ESSAYS ON EFFICIENCY AND TOTAL FACTOR PRODUCTIVITY IN DEVELOPING COUNTRIES

Author

Omotara Oluwatosin Adeeko, Southern Illinois University CarbondaleFollow

Date of Award

9-1-2021

Degree Name

Doctor of Philosophy

Department

Economics

First Advisor

Morshed, AKM Mahbub

Abstract

This dissertation examines efficiency and total factor productivity in developing countries. The three chapters of the dissertation are summarized as follows: In the first chapter, we examine, the technical efficiency and total factor productivity (TFP) growth in African economies over the period 1990 to 2017. Also, factors that contribute to technical inefficiency are examined and the TFP growth is decomposed into technological progress, the scale component, and the change in technical efficiency. This is important for the designing of policies that will help improve the performance of these economies. The study also looks at country groups, i.e. former French and British colonies, and members and non-members of the West African Monetary and Economic Union (WAEMU) to understand differences in the level of efficiency. For the second chapter, using data from 14 Nigerian commercial banks for the period of 2005 to 2017, we examine what happens to the level of efficiency of these banks after the banking reforms are implemented in 2005. A more efficient flexible Fourier stochastic frontier analysis for cost function was adopted to measure the efficiency parameters. We find there exists about a 30% gap between efficient cost level and current cost level suggesting a substantial inefficiency. We also observe signs of technological progress in the banking sector of Nigeria. The efficiency level crucially depends on the size of the bank and the functional differences in the scope of the banks. Lastly, in the third chapter, we estimate the technical efficiencies and total factor productivity (TFP) growth of selected manufacturing industries in Bangladesh from five rounds of survey: 1982/83, 1984/85, 1988/89, 2005/06 and 2012 are estimated using the stochastic frontier model. The result shows that, on average, technical efficiency was 80%. Furthermore, TFP growth is decomposed into technological progress, scale component, and efficiency growth. It is noted that export oriented industries are more efficient than import oriented industries, also, small sized industries have higher TFP growth than medium and big sized industries. The estimates of TFP growth indicate that productivity in Bangladeshi manufacturing industries was at 5.5% for the period in review. The decomposition of TFP indicates that technological progress is a major contributor to growth.