Productive efficiency in the Middle East and North Africa

Abstract

Productive efficiency and factors affecting it in 11 countries in the Middle East and North Africa region were evaluated over the period 1980 to 1999 using Färe's nonparametric approach. The results indicate that Oil-producing countries are more efficient in terms of production compared with non Oil-producing countries. Tobit analyses indicate that previous levels of efficiency, the degree of economic openness, consumption of domestically produced goods and the limited availability of credit have a positive impact on production efficiency. A sensitivity analysis using the bias corrected bootstrap technique shows that allocative efficiency and economic efficiency are more sensitive to the returns to scale assumption and sample size than pure technical efficiency.

Notes

¹ Sickles and Hartley (2001) show that Saudi Arabia oil production is aimed at achieving non-economic objectives; the production decisions are constrained by political considerations. For Saudi Arabia, the achievement of security or any other political objectives justifies production at levels substantially below the profit maximizing one.

² Syria and Egypt are also oil-producing countries, but their oil reserves and production levels are substantially smaller than those of Oil-producing countries.

³ Under the assumption of CRS, the sensitivity analysis regarding the sample size show that out of 110 cases PTE, AE, and EE scores are similar in 79, 75 and 72 cases respectively if we consider the mathematical point of view, and in 100, 88 and 92 cases if we consider the practical point of view.