Title: Technical efficiency and export performance: evidence for self-selection hypothesis from Indonesian manufacturing sector-level data

Authors: Putu Mahardika Adi Saputra

Addresses: Faculty of Economics and Business, University of Brawijaya, Jln. Mayjen Haryono 165 Malang, 65145, Indonesia

Abstract: This paper examines the technical efficiency of Indonesian manufacturing industry by estimating a stochastic production frontier and the constant returns to scale output-oriented data envelopment analysis approach. Using fixed effect model, this paper also analyses the determinants of export performance of the industry. The results show that comparing the scores obtained by stochastic production frontier and data envelopment analysis, there are six relatively prominent industries in terms of efficiency achievement, namely iron and steel, tobacco, transport equipment, food products, industrial chemicals, and machinery, (electric). Utilising fixed effect model, we find that all export determinants show the appropriate significant signs and this paper provides evidence for the presence of self-selection hypothesis.

Keywords: manufacturing industry; technical efficiency; exports; self-selection hypothesis; Indonesia; export performance; stochastic production frontier; data envelopment analysis; DEA; export determinants.

DOI: 10.1504/IJEPEE.2014.066625

International Journal of Economic Policy in Emerging Economies, 2014 Vol.7 No.4, pp.383 - 398

Available online: 29 Dec 2014 *

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