The study measures the level of technical efficiency and its determinants in Ethiopian garment factories. The study employs both Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA) to compute the technical efficiency of Ethiopian garment factories and Tobit model to examine the determinant of technical inefficiency of the garment factories based on a data set of ninety four garment factories over the period of 2014-2015.
The study used Akaike Information Criteria (AIC) to opt for the best function between Cobb-Douglas and Translog functions. The result reveals that Cobb-Douglas production functions better explains the production behavior of garment factories. The DEA estimation shows that the mean technical efficiency of garment factories was around to be 0.43 while such figure in SFA goes as high as 0.89 and the research indicated that export do not promote technical efficiency Ethiopian garment factories.
The research indicated that DEA is more appropriate for small garment factors while SFA is more suitable to large and medium garment factories. The result from DEA model indicates that educational level of production manager, local fabric sourcing, collaboration with similar factories and membership status with Ethiopian textile and garment institute have positive contribution to efficiency. On the other hand wage rate of semi/unskilled labour, years of establishments, number of production line, educational level of the manager and size have a negative effect to efficiency. While the result from SFA indicates that wage rate of semi/unskilled, year of establishment, size and educational level of the manger have the positive contribution to technical efficiency.
On the other hand owners citizenship and collaboration work with similar factories are a negative contribution to SFA technical efficiency. The research recommends that output can be increased by improving the technical efficiency of Ethiopian garment factories. To do so, for large and medium scale firms attention should be given to improve the wage rate of semi/unskilled labour, educational level of the managers and minimize collaboration with similar firms while educational level of the production manager, local fabric sourcing, collaboration with similar factories, and membership status of textile and garment institute should be improved for small firms.
Inhaltsverzeichnis (Table of Contents)
- Chapter One: Introduction
- 1.1 Background
- 1.2 Problem Statement
- 1.3 Objective
- 1.3.1 General Objectives
- 1.3.2 Specific Objectives
- 1.3.3 Research question
- 1.4 Research hypotheses
- 1.5 Significance of the study
- 1.6 Scope and limitation of the study
- 1.7 Organization of the Paper
- Chapter Two: Literature Review
- 2.1 Theoretical review
- 2.2 Empirical review
- Chapter Three: Methodology, Model Specification and Description of variables
- 3.1 Sources of Data
- 3.2 Sampling design
- 3.3 Description of Variables
- 3.3 Specification of Econometric Model
- 3.3.1 Parametric approach
- 3.3.2 Non Parametric approach
- 3.4 Identifying sources of technical inefficiency
- 3.5 Conceptual framework garment factories technical efficiency
- Chapter Four: Result and Discussion
- 4.1 Characteristics and production performance of garment factories in Ethiopia
- 4.2 The technical efficiency level of garment factories
- 4.3 Comparison of technical efficiency level by market orientation
- 4.3.1 Comparison of DEA and SFA result by owner's citizenship
- 4.4 Econometric analysis results
- 4.4.1 Hypothesis testing and Model selection
- 4.5 Determinates of technical efficiencies
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
The main objective of this thesis is to assess the technical efficiency of garment factories in Addis Ababa, Ethiopia, and to identify the factors that influence this efficiency. The study uses both parametric and non-parametric approaches to analyze the data. * Assessing the technical efficiency of garment factories in Addis Ababa. * Identifying factors influencing the technical efficiency of these factories. * Comparing efficiency levels across different factory sizes and market orientations. * Applying both parametric and non-parametric econometric models. * Determining the impact of ownership structure on efficiency.Zusammenfassung der Kapitel (Chapter Summaries)
Chapter One: Introduction: This chapter sets the stage for the research by providing background information on the Ethiopian garment industry, outlining the problem of low efficiency in the sector, and stating the research objectives. It details the research questions and hypotheses, highlighting the significance of the study and its limitations. The chapter concludes by outlining the structure of the thesis, guiding the reader through the subsequent chapters. Chapter Two: Literature Review: This chapter presents a comprehensive review of existing literature relevant to the study. It explores theoretical frameworks concerning firm efficiency and provides an overview of empirical studies conducted on similar topics within the garment industry, both globally and in developing economies. The review establishes the context for the current research and identifies any gaps in the existing knowledge that this study aims to address. This chapter provides theoretical foundations and contextualizes the study's approach within the broader body of existing research on factory efficiency. Chapter Three: Methodology, Model Specification and Description of variables: This chapter describes the research methodology employed in the study. It details the data sources, sampling techniques, and variable definitions used. The chapter also explains the econometric models—both parametric (e.g., Cobb-Douglas, Translog) and non-parametric (Data Envelopment Analysis, DEA) – used to assess technical efficiency. Furthermore, it articulates how the chosen models are appropriate for analyzing the specific research questions and dataset. The chapter also presents a clear conceptual framework that links the independent and dependent variables. Chapter Four: Result and Discussion: This chapter presents the findings of the empirical analysis. It reports the descriptive statistics of the sample, the estimated technical efficiency scores from both DEA and SFA models, and the results of the econometric analysis. The chapter also includes a comparison of technical efficiency across different subgroups, such as factory sizes and market orientations. A detailed analysis of factors influencing technical efficiency is undertaken, linking the results back to the theoretical framework presented earlier. It highlights significant findings and discusses their implications for policymakers and industry stakeholders.Schlüsselwörter (Keywords)
Ethiopian garment factories, technical efficiency, Data Envelopment Analysis (DEA), Stochastic Frontier Analysis (SFA), econometric modeling, firm-level productivity, market orientation, export orientation, ownership structure, Addis Ababa, developing economies.
Ethiopian Garment Factories: Technical Efficiency Analysis - FAQ
What is the main objective of this research?
The primary goal is to evaluate the technical efficiency of garment factories in Addis Ababa, Ethiopia, and pinpoint the factors influencing this efficiency. Both parametric and non-parametric approaches are used for data analysis.
What methods are used to assess technical efficiency?
The study employs both parametric (e.g., Cobb-Douglas, Translog) and non-parametric (Data Envelopment Analysis, DEA) econometric models to assess the technical efficiency of the garment factories.
What data sources are used in this study?
The chapter detailing the methodology will specify the precise sources of data used in the analysis. The sampling design and techniques for data collection will also be detailed there.
What are the key themes explored in this research?
Key themes include assessing technical efficiency, identifying influencing factors (such as factory size, market orientation, and ownership structure), comparing efficiency levels across different groups, applying parametric and non-parametric models, and determining the impact of ownership structure on efficiency.
What are the key findings of the research (in summary)?
The results chapter presents descriptive statistics, technical efficiency scores from DEA and SFA models, and econometric analysis results. It compares efficiency across subgroups and analyzes factors affecting efficiency, linking back to the theoretical framework. Specific findings regarding the determinants of technical efficiency are detailed in this section.
What are the chapters included in this thesis?
The thesis includes: Chapter One (Introduction), Chapter Two (Literature Review), Chapter Three (Methodology, Model Specification, and Description of Variables), and Chapter Four (Results and Discussion).
What does the literature review cover?
The literature review comprehensively examines existing research on firm efficiency, focusing on theoretical frameworks and empirical studies concerning the garment industry globally and in developing economies. It aims to contextualize the study and highlight any knowledge gaps it addresses.
How are the variables defined and described?
The methodology chapter provides detailed definitions and descriptions of all variables used in the econometric models. This ensures clarity and transparency in the analysis.
What is the significance of this study?
The study's significance lies in its contribution to understanding the factors impacting the technical efficiency of garment factories in Addis Ababa, providing valuable insights for policymakers and industry stakeholders in improving productivity and competitiveness.
What are the limitations of this study?
The introduction chapter will outline any limitations of the research, acknowledging potential constraints on the scope and generalizability of the findings.
What are the keywords associated with this research?
Keywords include: Ethiopian garment factories, technical efficiency, Data Envelopment Analysis (DEA), Stochastic Frontier Analysis (SFA), econometric modeling, firm-level productivity, market orientation, export orientation, ownership structure, Addis Ababa, developing economies.
- Citation du texte
- Tesfaye Fenta (Auteur), 2016, Efficiency of Ethiopian Garment Factories. Evidence from Addis Ababa, Munich, GRIN Verlag, https://www.grin.com/document/354760
