufacturing sectors of the Ivorian economy: textiles and garments, metal products, food processing, wood and furniture. To appraise the productive performance, econometric production frontier models are estimated, illustrating the maximum output attainable from a given quantity of inputs. The frontier and firm efficiency scores are derived from stochastic production functions estimated on cross-sectional data. The stochastic specification of the models allows for the decomposition of the error term into two components, one the normal random effect and the other to account for technical inefficiency that we explain by various exogenous variables describing the economic and institutional environment. Firm size proves to be a statistically significant determinant of the productive performance. Across the four sectors, the positive impact of being large compensates the negative effect of a formal institutional status in an environment where government regulations still prevail.