MEASURING PRODUCTION EFFICIENCY OF SMALL FIRMS IN PAKISTAN

This paper examines the efficiency of small manufacturing firms in Guj ranwala, Pakistan. In the first step of the study, we construct measur es of technical and scale efficiency for a sample of 153 small manufac turing firms from nine industries. The second step includes Tobit regr essions of these measures on attributes of the firm and entrepreneur t o examine sources of firm efficiency. Results reveal that newer firms, firms run by entrepreneurs with at least primary education, and firms engaging in production subcontracting appear more efficient and that many firms operate at less than the optimal scale. (C) 1998 Elsevier S cience Ltd. All rights reserved.