Inefficiency Effects Model Research Articles

Elementary education outcome efficiency of Indian state governments: a generalized stochastic frontier approach

PurposeThis paper aims to analyze the technical efficiency of Indian State governments in providing elementary education (EE) and to identify the determinants of their technical inefficiency.Design/methodology/approachThe Generalized Stochastic Frontier Approach (GSFA) is used in the context of the Inefficiency Effects Model to simultaneously estimate the frontier production function and the technical inefficiency model. Panel data of 28 Indian States from 2009–10 to 2018–19 is used.FindingsThe mean efficiency of States stands at 86%. Efficiency varied between 67 and 97%. 96% of the inter-state disparity in EE outcomes can be explained by inefficiency. Arunachal Pradesh is the least efficient State, followed by Sikkim and Tripura. Efficiency estimates were observed to change across States over the study period. Proportion of government schools, rural population, and proportion of Schedule Caste and Schedule Tribe children are the major determinants of inefficiency.Practical implicationsThis study emphasizes that efficient resource management is as important as adequate resource allocation for achieving positive EE outcomes. It distinguishes resource-poor States from inefficient ones, providing insights to enhance States’ efficiency, and aiding policymakers in formulating strategies for ensuring equitable and quality EE.Originality/valueThis is the first paper to apply GSFA (for Indian States), providing a more robust estimation of efficiency. The Inefficiency Effects Model is employed that address the limitations inherent in the two-stage approach.

Interstate Disparity in Combating COVID-19 in India: Efficiency Estimate Across States

Currently, COVID-19 is the most lethal menace in the world. Due to its health and economic consequences, it becomes a serious challenge for the economy. The present article aims to explore India’s interstate disparities of efficiency in combating COVID-19 based on secondary data. Besides, an attempt has been made to pinpoint the factors responsible for the inefficiency of resisting this deadly virus. The interstate efficiency measurement is facilitated by applying stochastic production frontier analysis. The empirical result divulges that among the Indian states, Bihar is the most efficient in combating COVID-19. The empirical estimation of the frontier model discloses that the number of doctors, nurses, police force, isolation beds and hotspots positively and significantly influence the recovery rate from COVID-19 in Indian states. The empirical results of the inefficiency effects model suggest that the share of elderly and urbanisation reversely influence the efficiency in combating the virus, while favourable sex ratio, literacy rate, regular salaried employment, digitalisation and ruralisation stimulate the efficiency of the concerned state. The study concludes that efficient utilisation, coupled with the advancement of the existing health infrastructure, is imperative for the acceleration of the recovery rate from this pandemic.

Toward green production practices: empirical evidence from Thai manufacturers' technical efficiency

PurposeThe development of green manufacturing has become essential to achieve sustainable development and modernize the nation’s manufacturing and production capacity without increasing nonrenewable resource consumption and pollution. This study investigates the effect of green industrial practices on technical efficiency for Thai manufacturers.Design/methodology/approachThe study uses stochastic frontier analysis (SFA) to estimate the stochastic frontier production function (SFPF) and inefficiency effects model, as pioneered by Battese and Coelli (1995).FindingsThis study shows that, on average, Thai manufacturing firms have experienced declining returns-to-scale production and relatively low technical efficiency. However, it is estimated that Thai manufacturing firms with a green commitment obtained the highest technical efficiency, followed by those with green activity, green systems and green culture levels, compared to those without any commitment to green manufacturing practices. Finally, internationalization and skill development can significantly improve technical efficiency.Practical implicationsGreen industry policy mixes will be vital for driving structural reforms toward a more environmentally friendly and sustainable economic system. Furthermore, circular economy processes can promote firms' production efficiency and resource use.Originality/valueTo the best of the authors' knowledge, this study is the first to investigate the effect of green industry practices on the technical efficiency of Thai manufacturing enterprises. This study also encompasses analyses of the roles of internationalization, innovation and skill development.

Technical Efficiency of Handloom-based Micro-enterprises in Assam, India: A Stochastic Frontier Analysis

Improving technical efficiency is one of the most effective ways to boost output in any manufacturing process. The efficiency level of enterprises can be improved by identifying their sources of inefficiency. The present article examines the technical efficiency and tries to identify the factors causing technical inefficiency in handloom-based micro-enterprises in Assam. The article used primary data and collected from 312 micro-level handloom enterprises spread across four districts of Assam. The stochastic frontier production with an inefficiency effects model is used for the purpose of analysis. Labour, capital and material inputs are found to be significant and labour is the most effective factor for increasing of output level. The mean technical efficiency of overall enterprises is 0.67 and a wide variation in the level of technical efficiency among the sample handloom enterprises is observed. Inefficiency model shows that a high yarn capital ratio, lower product diversity, entrepreneurs with training, a higher number of employees and adoption of promotional practices tend to reduce the technical inefficiency of the handloom enterprise significantly.

Technical efficiency of early variety country bean cultivation in selected areas of Bangladesh: a stochastic frontier approach

The present study was undertaken to measure the profitability and technical efficiency of early variety country bean cultivation in selected areas of Chatmohar upazila of Pabna district. A total of 60 early variety country bean-growing farmers were selected from three villages of Chatmohar upazila using a simple random sampling technique. Stochastic frontier production function was applied to determine the technical efficiency of the country bean growers. Technical inefficiency effects model was also applied to identify the demographic and socio-economic factors by which inefficiency effects are influenced. The study revealed that Benefit Cost Ratio (BCR) was the highest (2.29) for large farmers followed by medium (2.27) and small farmers (2.21). The result of the Maximum Likelihood Estimates (MLE) showed that human labor, fencing and manure had significant positive impact whereas the irrigation and insecticides had a negative impact on the production of country bean. The results of technical inefficiency effect model showed that farmer’s age, farm size had negative impact while education, family size and farm credit had positive impact on technical efficiency. The inefficiency analysis results indicated that farm level technical efficiency ranged between 43.06% and 98.01% with a mean technical efficiency of 91.9% implied that there was potential to increase country bean production among smallholder farmers in the study area by 8.1% through efficient use of present technology. The main constraints to country bean (early variety) production were identified as- infestation of pest and disease, high price of inputs, paucity of quality seed and fertilizer, scarcity of human labor, lack of technical knowledge, limited access to institutional credit etc. Despite the constraints, there is a great prospect of early variety country bean production in the study areas. Country bean (early variety) production could be increased in a sustainable manner if farmers would be provided with government support regarding lower price of input, fair price of output, marketing facilities, training for farmers and farm credit at low interest rate, reducing the activities of syndicate of middlemen. Government should provide necessary support to the farmers for ensuring sustainable production of early varieties of country bean. Res. Agric. Livest. Fish. Vol. 10, No. 2, August 2023: 155-164

Resource Use Efficiency and Cleaner Agricultural Production: An Application of Technical Inefficiency Effects Model for Paddy Producing Zones of West Bengal

It is possible to enhancement of agricultural productivity with environmental sustainability through efficient utilization of resources. This hypothesis is examined by the efficiency and the responsible factors for controlling inefficiency of the farms. The empirical analyses are conducted based on the secondary data of 14 960 farms scattered into five different paddy producing zones of West Bengal, India. The Efficiency estimates disclose that clayey soil texture zone is the most efficient and sandy and gravelly soil texture zone is the least efficient concerning paddy production. The study concludes with appropriate policy implications that the inefficiency on the part of the farms is caused by inefficient utilization of the chemical fertilizers, viz., nitrogen and potassium and insecticides and by the efficient utilization of this the farm can increase its productivity with environmental sustainability.

Assessing the technical efficiency of container ports based on a non-monotonic inefficiency effects model

This study aims to assess the technical efficiency of container ports in the Mediterranean and the Black Sea for the 2017–2019 period. A non-monotonic inefficiency effects model is used since it can reveal non-monotonic relationships and capture observation-specific marginal effects. Findings imply that while increasing physical size has non-monotonic effects on efficiency, increasing connectivity has monotonic positive effects on efficiency. Decision-makers should avoid large-scale infrastructure investments triggered by only the fierce competition to control underutilization. Making decisions focused on higher connectivity about marketing and operational structure could positively impact the performance of container ports.

Efficiency of Pineapple Production and its Determinants: A Case Study of Manipur

The study was conducted in the hills and valley regions of Manipur with the objectives of assessing the level of technical efficiency and determining the factors influencing the technical inefficiency of pineapple production in the state during the year 2022-23. A total of 240 farmers were interviewed in person to gather primary data. A stochastic frontier technique was used in the study to achieve the stated objectives. Results showed that pineapple production was a profitable business. However, the study’s efficiency score of 0.603 indicated that farmers were operating inefficiently. The estimated stochastic production frontier model showed an adverse association between the cost of the sapling, transportation, fertilizer, and manure to the efficiency of pineapple production. According to the technical inefficiency effect model, the only factors that positively explained the technical inefficiency in pineapple production were the farmers’ age and household size while factors like education, years of farming experience, credit availability, and contact with extension agents had a negative effect. Therefore, the study concludes that attracting youth in agriculture, extension services, and production inputs availability has to give due attention to augment the effectiveness of pineapple production across the state and nation as a whole.

Technical Efficiency Analysis of Layer and Broiler Poultry Farmers in Pakistan

Achieving high production with limited resources is a major challenge faced by poultry farmers in countries with developing economies, such as Pakistan. Optimization of the technical efficiency (TE) of poultry business operations is a promising strategy. A representative sample of 210 poultry farms in the province of Punjab in Pakistan was analyzed for TE. The studied sample comprised 105 layer chicken farms (battery cage system, egg production) and 105 broiler chicken farms (environmental control shed system, meat production). A Cobb–Douglas stochastic frontier production analysis approach with the inefficiency effect model was used to simultaneously estimate TE levels and identify factors that influence efficiency. The results indicated that flock size, labor, feed, and water consumption are positively related to egg production, whereas vaccination was found to be insignificant. For broiler businesses, flock size, feed, and water consumption were positively related to the output, whereas labor and vaccination were found to be insignificant. The results of the TE inefficiency effect model revealed that farmer age, education, experience, access to credit, and access to extension services all had a significant and positive influence on the technical efficiency of both layer and broiler farmers. The estimated mean TE level of layer and broiler poultry farmers was 89% and 92%, respectively, evaluated against the benchmark of the identified frontier of efficient production with prevailing systems. The study concludes that it is possible to increase egg production by 11% and meat production by 8% by making more efficient use of the available resources and technology. To improve poultry farmers’ efficiency, policy interventions should focus more on the pronounced effects of variables such as education, farmer experience, credit access, and extension services.

Measurement and analysis of technical efficiency in the production of wheat and barley crops in Erbil Governorate for the agricultural season 2020-2021

The study aimed to measure the technical efficiency in the production of crops (wheat and barley) in Erbil Governorate. Using the stochastic frontier analysis method and Maximum-Likelihood (ML) Model, which combines both stochastic frontier and the effects of inefficiency models. based on preliminary data collected randomly for a sample of 58 farms in Erbil Governorate. The study used the Cobb-Douglas production function using four traditional production factors, which are (land, labor, machinery, and fertilizers) in addition to a dummy variable (D1), which represents supplementary irrigation, to estimate the parameters of the stochastic frontier model. As for estimating the parameters of the inefficiency effects model, two variables were used, namely, rainfall rates and farmer’s level of education. The results of estimating technical efficiency showed that the overall average efficiency in the study sample amounted to 60%, and it was also found that supplementary irrigation is the most important and most effective factor on grain production, followed by the land factor The study also found that about (100%) of the deviations from the production frontier are due to the inefficiency in the use of resources. One of the most important suggestions of the study is to expand the role of Agricultural guidance in educating farmers to apply modern agricultural techniques in production to raise their production efficiency.

Women's political leadership and efficiency in reducing COVID-19 death rate: An application of technical inefficiency effects model across Indian states

Evidence from earlier studies on COVID-19 suggests that the countries led by female leaders were more successful in handling the COVID-19. India being a patrilocal society evident that women's political autonomy in the Gram Panchayat does miracles concerning development. With this backdrop, the present paper aims to explore the role of women's political participation and leadership on the efficiency in reducing the COVID-19 death rate for Indian states. This predominantly empirical paper is entirely based on secondary data compiled from different sources. The empirical analysis of the paper is facilitated by the utilization of the Technical Inefficiency Effects model within the framework of Stochastic Production Frontier. The empirical results accredit us to conclude that the efficiency of the Indian states in reducing the COVID-19 death rate is highly influenced by female political participation and leadership, digitalization, urbanization, and literacy rate. The study ends with suitable policy prescriptions.

Profit efficiency and influencing factors for the inefficiency of maize production in Bangladesh

This study examines the profit efficiency and the responsible factors for inefficiency in 350 hybrid maize growers in selected areas of Bangladesh by using the profit frontier function and inefficiency effects model. A multistage stratified random sampling procedure was used for data collection. This study proves that maize production is profitable. The average net return is 32392 BDT/acre and the benefit-cost ratio was more than 2. Farmers use more organic manure, but less chemical fertilizer than recommended doses. The outcomes also disclosed a profit efficiency score of 0.71, which indicates a 29% profit inefficiency. The average net benefit was 32392.40 BDT/acre and profit-loss 16975.99 BDT/acre. This implies that the enhancement of allocative, technical, and scale efficiencies can reach a potential profit of 49368.39 BDT/acre. This study found that age, educational level, extension experience, and non-farm income were the main factors for profit inefficiency. This study suggests that farming efficiency can be increased remarkably by enhancing the educational status and proper extension services. Furthermore, the necessary steps for promoting an effective system of soil management with good irrigation facilities and increasing agricultural training will improve efficiency. • The Bangladesh maize production need attention. . • The Battese and Coelli model was used. • Maize is an excellent crop for food, feed and industrial utilization. • The market potentiality of maize is enormous. • Socio-economic factors play important role in maize production.

Effects of partial quantity rationing of credit on technical efficiency of Boro rice growers in Bangladesh: Application of the stochastic frontier model

In this study, we analyzed the effects of the partial quantity rationing of credit on the technical efficiency of Boro rice growers in the Pabna district of Bangladesh. Before conducting the field survey, we designed a theoretical framework and identified farm households affected by the partial quantity rationing of credit. Data were collected from 174 Boro rice growers and analyzed in two stages, where the technical efficiency of Boro rice growers was assessed using stochastic frontier analysis, and the inefficiency effects model was then applied to evaluate determinants of the technical efficiency. The mean technical efficiency of Boro rice growers was 78%, which indicates that their technical efficiency was 22% beyond the production frontier curve. The variables comprising the household head’s age, education level, seed quality, formal training, access to the market, farm labor, tillage cost, fertilizer cost, irrigation cost, and price of seedlings significantly affected the technical efficiency of rice growers. The variables of interest comprising the rate and partial quantity rationing of credit had significant negative effects on the technical efficiency of rice growers. The findings obtained in this study will help to enhance the actual production level using the available resources and improve the food security situation in Bangladesh.

Do credit constraints affect the technical efficiency of Boro rice growers? Evidence from the District Pabna in Bangladesh.

This study analyzes the effects of credit constraints on technical efficiency of Boro rice growers in the district of Pabna in Bangladesh. Using a simple random sampling technique, the data was collected from 570 Boro rice growers from the Pabna district of Bangladesh. Before conducting a field survey, a theoretical model was designed to identify credit-constrained and non-constrained rice growers. We have analyzed the collected data in two phases: first, we investigated the technical efficiency of Boro rice growers using the stochastic frontier model (SFA); and second, we used an inefficiency effect model to estimate the influence of credit constraints on technical efficiency. Findings indicate that credit-constrained rice growers (CCRG) are 6.7% less technically efficient than credit non-constrained rice growers (CNRG). Findings further indicate that the education level of the household head, family size, certified seed, sowing time, access to extension services, off-farm income, and household savings have significant effects on the technical efficiency of both groups of rice growers. Furthermore, credit size has a significantly positive impact, whereas the interest rate imposed on the principal amount has a significantly negative impact.

Efficiency Analysis of Lignite Mining Operations Using Production Stochastic Frontier Modeling

This paper proposes a stochastic frontier model for measuring both technical and environmental performance at the mine level by using a translog production function. The Kardia Field opencast lignite mine of the Greek Public Power Corporation (PPC), S.A. is the topic of the case study. Efficiency ratings are derived over a long period of time using annual operating data, and in addition, the determinants of inefficiency are established by means of the technical inefficiency effects model. In the light of the results, there is a strong correlation between technical and environmental efficiency; the results are validated by those produced by data envelopment analysis (DEA). In addition, the stripping ratio is identified as the statistically significant determinant of performance. The proposed framework could be used as an instrument to measure the efficiency of lignite mining operations and to identify the drivers of performance.

Technical efficiency of smallholder honey farmers in Jimma zone, Ethiopia

This study analyzes technical efficiency and determinants of the efficiency of honey production in the Gomma and Gera districts of the Jimma zone. The data were obtained from 194 randomly selected honey-producing smallholder farmers. A Cobb - Douglas stochastic frontier production analysis with the inefficiency effect model was used to estimate technical efficiency and identify the determinants of efficiency variations among honey farmers. The study showed that several hives and supplementary feeds positively and significantly influenced honey yield. This shows that there is room to increase honey productivity from the current level if farmers can efficiently use these input variables. The result further showed that there were differences in technical efficiency among honey producers in the study area. The discrepancy ratio, γ, which measures the relative deviation of output from the frontier level due to inefficiency, was about 84%. This implies that about 84% of the variation in honey output among the farmers was attributed to technical inefficiency effects. The estimated mean level of technical efficiency of honey producers was about 74%. This reveals that there is a possibility to increase the level of honey output by about 26% through exploiting the existing local practices and technical knowledge of the relatively efficient farmers. The education level of the farmer, landholding, income, extension contact, and training were found to determine technical efficiency significantly. Therefore, the concerned sector should focus on the above variables to enhance the technical efficiency of honey producers in the study area.

Technical Efficiency Analysis of Pineapple Production at Madhupur Upazila of Tangail District, Bangladesh

The main objective of this study is to analyse the technical efficiency and its determinants of pineapple production at Madhupur upazila of Tangail district in Bangladesh. Cross-section data from a sample of 100 pineapple producers during the 2016-17 cropping season were collected by applying multistage random sampling technique. Farm specific technical efficiency scores were estimated using the Cobb-Douglas stochastic frontier production function approach. Empirical findings show that the estimated technical efficiencies of the sampled farmers’ range from 61.61% to 99.95% with the mean technical efficiency of 91.14%. The result suggests that, on an average, farmers in the study area can potentially increase their productivity by 8.86% through more efficient use of inputs. The estimated stochastic production frontier model indicates that input variables such as area, tillage cost, seedling cost and human labour cost were statistically significant variables to increase the quantity of pineapple production. Technical inefficiency effect model identifies that age of farmers had significant positive, but years of schooling and extension contact had significant negative effect on farmers’ inefficiency. The study therefore recommends that government should focus on the ways of attracting and encouraging the youths as they are more efficient and are likely to be able to properly allocate resources and are willing to adopt new technical innovations. Besides, policies and strategies should be directed towards increasing farmers’ formal as well as informal education through the implementation of effective training programmes by the well-trained extension workers.

Interstate disparities in the performances in combatting COVID-19 in India: efficiency estimates across states

BackgroundCurrently, the novel coronavirus or COVID-19 pandemic poses the greatest global health threat worldwide, and India is no exception. As an overpopulated developing country, it is very difficult to maintain social distancing to restrict the spread of the disease in India. Under these circumstances, it is necessary to examine India’s interstate performances to combat COVID-19.This study aims to explore twin objectives: to investigate the comparative efficiency of Indian states to combat COVID-19 and to unfold the factors responsible for interstate disparities in the efficiency in combatting COVID-19.MethodsThe stochastic production frontier model was utilized for data analysis. The empirical analysis was facilitated by the inefficiency effects model, revealing the factors that influence interstate variability in disease management efficiency. Three types of variables, namely, output, inputs, and exogenous, were used to measure health system efficiency. The relevant variables were compiled from secondary sources. The recovery rate from COVID-19 was the output variable and health infrastructures were considered as the input variable. On the contrary, the non-health determinants considered to have a strong influence on the efficiency of states’ disease management, but could not be considered as input variables, were recognised as exogenous variables. These exogenous variables were specifically used for the inefficiency analysis.ResultsThe empirical results demonstrated the existence of disparities across Indian states in the level of efficiency in combatting COVID-19. A non-trivial outcome of this study was that Tamil Nadu was the best performer and Manipur was the worst performer of the investigated states. Variables such as elderly people, sex ratio, literacy rate, population density, influenced the efficiency of states, and thus, affected the recovery rate.ConclusionThis study argues for the efficient utilisation of the existing health infrastructures in India. Simultaneously, the study suggests improving the health infrastructure to achieve a long-run benefit.

An Estimation of Technical Efficiency of Tea Smallholdings in Ratnapura District of Sri Lanka

While accepting the fact that the tea smallholdings sector of Sri Lanka immensely contribute to the annual tea output of the economy, the sector still faces various deficiencies due to problems pertaining to input related issues. Measuring the level of efficiency and identifying the factors which are attributed to inefficiency are in utmost importance in introducing remedies for that. A cross sectional survey was conducted on a sample of tea smallholders in Ratnapura district where highest contribution to the total tea production of the country is made. In this study, the Cobb-Douglas Stochastic production frontier model was used by incorporating the technical inefficiency effect model to estimate the level of technical efficiency in tea smallholdings sector. The study revealed that average technical efficiency of tea smallholdings sector in the study area was 87.36 percent that keeps a margin of 12.64 percent for further improvements through better use of available resources and technology. The results of the Cobb-Douglas model revealed that the estimated coefficients of land, labor and fertilizer are positively and significantly affect the green leaves production of the sector. The findings of the inefficiency model disclosed that age, farming experience, level of education, occupation, age of tea plants, farming group membership and credit access have significant negative impact on technical inefficiency

Performance analysis of electricity distribution sector post the implementation of electricity act 2003: empirical evidence from India

PurposeThe objective of the present study is to evaluate and analyse the performance of Indian electricity distribution utilities post the implementation of landmark Electricity Act 2003.Design/methodology/approachStochastic frontier analysis (SFA) that incorporates exogenous influences on operational efficiency is adopted in the present study. Specifically, a stochastic frontier production function model with a technical inefficiency effects model (Battese and Coelli, 1995) is chosen as a preferred model. In this model, the function that explains the inefficiency scores is estimated in a single stage with the production technology. This avoids the problem of inconsistency which is possible in the two-stage approach.FindingsThe sample involved 52 Indian electricity distribution utilities for seven-year period from 2006 to 2013. Major findings of SFA show that Indian electricity distribution utilities post the implementation of Electricity Act (2003) had, on average, experienced efficiency improvement during the observed period. The overall mean technical effciency score is estimated as 78.5% which indicates that there exist wide scope for effciency improvement in the sector. Further, the empirical findings also indicate that publicly owned distribution utilities obtain average technical efficiencies of 71.3%, which is lower than privately owned distribution utilities, which achieve average technical efficiencies of 85.7%.Research limitations/implicationsPower supply quality indicators such as SAIFI, SAIDI, CAIFI, etc. and unobserved heterogeneity also influence the efficiency analysis of electricity distribution utilities. Hence, these parameters as explanatory variables can be incorporated in the future work.Practical implicationsThe results obtained from this empirical study would likely be helpful for utility managers and policymakers to know how well they are performing, and how a better corporate strategy a particular utility can formulate to improve its operational efficiency and also its position in the marketplace.Originality/valueThis paper is amongst the first significant attempts that implement SFA approach to the panel dataset over a longer period of time – 2006 to 2013, so, as to evaluate and analyse the operational efficiency of Indian electricity distribution utilities in a single framework after the enactment of Electricity Act (2003). Unlike previous studies, this study investigates the degree to which various exogenous (or environmental) factors influence efficiency levels in these utilities.