Technical inefficiency of the manufacturing sector in Laos: a case study of the firm survey
Purpose – This study aims to unlock the path of growth for sustainable economic development and accomplish the government's vision 2030 by ameliorating the productivity of the manufacturing sector in Laos. Design/methodology/approach – This study applied cross-sectional data of 2,009 firms from...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2022-11-01
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| Series: | Journal of Asian Business and Economic Studies |
| Subjects: | |
| Online Access: | https://www.emerald.com/insight/content/doi/10.1108/JABES-11-2020-0134/full/pdf |
| _version_ | 1827909877546090496 |
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| author | Vanxay Sayavong |
| author_facet | Vanxay Sayavong |
| author_sort | Vanxay Sayavong |
| collection | DOAJ |
| description | Purpose – This study aims to unlock the path of growth for sustainable economic development and accomplish the government's vision 2030 by ameliorating the productivity of the manufacturing sector in Laos. Design/methodology/approach – This study applied cross-sectional data of 2,009 firms from the national firm survey, namely the Economic Census Survey (ECS), in 2012/13 in addition to employing the stochastic frontier analysis (SFA) to assess the production frontier and factors behind the technical inefficiency to arrive at policy recommendations. Findings – The study found that the efficiency level varied across subindustries with an average of 72.51% in full potential production. Out of the five classified groups, Sub4 (chemical and plastic) was found to be the most efficient manufacturer, while the rest in order are Sub1 (food and beverage), Sub5 (furniture and others), Sub2 (garment and textile), and Sub3 (paper and printing), providing the evidence to improve the technical efficiency. This study discovered that the firm's size, accounting system and credit access are crucial to enhancing the production efficiency of all sampling firms. However, these factors might be subject to specific industries. Practical implications – For the implication to the business community and policymakers, the findings of this study could be a reference in terms of which areas they should concentrate on to improve the technical efficiency as a part of productivity in the manufacturing industry. For instance, it suggests that firms could improve their production efficiency by introducing the accounting system, laborers' skills (education of managers) and engaging in international trade activities. Additionally, it asks policymakers to help private firms by improving the infrastructure, credit access, training and trade facilitation. Originality/value – It is believed that, as the major contribution in Lao literature, this study is the first research applying the largest data from the national survey – the Lao ECS – examining the technical efficiency in the manufacturing sector in the country, and overcoming the gap of the previous research which recruited few policy variables and applied a small sample size in one specific industry. Therefore, the findings of this study impart more insights into the analysis, providing more effective and credible recommendations to policymakers and firms to improve their technical efficiency and, consequently, their competitiveness. |
| first_indexed | 2024-03-13T01:44:55Z |
| format | Article |
| id | doaj.art-a25d05bf8df1411496db6c1f13c53172 |
| institution | Directory Open Access Journal |
| issn | 2515-964X |
| language | English |
| last_indexed | 2024-03-13T01:44:55Z |
| publishDate | 2022-11-01 |
| publisher | Emerald Publishing |
| record_format | Article |
| series | Journal of Asian Business and Economic Studies |
| spelling | doaj.art-a25d05bf8df1411496db6c1f13c531722023-07-03T09:22:27ZengEmerald PublishingJournal of Asian Business and Economic Studies2515-964X2022-11-0129431433210.1108/JABES-11-2020-0134Technical inefficiency of the manufacturing sector in Laos: a case study of the firm surveyVanxay Sayavong0Graduate School of Economics, Waseda University, Tokyo, JapanPurpose – This study aims to unlock the path of growth for sustainable economic development and accomplish the government's vision 2030 by ameliorating the productivity of the manufacturing sector in Laos. Design/methodology/approach – This study applied cross-sectional data of 2,009 firms from the national firm survey, namely the Economic Census Survey (ECS), in 2012/13 in addition to employing the stochastic frontier analysis (SFA) to assess the production frontier and factors behind the technical inefficiency to arrive at policy recommendations. Findings – The study found that the efficiency level varied across subindustries with an average of 72.51% in full potential production. Out of the five classified groups, Sub4 (chemical and plastic) was found to be the most efficient manufacturer, while the rest in order are Sub1 (food and beverage), Sub5 (furniture and others), Sub2 (garment and textile), and Sub3 (paper and printing), providing the evidence to improve the technical efficiency. This study discovered that the firm's size, accounting system and credit access are crucial to enhancing the production efficiency of all sampling firms. However, these factors might be subject to specific industries. Practical implications – For the implication to the business community and policymakers, the findings of this study could be a reference in terms of which areas they should concentrate on to improve the technical efficiency as a part of productivity in the manufacturing industry. For instance, it suggests that firms could improve their production efficiency by introducing the accounting system, laborers' skills (education of managers) and engaging in international trade activities. Additionally, it asks policymakers to help private firms by improving the infrastructure, credit access, training and trade facilitation. Originality/value – It is believed that, as the major contribution in Lao literature, this study is the first research applying the largest data from the national survey – the Lao ECS – examining the technical efficiency in the manufacturing sector in the country, and overcoming the gap of the previous research which recruited few policy variables and applied a small sample size in one specific industry. Therefore, the findings of this study impart more insights into the analysis, providing more effective and credible recommendations to policymakers and firms to improve their technical efficiency and, consequently, their competitiveness.https://www.emerald.com/insight/content/doi/10.1108/JABES-11-2020-0134/full/pdfManufacturing sectorStochastic frontier analysisLaosTechnical inefficiency |
| spellingShingle | Vanxay Sayavong Technical inefficiency of the manufacturing sector in Laos: a case study of the firm survey Journal of Asian Business and Economic Studies Manufacturing sector Stochastic frontier analysis Laos Technical inefficiency |
| title | Technical inefficiency of the manufacturing sector in Laos: a case study of the firm survey |
| title_full | Technical inefficiency of the manufacturing sector in Laos: a case study of the firm survey |
| title_fullStr | Technical inefficiency of the manufacturing sector in Laos: a case study of the firm survey |
| title_full_unstemmed | Technical inefficiency of the manufacturing sector in Laos: a case study of the firm survey |
| title_short | Technical inefficiency of the manufacturing sector in Laos: a case study of the firm survey |
| title_sort | technical inefficiency of the manufacturing sector in laos a case study of the firm survey |
| topic | Manufacturing sector Stochastic frontier analysis Laos Technical inefficiency |
| url | https://www.emerald.com/insight/content/doi/10.1108/JABES-11-2020-0134/full/pdf |
| work_keys_str_mv | AT vanxaysayavong technicalinefficiencyofthemanufacturingsectorinlaosacasestudyofthefirmsurvey |