ACCESING TECHNICAL EFFICIENCY AND PRODUCTIVITY GROWTH OF MEDIUM AND LARGE-SCALE MANUFACTURING INDUSTRIES IN ETHIOPIA

Abstract

The main objective of the study is to measure the technical efficiency and productivity of large and medium manufacturing industries. To compute efficiency score the study employed Constant Return to scale and Variable returning to scale using a dataset ranging from2016 to 2020 of 44 sub industries out of 79 to industries. A purposive sampling technique is used identify and sample industries with full dataset on all input and output variables. Additionally, a Malmquist productive index is performed examine total productivity growth. To do this the study used a panel data of 15 major groups of industries with data ranging from 2007 to 2020. Secondary data was the only source and obtained from Ethiopian Statistical Service. To measure technical efficiency score two models were use: Constant Return to scale and Variable return to scale models. Based on constant return to scale model, on average, the efficiency value of the sample industries was 25.92% from the year 2016 to 2020. This reveals on average about 74.18% of inputs were inappropriately utilized. Whereas the average technical score when variable return to score model assumed was 28.76%. In addition Malmquist index result shows the sector under study had showed productivity progress by 5.7% over the study periods. This finding will have implication for policy makers and industry managers in order to be efficient.