Sources of productive efficiency: International comparison of iron and steel firms

Using a time-varying stochastic frontier model, this paper examines the technical efficiency of firms in the iron and steel industry to try to identify the factors contributing to the industry's efficiency growth. Industry observers and policymakers tend to cite most frequently three possible sources of efficiency growth: privatization; economics of scale; and vintage of equipment. Our study corroborates these factors. Based on our findings, which pertain to 52 iron and steel firms over the period of 1978-1997, privatization is likely to improve the efficiency of iron and steel firms to a great extent as evidenced in various industries. This study also provides systematic evidence that iron and steel production shows economies of scale. In addition, newer vintages of equipment are found to be closely correlated with higher levels of efficiency. This clearly indicates that investment in new plants and equipments is critical in pursuit of efficiency in the iron and steel industry. (c) 2007 Elsevier Ltd. All rights reserved.
Publisher
ELSEVIER SCI LTD
Issue Date
2006-12
Language
ENG
Keywords

TECHNICAL INEFFICIENCY; PRODUCTION FRONTIERS; CHINA IRON; INDUSTRY; PRIVATIZATION

Citation

RESOURCES POLICY, v.31, no.4, pp.239 - 246

ISSN
0301-4207
DOI
10.1016/j.resourpol.2007.03.003
URI
http://hdl.handle.net/10203/3616
Appears in Collection
KGSF-Journal Papers(저널논문)
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