Production technology, elasticity of substitution and technical efficiency of the handloom textile industry of Bangladesh

Abstract

A number of translog and Cobb-Douglas frontier production models were estimated for the Bangladesh handloom textile industry to investigate its production technology and technical efficiency in production. It was found that the technical efficiency of the industry in producing cloth was only 41%. It was concluded that the industry might improve its technical efficiency by increasing its male/female labour ratio and yarn/capital ratio and decreasing its hired/family labour ratio and labour/capital ratio. The production technology of the industry was found to be characterized by a linearly homogeneous Cobb-Douglas function. The elasticity of substitution between labour and capital for the industry was found to be unity.