Efficiency estimates for Singapore manufacturing: new evidence from the Malmquist Index

Abstract

A nonparametric technique is employed, data envelopment analysis, to derive estimates of technical efficiency change in Singapore manufacturing industries for 1975 to 1998 using the Malmquist index. The results show that on average, there have been improvements in technical efficiency over the sample period for overall manufacturing. This broadly corroborates the results from an earlier stochastic frontier analysis.

Notes

¹ We distinguish the output-oriented distance function measured relative to a production frontier based on VRS by

² CCR and BCR are the seminal applications of DEA in the literature based on constant returns to scale and variable returns to scale formulations respectively.

³ Computations such as Equation 5 where information from two periods is used may yield readings that suggest technical regress. To avoid this, it is sometimes suggested that all information from the two periods involved be used to form the reference frontier. We prefer not to use such a device because it confuses the period–period comparisons we are interested in making.

⁴ I am grateful to Shahidur Rahman and Koh Soo-Wei for permission to make use of the database.

⁵ Full names corresponding to industry group codes are given in the appendix. All figures in Tables 1, 2 and 3 are (geometric) average annual changes measured in percentage points.

⁶ Results on the detailed decomposition by industry group and year have been omitted to save space. These are available from the author upon request.