Determinants of Efficiency in Least Developed Countries: Further Evidence from Nepalese Manufacturing Firms

Edward Oczkowski, Kishor Sharma

Research output: Contribution to journalArticlepeer-review

19 Citations (Scopus)

Abstract

Using a translog stochastic production frontier and maximum likelihood econometric methods, we estimate and model the determinants of firm level efficiency in the Nepalese context. Our results are broadly in line with theoretical expectations. We find that large firms are more efficient and that a higher capital intensity leads to inefficiency. There is no statistical evidence to suggest that foreign participation leads to efficiency improvements. Also, we do not observe any link between export intensity and efficiency improvement. We find that higher protection leads to inefficiency. Overall, our results suggest that an outward looking industrial strategy, which relies on less intervention and permits the development of large-scale industries, is conducive to efficiency improvement in least developed countries (LDCs) like Nepal.
Original languageEnglish
Pages (from-to)617-630
Number of pages14
JournalJournal of Development Studies
Volume41
Issue number4
DOIs
Publication statusPublished - 2005

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