Measuring Efficiency for Egyptian Textile and Apparel Industry Using Stochastic Frontier Analysis and Data Envelopment Analysis

Abstract

This thesis gives an overall view of measuring efficiencies in the Egyptian textile and apparel industry via stochastic frontier analysis (SFA) and data envelopment analysis (DEA). Differences between the SFA and the DEA can lead to different estimates for some, or all of the units in an analysis. Measuring efficiency through production process, (inputs and outputs), lacking factors affecting supply chain operations and other key factors, such as value-adding capabilities, exchange rates, time, inventory turnover, quality, logistics, etc. can lead to inaccurate measures. Thus, to ensure accurate efficiency measures, these factors have to be considered. Techniques used are; SFA time-varying and metafrontier. Constructing a single production frontier based on all data points would cause an unfitting benchmark due to differences in production technologies, location, ownership type, etc. Hence, metafrontier allows grouping firms with similar characteristics into a separate group frontier for each region with single metafrontier applied to all groups. Empirical results show clear variability in efficiencies between private and public firms and shows that efficiency scores vary, when assessed against the metafrontier. The evidence also shows the major role of the supply chain factors in improving efficiencies for public firms