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Technical e iciency, echnological p og ess
and p oduc i i y g ow h o la ge and medium
manu ac u ing indus ies in E hiopia: A da a
en elopmen analysis
Obsa Te e i E ena, Mes in Mala Kalko & Sa a Adugna Debele |
To ci e his a icle: Obsa Te e i E ena, Mes in Mala Kalko & Sa a Adugna Debele | (2021)
Technical e iciency, echnological p og ess and p oduc i i y g ow h o la ge and medium
manu ac u ing indus ies in E hiopia: A da a en elopmen analysis, Cogen Economics & Finance,
9:1, 1997160, DOI: 10.1080/23322039.2021.1997160
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a icle is dis ibu ed unde a C ea i e
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GENERAL & APPLIED ECONOMICS | RESEARCH ARTICLE
Technical e iciency, echnological p og ess and
p oduc i i y g ow h o la ge and medium
manu ac u ing indus ies in E hiopia: A da a
en elopmen analysis
Obsa Te e i E ena
1
*, Mes in Mala Kalko
2
and Sa a Adugna Debele
1
Abs ac : The pu pose o his s udy is o assess empi ically how he echnical
e iciency sco es o 43 sub-sec o s and hei de e minan s o e he pe iod 2010 o
2017 show signi ican a ia ion ac oss he sub-sec o s. The s udy applied a wo-s ep
app oach o measu ing echnical e iciency and i s de e minan s. A da a en elop-
men analysis ou pu -o ien a ion (i.e. bo h CCR & BCC models) is used o es ima e
echnical e iciency sco es o 43 sub-sec o s o e he pe iod 2010 o 2017.
Malmquis p oduc i i y index (MPI) ou pu o ien a ion is also applied o compu e
echnical e iciency change, echnological p og ess, and p oduc i i y change. The
es ima ed echnical e iciency sco e shows signi ican a ia ion ac oss he sub-
sec o s. Thus, we used a Tobi eg ession model o sc u inize wha de ines he
a ia ion in echnical e iciency sco es using h ee yea s o panel da a which co e s
2015 o 2017. Mo eo e , he 43 sub-sec o s we e u he g ouped in o 14 majo sub-
ABOUT THE AUTHOR
Obsa Te e i E ena is an Assis an P o esso a he
College o Business and Economics a Hawassa
Uni e si y, E hiopia. His esea ch in e es include
co po a e go e nance, ea ning managemen ,
knowledge managemen , echnology manage-
men , and inancial accoun ing. He has pub-
lished in Co po a e Go e nance: The
In e na ional Jou nal o Business in Socie y.
Email: [email p o ec ed]
Mes in Mala Kalko is cu en ly a Ph.D. Candida e
a he Facul y o Managemen and Economics a
Tomas Ba a Uni e si y in Zlin, Czech Republic. His
esea ch in e es include co po a e go e nance,
co po a e social esponsibili y, co po a e
inance, inno a ion, knowledge managemen ,
and inancial accoun ing. He has published in
Co po a e Go e nance: The In e na ional Jou nal
o Business in Socie y. Email: [email p o ec ed]
Sa a Adugna Debele is a Lec u e a he College
o Business and Economics a Hawassa
Uni e si y, E hiopia. He esea ch in e es
include inancial accoun ing, co po a e go e n-
ance, and co po a e social esponsibili y. She
has published in Co po a e Go e nance: The
In e na ional Jou nal o Business in Socie y.
Email: [email p o ec ed]
PUBLIC INTEREST STATEMENT
This pape uses da a en elopmen analysis o
measu e echnical e iciency, echnological
change, and p oduc i i y g ow h in 43 manu ac-
u ing indus ies o e he pe iod 2010 o 2017.
Malmquis p oduc i i y index (MPI) ou pu o ien-
a ion is also applied o compu e echnical e i-
ciency change, echnological change, and
p oduc i i y change. The esul s show ha he
sec o had expe ienced a 37 pe cen echnical
e iciency in o e all a e age when he CCR model
was used. The indings o he s udy would ha e
implica ions o policymake s, go e nmen , and
i m owne s in ha i p o ides an insigh in o he
sou ce o p oduc i i y g ow h in he sec o .
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
Page 1 o 38
Recei ed: 07 Feb ua y 2021
Accep ed: 20 Oc obe 2021
*Co esponding au ho : Obsa Te e i
E ena, College o Business and
Economics, Hawassa Uni e si y, P.O.
Box: 05, Hawassa, E hiopia
E-mail: [email p o ec ed]
Re iewing edi o :
Ch is ian Nsiah, School o Business,
Baldwin Wallace Uni e si y, Ohio,
Uni ed S a es
Addi ional in o ma ion is a ailable a
he end o he a icle
© 2021 The Au ho (s). This open access a icle is dis ibu ed unde a C ea i e Commons
A ibu ion (CC-BY) 4.0 license.
sec o s and classi ied as public and p i a e o examine whe he he e is a echnical
e iciency sco e disc epancy be ween he same sub-sec o s ope a ing unde di e -
en owne ship. Fo measu ing o e all echnical e iciency, we used wo ou pu
a iables (i.e., alue-added and ope a ing su plus) and wo inpu a iables (i.e., o al
ixed asse s and a o al numbe o employees). When educing he sub-sec o s o
ou een majo g oups, he ope a ing su plus was no included, hus we used alue-
added and o al sales as ou pu a iables and o al ixed asse s, he o al numbe o
employees, and cos o aw ma e ials used in he p oduc ion p ocess as inpu
a iables. To shed ligh on he sou ce o ine iciency, echnical e iciency is decom-
posed in o pu e echnical e iciency and scale e iciency. This s udy ound ha he
sec o had expe ienced a 37 pe cen echnical e iciency in o e all a e age when
he CCR model was used. The s udy also claims ha public owned subsec o s a e
less likely o be e icien han p i a e subsec o s. The eg ession esul s show he
capi al expendi u e a io has a signi ican posi i e in luence on echnical e iciency.
The Malmquis index esul also shows, on a e age, he sec o had egis e ed
a 10.5% echnological p og ess and a 13% p oduc i i y g ow h o e he pe iod
2010–2017. The indings o he s udy would ha e implica ions o policymake s,
go e nmen , and i m owne s in ha i o e s an insigh in o he sou ce o p oduc-
i i y g ow h in he sec o .
Subjec s: Economics; Finance; Business, Managemen and Accoun ing
Keywo ds: Technical e iciency; Technological p og ess; P oduc i i y; DEA; Tobi Model;
E hiopian manu ac u ing sec o
1. In oduc ion
The manu ac u ing sec o plays a c ucial ole in p oduc ion, g ow h, and job c ea ion (Naudé &
Szi mai, 2012). I is he mos impo an engine o long- e m g ow h and de elopmen , bo h in
de eloped and de eloping coun ies (McKinsey, 2012). In he o me , o ins ance, in 2015 he
manu ac u ing sec o sha es 12% and 19% o he g oss domes ic p oduc (GDP) o he Uni ed
S a es and Japan, espec i ely (UNCTAD, 2015) and i emains a i al sou ce o inno a ion &
compe i i eness, making eno mous con ibu ions o esea ch & de elopmen , expo s, and p o-
duc i i y g ow h (McKinsey, 2012). While, in he la e , he manu ac u ing sec o sha es 27% and
16% o he GDP o China and India in 2015, espec i ely (UNCTAD, 2015) and i con inues o
p o ide a pa hway om subsis ence a ming o ising incomes and li ing s anda ds. Fo he leas
de eloped coun ies, such as E hiopia, ag icul u e makes up he highes p opo ion o he econ-
omy. Acco ding o he E hiopian CSA (2018), he ne con ibu ion o he manu ac u ing sec o o
he GDP g ow h a e inc eased om 0.4% in 2011 o 1.1% in 2017. The ag icul u e and se ices
sec o s accoun ed o 36.3% and 39.3% in 2017, espec i ely. This low con ibu ion o he manu-
ac u ing sec o o he GDP is a common ea u e o Sub-Saha an A ican coun ies. oF ins ance, i
akes 8.4% o Kenya`s GDP (Kenya Associa ion o Manu ac u e s, 2018) and 2.4% o Djibou i`s GDP
(Uni ed Na ions, 2016). In his ega d, E hiopia has shi ed i s economic s a egy om ag icul u al
o indus ial lead in 2011. The s a egic plan was di ided in o wo i e-yea plans, wi h G ow h and
T ans o ma ion Plan I, which co e s om 2011 o 2015, and G ow h and T ans o ma ion Plan II,
which co e s om 2016 o 2020. Ne e heless, he ag icul u e sec o has con inued o domina e
he GDP o he coun y, which was ollowed by he se ice sec o . Indeed, he manu ac u ing
sec o `s con ibu ion o GDP demons a es E hiopia`s in an s age o manu ac u ing ac i i ies o
indus ializa ion. Empi ical e idence (Ayelign & Singh, 2019; Oqubay, 2015; Hailu & Tanaka, 2015;
UNDP, 2017) has also con i med ha he sec o had aced se e al p oblems, such as limi ed access
o and in e up ed elec ici y powe , a low le el o expo pe o mance and compe i ion, a sho age
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
and i egula supply o domes ic aw ma e ials, limi ed access o and poo quali y o in e ne
se ices, and weak logis ic suppo .
Technical e iciency is he abili y o a i m o p oduce as much ou pu as possible wi h a speci ied
le el o inpu s, gi en he exis ing echnology. I can also be a si ua ion whe ein i is impossible,
wi h cu en echnical knowledge, o inc ease ou pu om gi en inpu s o p oduce a gi en ou pu
using less han one inpu wi hou using mo e o ano he inpu (Fa ell, 1957). E iciency is a majo
p oblem in E hiopia. Because E hiopia`smanu ac u ing indus ies we e no ope a ing a ull capa-
ci y (Hailu & Tanaka, 2015), he e was a need o imp o e he sec o `s e iciency (Bekele & Belay,
2007). E hiopia has e y limi ed capi al bu an abundan wo k o ce, and hence i s indus ies a e
p edominan ly labo -in ensi e ins ead o capi al-in ensi e. P oduc i i y g ow h migh come om
he enhancemen o p oduc i i y based on ca ching up capabili y and inno a ion by e ec i e use
o human capi al in he labo ma ke and adop ion o new echnology. Con e sely, swi ching om
labo -in ensi e o capi al-in ensi e would inc ease p oduc i i y i an op imal bene i is achie ed
om echnology change. The E hiopian manu ac u ing sec o ends o be labo -in ensi e. This is
common in he leas de eloped coun ies because o he p esence o a massi e pool o unem-
ployed labo o ce (Wu, 1993). Being labo -in ensi e o capi al-in ensi e migh no esul in
e iciency o ine iciency, bu being able o p oduce addi ional uni s o p oduc ion (ou pu ) while
keeping inpu cons an o educing inpu while keeping ou pu cons an could lead o he e icien
on ie . The e ha e been con adic ing esul s in he li e a u e ha sugges capi al-in ensi e i ms
a e mo e e icien han labo -in ensi e one. Fo example, A ow e al. (1961) sugges ed ha
di e ences in he e iciency o i ms a ise due o a ia ions in he e iciency o he labo o ce.
Wu (1993), using econome ic and g oup-wise analyses, inds ha labo -in ensi e i ms a e
ela i ely mo e e icien han capi al-in ensi e i ms. In con as , Al a ez and C espi (2003) and
Sun e al. (1999) sugges i ms ha a e capi al-o ien ed end o be mo e e icien . Simila ly, Li and
Zhao (2017) indica ed ha capi al-in ensi e i ms we e ound o pe o m be e and ha e highe
s ock alue han labo -in ensi e i ms.
The e ha e been ew s udies on measu ing he p oduc i i y o manu ac u ing i ms in E hiopia.
Fo example, Goshu e al. (2017) p oposed a amewo k o measu ing p oduc i i y in manu ac u -
ing companies. Tsegay e al. (2018) applied con en ional OLS and panel da a o es de e minan s
o pe o mance in manu ac u ing wi h ega d o he ex ile and ga men indus y. Rao and
Tes ahunegn (2015) used he Cobb-Douglas p oduc ion unc ion o examine he pe o mance o
manu ac u ing indus ies. Abegaz (2013), Hailu and Tanaka (2015), and Ayelign and Singh (2019)
es ima e he echnical e iciency and o al p oduc i i y changes o medium and la ge manu ac u -
ing i ms using a comp ehensi e panel da a se annually collec ed by he cen al s a is ical agency.
Bekele and Belay (2007) analyzed echnical e iciency and i s de e minan s in he g ain mill
p oduc s manu ac u ing indus y, using he s ochas ic on ie model. Mo eo e , he ecen s udy
by Oqubay (2018) analyzed he s uc u e and pe o mance o manu ac u ing indus ies. Mos o
he s udies s a ed he e ha e employed a linea unc ion, s ochas ic on ie app oach o compu -
ing echnical e iciency sco e which is subjec o model diagnos ic es s such as he no mal
dis ibu ion o esidual e ms (which is a pa o echnical ine iciency sco e), model iden i ica ion,
and speci ica ion. In addi ion, no a emp has been made in hese p io s udies o examine wha
de ines he a ia ion in echnical e iciency sco es o he i ms unde s udy. Thus, his s udy
a emp s o ill his gap by using wo- old analyses: (1) measu ing echnical e iciency and o al
p oduc i i y g ow h using a non-linea p og amming app oach, da a en elopmen analysis
app oach, and (2) a Tobi eg ession model has been employed o analyze de e minan s o
echnical e iciency. Fu he mo e, a compa a i e analysis has been pe o med o unde s and
whe he he echnical e iciency sco e di e s be ween public-owned indus ial g oups and p i-
a ely owned indus ial g oups.
We assume ha his s udy con ibu es o he body o knowledge in wo ways. Fi s , i has used
a mo e comp ehensi e analysis o answe he ques ion ha add esses why some i ms a e mo e
e icien han o he i ms? This ques ion has been pa ially answe ed by iden i ying he po en ial
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
i m-speci ic ac o s ha la gely de ine a i m echnical e iciency sco e. Second, he s udy asse s
ha public-owned i ms a e less likely o be e icien han p i a ely-owned i ms. The impo an
ques ion o be aised he e is: do esou ce p o ide s wo y abou hei i m’s echnical e iciency and
p oduc i i y g ow h? This ques ion may no be ele an and sound whe e he e a e s ong sha e-
holde s/ esou ce p o ide s’ laws and egula o y p o isions ha impose du ies and esponsibili ies
on he managemen o he company. Howe e , in de eloping coun ies such as E hiopia, sha e-
holde s` law and o he p o isions a e sca ce and limi ed in hei applica ion, so public-owned i ms
a e assumed o be less e icien han hose i ms ha ope a e unde p i a e in es o s. The bes
esolu ion o his p oblem would be p i a izing public-owned i ms. E hiopia is cu en ly wo king on
a p i a iza ion s a egy.
The emainde o he pape is o ganized as ollows: Sec ion 2 p esen s a e iew o li e a u e
ele an o his s udy. Sec ion 3 p esen s he me hodology employed in he s udy. Sec ion 4
epo s esul s and discussion and Sec ion 5 p esen s he conclusion. Sec ions 6 & 7 p esen
p ac ical implica ions and limi a ions and sugges ions o u he s udies, espec i ely.
2. Li e a u e e iew
2.1. The link be ween he ela i e echnical e iciency and echnological change o
p oduc i i y g ow h
P oduc i i y g ow h pe mi s a company o inc ease p o i and ma ke sha e a he mic o-le el, and
i assis s a coun y o c ea e jobs, coun e ac in la ion, and o ce he necessa y indus ial es uc-
u ing a he mac o-le el (J.D. Lee & Heshma i, 2009, p.1). The e is widesp ead ag eemen among
academic esea che s in he ield o g ow h heo y, policymake s, and businessmen ha p oduc-
i i y aise is essen ial o con inued economic g ow h (J.D. Lee & Heshma i, 2009, p.1). In one o
he o iginal con ibu ions o economic g ow h heo y, he in es iga ions o economic g ow h by
Ab amo i z (1956), Denison (1962), and Kend ick (1956), p oduc i i y/e iciency was conside ed
anscenden o cla i ying a no ewo hy po ion o g ow h, as G iliches (1998) indica ed. In hese
s udies, he au ho s wan ed o e iew he beha io o g ow h a es o physical and labo capi al as
well as he g ow h a es o pe capi a p oduc ion wi hin he USA. F om hei conclusions, hey
asse ed ha much o he g ow h was because o p oduc i i y o , ag eeing o Ab amo i z (1956),
he measu e o ou igno ance. Ha ing con i med he signi icance o p oduc i i y o economic
g ow h, Denison (1962) con ended ha one o he explana ions o i s accele a ion es ed in
economies o scale, bu his migh no be di ec ly in luenced.
Among he con ibu ions o Solow (1956) and Swan (1956), who in oduced p oduc i i y in o an
economic g ow h model, whe e i had been called echnical p og ess. The g ow h model was
suppo ed by he analysis o a neoclassical p oduc ion unc ion, which assumed cons an e u ns
o scale and dec easing e u ns on inpu s. Solow (1956) s a ed echnical p og ess was an inc eas-
ing ac o o scale by which p oduc ion was mul iplied. Meanwhile, Swan (1956) said echnical
p og ess was ini ially neu al bu inc eased i s esponsibili y o ises in ou pu ha we e no
caused by ises in capi al o labo and indi ec ly inc eased p oduc ion by inc easing he con ibu-
ion o capi al. In con as o hose models, endogenous models appea ed wi hin which echnical
p og ess would be in e nal o he model o economic g ow h. Among hese s udies a e Lucas
(1988), Rome (1986, 1990), who we e also known o hei a en ion o inc easing incomes a
scale and he conside a ion o models in lawed equilib ium, assuming equilib ium in monopolis ic
compe i ion and he inclusion o human capi al s ock in he p oduc ion unc ion. Though, con-
side ing TFP, echnical p og ess, o echnological change, he e is also he model o Mankiw e al.
(1992) which wan ed o de end Solow’s con ibu ions o economic g ow h by inding solu ions o
some o he c i iques indica ed in he o iginal model. Thus, i was ea ed as an augmen ed Solow
model wi h human capi al, and o he au ho s, ha al e na ion be e i he explana ion o he
g ow h o na ions.
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160

In a simila ein, he mains eam app oaches o economies o inno a ion by Acemoglu and
Zilibo i (2001) poin ed ou ha many echnologies used by he leas de eloped coun ies (LDCs)
a e de eloped in he ad anced economies and a e designed o make op imum use o he skills o
hese iche coun ies’ wo k o ces. Di e ences in he supply o skills c ea e a misma ch be ween
he equi emen s o hese echnologies and he skills o LDC wo ke s and lead o low p oduc i i y
in he LDCs. E en when all coun ies ha e equal access o new echnologies, his skill- echnology
dispa i y can lead o sizable di e ences in TFP and p oduc ion pe wo ke . Fo example, he
e olu iona y app oach o Nelson and Win e (1973) o he economics o inno a ion indica ed
di usion p ocesses o new echnologies and he exis ence o signi ican di e ences among
i ms in e ms o p o i abili y, he echnology used, lead o di e ences in p oduc i i y and g ow h.
Simila ly, Ge oski e al. (1993) in hei s udies on he p o i abili y o 721 inno a ing manu ac u ing
i ms in he UK, ound he numbe o inno a ions achie ed by manu ac u ing i ms had a posi i e
impac on ope a ing p o i . They also indica ed inno a i e i ms we e mo e p o i able han non-
inno a i e i ms in gene al, al hough he e ec o speci ic inno a ion ypes on i m p o i ma gin
was only modes in size.
The e m economic e iciency e e s o he use o esou ces o maximize he p oduc ion o goods
and se ices. In absolu e e ms, he si ua ion can be called economically e icien i : (1) no one can
be made be e -o wi hou making someone else wo se-o , (2) no addi ional ou pu can be
ob ained wi hou inc easing he amoun o inpu , and (3) p oduc ion p oceeds a he lowes
possible pe -uni cos (Sulli an & She in, 2007 p. 15). E iciency can be ca ego ized in o echnical,
alloca i e, o he combina ion o he wo (i.e. o al economic e iciency) based on he scope o
e iciency a ge ed (Bha e al., 2001). Technical e iciency means p oducing maximum ou pu wi h
gi en inpu s, o equi alen ly, using minimum inpu s o p oduce a gi en ou pu (Fa ell, 1957).
Fa ell (1957) conside ed a p oduc ion unc ion o a ully e icien i m and analyzed echnical
e iciency o a p oduc ion i m as he a io o he ou pu o any gi en i m o ha o a ully e icien
i m. Alloca i e e iciency deals wi h he minimizing o he cos o p oduc ion wi h a p ope
combina ion o inpu s o a gi en le el o ou pu and a se o inpu p ices, assuming ha he
en i y examined is wo king a ull echnical e iciency. These echnical and alloca i e e iciencies
can be combined as a measu e o economic e iciency.
TFP can e ec i ely con ibu e o ou pu g ow h by imp o emen s in echnology and e iciency,
as hese a e wo de e minan s o TFP, unde cons an e u ns o scale. I e u ns o scale a e
a iable, TFP g ow h can be gene a ed by echnical change, e iciency imp o emen , and scale
e ec s. This also ein o ces he po en ial ole played by echnical e iciency in de e mining p o-
duc i i y and he e o e he need o he ela ion o assump ions o accommoda e ine iciency and
e iciency a ia ions. Technical e iciency e lec s i m-speci ic echnical knowledge and e o
(Page, 1980), he will, skills, and de e mina ion o employees and managemen (Aigne e al.,
1977; L.-F Lee & Tyle , 1978), and he e ec s o wo k s oppages, manage ial skills, ma e ial
bo lenecks, wo ke e o s and o he dis up ions o p oduc ion (L.-F Lee & Tyle , 1978).
To explo e sou ces o p oduc i i y g ow h in he p esence o ine iciencies, i is essen ial o
app op ia ely model p oduc ion echnology and ine iciencies among economic agen s. Da a
en elopmen analysis (DEA) has been ex ensi ely used o analyze p oduc i i y g ow h and ine i-
ciencies. Da a en elopmen analysis ep esen s a me hod o analysis ha can se e as an aid in
iden i ying bes p ac ice pe o mance in he u iliza ion o esou ces amongs i ms o a simila
ca ego y. Such iden i ica ion can highligh whe e he mos signi ican bene i s can be made om
e iciency imp o emen s and assis o ganiza ions o ealize hei maximum po en ial.
Measu emen ools such as DEA a e use ul in si ua ions whe e go e nmen bodies ope a e in
ma ke s, which a e dis o ed by p ices closely con olled by he go e nmen , subsidies, and a lack
o con es abili y. In hese cases, he same old ma ke indica o s o pe o mance such as p o i -
abili y and a es o e u n canno be used o measu e an o ganiza ion’s economic pe o mance
accu a ely. Despi e his, go e nmen s and he public a la ge a e s ill wo ied ha hese o ganiza-
ions ope a e e icien ly. In hese si ua ions, DEA p o ides compa a i e moni o ing ha iden i ies
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
a ia ions and hence p o ides encou agemen and di ec ion o he imp o emen o he pe o -
mance (Abbo & Doucouliagos, 2003).
Mos o he p io li e a u e on p oduc i i y ocused on inpu p oduc i i y like labo o capi al as
a measu e o inpu e iciency. A ise in he le el o p oduc i i y e lec s a ise in he e iciency o
inpu s. Hence, he same le el o inpu s can p oduce highe ou pu le els, which sugges s
a educ ion in he cos o p oduc ion. In o he wo ds, i e lec s be e men in he inpu quali ies.
A s udy conduc ed by Bha ia (1990) on misleading g ow h a es in he manu ac u ing sec o
a gued ha uns able socio-demog aphic changes and lowe le els o echnology a e causing
low p oduc i i y in India as compa ed o he Uni ed Kingdom and he Uni ed S a es. In his s udy
o he manu ac u ing sec o in India using da a o 21 yea s ( om 1965 o 1985), i was poin ed
ou ha ac o e iciency was in luenced by he ac o o p oduc ion, socio-demog aphic, socio-
poli ics, de elopmen and managemen o he human esou ce, wo kplace, and wo king condi ion
whe e a highe capi al-labo in ensi y a io is associa ed wi h a highe le el o echnology.
2.2. Manu ac u ing sec o o E hiopia
E hiopia began i s i s se ies o economic e o m p og ams in 1992. The e o m p og ams a e
aimed a eo ien ing he economy om a command o a ma ke economy, a ionalizing he ole o
he s a e, and c ea ing legal, ins i u ional, and policy en i onmen s o enhance p i a e-sec o
in es men . Di e en sec o al policies, s a egies, and plans we e de eloped and implemen ed in
an e o o make he manu ac u ing indus y play a g ea ole in he economy. As a esul o he
economic e o ms and p io i ies gi en o he sec o , i s con ibu ion o he economy has inc eased
om 11.4% in 2003/2004 o 13.4% in 2010/11 and wi hin he indus y, he cons uc ion and
manu ac u ing sub-sec o s ha e egis e ed a high g ow h a e o 12.8% and 12.1% espec i ely
(MoFED, 2011). The ac ha he con ibu ion o he manu ac u ing sec o o GDP is minimal
exhibi s he in an s age o manu ac u ing ac i i ies o indus ializa ion in E hiopia. This low
con ibu ion o he manu ac u ing sec o o he GDP is he common ea u e o mos de eloping
coun ies ha a e especially ound in Sub-Saha an A ican coun ies. The sha e o he manu ac u -
ing alue added (MVA) is one o he indica o s which pa e he way o assess he sec o ’s
pe o mance agains o he economies.
The E hiopian manu ac u ing sec o is domina ed by ood p oduc s and be e ages and non-
me allic mine al manu ac u ing sub-sec o s. In 2017, he o me made up abou 26% o he
es ablishmen s in he manu ac u ing sec o (CSA, 2018). The ela i ely high numbe o ood
p oduc s and be e age manu ac u ing indus ies is mainly explained by he high local inpu
con en and he a ailabili y o la ge local ma ke s o ood p oduc s and be e ages (Be ekadu &
Be hanu, 2000). In 2017, g ain mill p oduc s manu ac u ing i ms (GMPMF) con ibu ed abou 35%
o he manu ac u ing o ood p oduc s and be e ages indus ial g oup (CSA, 2018). Indus ies such
as me al p ocessing, elec ical and elec onics, chemical, and o he enginee ing indus ies, which
help build echnical capabili ies and dynamism, ha e no ye been de eloped. Mos manu ac u ing
expo s a e ocused on ag icul u e, including d inks, clo hes, shoes, and semi-p ocessed hides. On
he o he hand, mos capi al goods and manu ac u ed consume goods a e impo ed in o E hiopia,
which is also hea ily elian on he impo a ion o uel. On he policy ace , he go e nmen is
commi ed o c ea ing a a o able en i onmen o a ac ing di ec o eign in es men and
p omo ing domes ic in es men . A a ie y o o eign companies om China, India, Tu key, and
Japan a e p esen ly compe ing in he coun y o le e age his oppo uni y. The p e e en ial du y-
ee ade access p o ided by E hiopia o he Uni ed S a es o Ame ica and Eu opean Union
ma ke s also p o ides s a egic oppo uni ies (Hailu & Tanaka, 2015).
E hiopia has abundan esou ces ha can p o ide aluable inpu s o ligh manu ac u ing,
namely, ca le, which can be used as an inpu o making lea he and lea he p oduc s; o es s,
which can be used as an inpu o he u ni u e indus y; co on, which can be used as an inpu o
he ga men indus y; and ag icul u al land and lakes a e used o p o ide inpu s o ag o-
p ocessing indus ies (Dinh e al., 2012). Mo eo e , E hiopia has plen i ul low-cos labo , which
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
gi es i a compa a i e ad an age in less-skilled, labo -in ensi e sec o s (Dinh e al., 2012; Sonobe
e al., 2009). In such ligh manu ac u ing a eas as lea he p oduc s and appa el, ex ile, wood
p oduc s indus ies, i has a good oppo uni y o low-cos manu ac u ing expo s.
2.3. De e minan s o echnical e iciency o manu ac u ing i ms in E hiopia
The aim o his sec ion is o iden i y he ac o s ha a ec each i m’s e iciency le els. These
de e minan s o echnical e iciency can be summa ized as ollows:
2.3.1. Capi al expendi u e
P io s udies on capi al in es men in ixed asse s indica ed a signi ican and posi i e ela ionship
be ween capi al expendi u es in ixed asse s and p oduc i i y g ow h (Abdi, 2008; Delong &
Summe s, 1991; Go e al., 1999; Gumbau-Albe & Maudos, 2002; Sala-i-Ma in, 1997). Fo
ins ance, Delong and Summe s (1991) ound a ising 1% in es men sha e in machine y and
equipmen could lead o a 0.2 o 0.3% ise in long- un p oduc i i y g ow h. In suppo o hei
indings, Sala-i-Ma in (1997) poin ed ou ha a 1% inc ease in equipmen in es men could cause
a 0.2% ise in ou pu g ow h, while a 1% ise in non-equipmen in es men could lead o a 0.06%
ise in p oduc i i y g ow h o ou pu . Simila ly, Gumbau-Albe and Maudos (2002) indica ed ha
di e ences in e iciency a e ypically due o a highe a io o in es men o physical capi al i i is
belie ed ha new p oduc ion echnologies a e in eg a ed in o new capi al pu chases, and ha
echnological imp o emen accele a es he g ow h o e iciency/p oduc i i y in he sec o .
Thus, we p opose new capi al in es men in ixed asse s is posi i ely associa ed wi h i m
e iciency in manu ac u ing i ms in E hiopia.
2.3.2. Capi al in ensi y
The ela ionship be ween capi al in ensi y and echnical e iciency has been s udied by many
schola s wi h inconsis en esul s (La u e e al., 2004; Ma hijs & V anken, 2000; Sun e al.,
1999; Wu, 1993). An impo an inding o p e ious s udies indica es ha capi al in ensi y, mea-
su ed as capi al di ided by labo , has a signi ican and posi i e impac on echnical e iciency in he
ood, machine y, and elec onics sec o s o Chinese manu ac u ing indus ies (Sun e al., 1999).
They poin ed ou ha a ise in he u iliza ion o capi al inpu s such as machine y and equipmen in
ela ion o labo , o capi al deepening, is expec ed o imp o e p oduc i i y and lead o a g ow h in
echnical e iciency in hese indus ies. Simila ly, Ma hijs and V anken (2000) indica ed mo e
capi al-in ensi e a ms a e e icien in Bulga ian c op a ms. In con as , La u e e al. (2004)
poin ed ou mo e capi al-in ensi e a ms a e less e icien in c op and li es ock a ms in Poland.
Hence, we p opose capi al in ensi y is posi i ely associa ed wi h manu ac u ing i m e iciency in
E hiopia. In p io li e a u e, capi al in ensi y is measu ed as he a io o o al asse s (book alue) o
he o al numbe o employees (Bloms öm & Pe sson, 1983). Abenoja and Lapid (1991) measu ed
capi al in ensi y as he a io o he g oss book alue o ixed asse s o he o al numbe o
p oduc ion wo ke s. Following Abenoja and Lapid (1991), o his s udy, we used he a io o he
book alue o machine y and equipmen o he es ablishmen o he o al numbe o p oduc ion
wo ke s.
2.3.3. Accoun -book a io
To ou knowledge, ex an esea ch has no add essed he impac o in e nal con ol on manu ac-
u ing i m e iciency. When sound in e nal con ols a e main ained and e ec i ely moni o ed,
hey a e an impo an aid o enhancing p oduc i i y and e ec i eness. Fi ms ha main ain p ope
eco d-keeping a e assumed o be e icien . Fi ms ha keep a comple e book o accoun a e in
a be e posi ion o p uden ly plan and ack he day- o-day ope a ions o hei p oduc ion uni
(Bekele & Belay, 2007). This will aid hem o imp o e hei echnical e iciency le el by p e en ing
was e o esou ces. In his s udy, he accoun -book a io, as a p oxy o in e nal con ol, is
measu ed as he a io o i ms ha main ain books o accoun o he o al numbe o i ms in
he indus y. Thus, we hypo hesize ha he accoun -book a io is posi i ely ela ed o he echnical
e iciency o manu ac u ing i ms in E hiopia.
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
2.3.4. Skill in ensi y
P io li e a u e on he ela ionship be ween skill in ensi y and echnical e iciency indica es ha
skill-in ensi e i ms a e mo e capi al-in ensi e, la ge in size, end o be expo e s, and mo e
p oduc i e (Be na d & Jensen, 1999). Fi ms wi h be e manage ial skills end o ha e highe
ea nings, p oduc ion, and echnical e iciency (Ki kley e al., 1998). Simila ly, Ray (1997) indica es
an inc ease in he p opo ion o non-p oduc ion whi e-colla and manage ial s a migh impose
ce ain igidi ies in he p oduc ion p ocess, causing slow adjus men s o a ia ions in demand. In
his s udy, skill in ensi y is measu ed as he a io o p oduc ion wo ke s o o al employees. Thus,
we expec a posi i e co ela ion be ween skill in ensi y and echnical e iciency. This expec a ion is
also consis en wi h con en ional ade heo y, which claims ha i ms wi h highe skill in ensi y
specialize in highe quali y p oduc s and end o be mo e p o i able and e icien (Whang, 2016).
2.3.5. Indus y size
Theo e ical esea ch on he ela ionship be ween i m size and e iciency indica es ha la ge i ms
bene i om economies o scale and ope a e a lowe a e age cos s o p oduc ion, implying ha
i m size has a posi i e impac on e iciency. Simila ly, a heo y de eloped as a model o i m
g ow h by Jo ano ic (1982) indica es la ge i ms a e mo e e icien han smalle ones. This esul
is an ou come o a selec ion p ocess, in which e icien i ms g ow/p ospe and su i e, while
ine icien i ms s agna e o lea e he indus y. Fu he mo e, empi ical s udies on he i m size and
e iciency ela ionship indica e a ious esul s. Fo ins ance, Lund all and Ba ese (2000) indica ed
echnical e iciency inc eases wi h i m size. Sun e al. (1999) also poin ed ou a ise in he size o
i ms is likely o p omo e a i m’s ma ke sha e and compe i i eness, which in u n is expec ed o
imp o e a i m’s access o new echnology, scale e iciency, inno a i e capabili y, and p oduc i i y.
These imp o emen s end o imp o e he i m’s echnical e iciency. Simila ly, Su e al. (2018)
indica ed a posi i e associa ion be ween size and echnical e iciency. They ound ha as he
capaci y o a i m inc eases, i s e iciency also inc eases. In con as , Be ancou and Clague (1975)
assumed a nega i e associa ion be ween e iciency and i m size. They a gue small i ms adop
mo e app op ia e echnology and os e compe i i e ac o s and p oduc ma ke s wi h hei
lexibili y o espond o changes in echnology, p oduc ma ke s, and ma ke s. Hence, we hypo he-
sized ha i m size is posi i ely co ela ed o echnical e iciency.
2.3.6. Ad e ising expense
Acco ding o he Resou ce-Based Theo y o he i m, i ms ha in es in R&D and ad e ising a e
mo e likely o c ea e i m-speci ic asse s ha canno be imi a ed by hei i als/compe i o s and
se e as he ounda ion o hei long- e m compe i i e ad an age. Fi ms’ ad e isemen and R&D
choices, acco ding o Ge oski (1995), may help o be e cap u e ela i e e iciency and i s e olu-
ion o e ime. Fi ms ha ob ain inno a ions and conduc ad e ising imp o e hei e iciency,
making hem mo e likely o succeed.
Ex an li e a u e on he ela ionship be ween ad e ising expenses and echnical e iciency is
sca ce. OCED (2014) indica ed ha ad e ising is an example o i ms` esponses o compe i ion
and is associa ed wi h imp o ed p oduc i i y. Fi ms ha spend money on ad e ising end o be
mo e p oduc i e han hei compe i o s. Simila ly, ad e ising expendi u es may also be hough o
as endogenous sunk cos s, as Su on (1991) sugges s, s eng hening he i ms’ pe cei ed b and
epu a ion and inc easing cus ome s’ willingness o pay o hei goods. As a esul , ad e ising is
supposed o boos su i al chances. Comano and Wilson (1967) sugges ha ad e ising has an
an icompe i i e impac because i inc eases en y ba ie s, so ening he esilience o compe i ion.
Following Özçelik and Taymaz (2004), in his s udy, he ad e ising a io is measu ed as he a io o
ad e ising expense o o al sales. Thus, we hypo hesize ha ad e ising expense is posi i ely
associa ed wi h echnical e iciency.
3. Me hodology
The manu ac u ing sec o is one o he apidly g owing sec o s in E hiopia. Acco ding o he CSA
(2018) epo , abou 3,529 la ge and medium manu ac u ing companies a e ope a ing in E hiopia.
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
sec o s ha e e iciency sco es mo e han he a e age, while wen y-se en (27) sub-sec o s a e
ound wi h an e iciency sco e less han he a e age. The o e all a e age e iciency sco es o he
sec o ha e inc eased om 0.344 in 2011 o 0.507 in 2012 as some sub-sec o s ha e shown
imp o emen in esou ce u iliza ion o p oduce p oduc s. The e o e, by adop ing bes p ac ices, he
sec o could ha e on a e age p oduced mo e p oduc s by 49.3% han ac ually p oduced om he
cu en le el o inpu s quan i y.
The numbe o e icien sub-sec o s sligh ly declined om 2012 o 2015. Th ee sub-sec o s we e
e icien in 2013, whe eas wo sub-sec o s we e in 2014 and 2015. The a e age e iciency sco es
also declined om 2012 o 2016. Mo eo e , he a e age echnical e iciency pe sub-sec o o e
he obse a ion yea s (2010 o 2017) anges om 0.122 o spinning, wea ing & inishing o he
ex ile o 0.916 o obacco p oduc s. This implies he e is a high-e iciency a iance among he
sampled sub-sec o s o e he obse a ion yea s. This esul is consis en wi h some p io s udies
such as Hailu and Tanaka (2015) who ind he e is echnical e iciency sco e a ia ion ac oss
E hiopian manu ac u ing i ms, sugges ing sho age o aw ma e ials supply was he main cause
o he ela i e echnical ine iciency o he sec o .
On o e all a e age, he sec o unde s udy had a 37% echnical e iciency alue om 2010
h ough 2017. Ou esul is e y consis en wi h he ecen s udy by Ayelign and Singh (2019),
who ound ha in he o e all a e age E hiopian medium and la ge-scale manu ac u ing indus ies
egis e ed 36.7% echnical e iciency o e he pe iod 1996–2015. Low echnical e iciency and
p oduc i i y seem o be a common p oblem in manu ac u ing indus ies in Sub-Saha an A ican
coun ies. Fo ins ance, he Kenyan manu ac u ing sec o had low o e all p oduc i i y and la ge
p oduc i i y di e ences ac oss indus ies (Wo ld Bank, 2014). Diaz and Sanchez (2007) indica ed
consis en indings ha mos indus ies in he manu ac u ing sec o we e ine icien and he
ine iciency was g ea e among la ge i ms han small i ms. Abegaz (2013) add esses ha
E hiopian manu ac u ing indus ies ha e he capabili y o use impo ed echnology, bu imp o e-
men and adop ion o he echnology a e weak. This means ha he sec o has no u ilized i s
maximum capaci y. UNCTAD (2015) also p o ides e idence ha he lack o access o and sha ing
o R&D acili ies con inues o hinde he abili y o local i ms o ake ad an age o oppo uni ies
bo h wi hin E hiopia and in o he eme ging ma ke s. The Wo ld Economic Fo um’s Global
Compe i i eness Index (GCI) anks E hiopia 109
h
ou o 140 coun ies wi h a sco e o 3.7 ou o
7.0 in he 2015–16 epo . I e lec s ha E hiopian i ms a e no as compe i i e in he in e na-
ional ma ke because inno a i e ac i i y in he indus y is e y low. In conjunc ion wi h his da a,
he esea ch and de elopmen (R&D) sha e o GDP was 0.5% in 2015 (UNCTAD, 2015). The
a o emen ioned ac o s would collec i ely a ec he e iciency o he sec o .
4.4. BCC model esul s
The BCC model e alua es whe he inc easing, dec easing, o cons an e u ns o scale would be
aken o imp o e he e iciency alue ound. CRS a ises when a pe cen age inc ease in (all) inpu s
p oduces he same pe cen age inc ease in ou pu s. Howe e , VRS occu s when a p opo iona e
inc ease in inpu s p oduces a smalle (la ge ) p opo iona e inc ease in ou pu s (W. W Coope
e al., 2006, p.125). This assump ion o he BCC model decomposed in o dec easing e u ns o scale
and inc easing e u n o scale. In a dec easing e u n o scale, an inc ease in inpu p oduces
a smalle inc ease in ou pu . An inc easing e u n o scale a ises when an inc ease in inpu s yields
a la ge inc ease in ou pu . A VRS model allows he bes p ac ice le el o ou pu s o inpu s o a y
wi h he size o indus ies and i also measu es he e iciency o he managemen in u ilizing inpu s
ha a e ee o scale e iciency.
The CRS echnical e iciency o he sample indus ies is di ided in o pu e echnical e iciency
(PTE) and scale e iciency (SE) in he BCC model. PTE measu es he ex en o which an indus y can
inc ease i s ou pu (in ixed p opo ion) while emaining wi hin he VRS on ie . Thus, echnical
e iciency measu es he indus y’s o e all success in maximizing i s ou pu . SE e lec s he ex en
o which an indus y p ojec ed o he VRS e iciency on ie can u he inc ease i s ou pu (again
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160

Table 2. Technical e iciency o sub-sec o s compu ed by CCR model unde CRS assump ion
Sub-sec o s 2010 2011 2012 2013 2014 2015 2016 2017 A e age
P ocessing &
p ese ing o
mea , ui &
ege ables
0.27 0.094 0.163 0.114 0.276 0.171 0.054 0.151 0.16
Vege able &
animal oils and
a s
0.168 0.16 0.272 0.311 0.348 0.399 0.692 0.803 0.39
Dai y 0.259 0.31 0.285 0.499 0.39 0.355 0.326 0.486 0.36
G ain mill 0.118 0.122 0.194 0.185 0.172 0.341 0.141 0.232 0.188
Animal eeds 0.237 0.137 0.36 1 0.12 0.29 0.358 0.788 0.41
Bake y 0.113 0.276 0.839 0.154 0.145 0.159 0.145 0.135 0.24
Suga and suga
con ec ione y
1 0.68 0.35 0.415 0.444 1 0.538 0.517 0.618
Maca oni &
spaghe i
0.259 0.237 1 0.161 0.19 0.071 0.095 0.198 0.27
Food p oduc s n.
e.c.
0.179 0.163 0.262 0.377 0.464 0.279 0.319 0.162 0.27
Dis illing,
ec i ying &
spi i s
0.794 0.682 0.682 0.255 0.288 0.293 0.147 0.31 0.431
Wines 0.745 0.884 1 0.854 0.797 0.45 0.562 0.771 0.757
Mal liquo s &
mal
0.391 1 0.88 0.843 0.464 0.197 0.781 0.677 0.65
So d inks &
mine al wa e
0.455 0.6 0.226 0.198 0.315 0.59 0.135 0.119 0.32
Tobacco
p oduc s
1 0.685 1 1 1 0.648 1 1 0.916
Spinning,
wea ing &
ex iles
0.133 0.079 0.287 0.182 0.03 0.09 0.071 0.11 0.122
(Con inued)
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
Table2. (Con inued)
Sub-sec o s 2010 2011 2012 2013 2014 2015 2016 2017 A e age
Co dage, ope,
wine & ne ing
0.155 0.358 0.218 0.08 0.123 0.242 0.171 0.086 0.179
Kni ing mills 0.02 0.018 0.032 0.317 0.27 0.03 0.161 0.333 0.147
Wea ing appa el
excep u
appa el
0.084 0.214 0.424 0.122 0.195 0.162 0.517 1 0.339
Tanning &
d essing o
lea he , luggage
& handbags
0.11 0.258 0.32 0.484 0.299 0.142 0.195 0.898 0.33
Foo wea 0.12 0.194 0.809 0.148 0.265 0.316 0.127 0.161 0.26
Wood & wood
p oduc s
0.035 0.083 1 0.785 0.041 0.153 0.192 0.181 0.308
Pape 0.251 0.281 0.19 0.078 0.143 0.243 0.33 0.442 0.244
Publishing &
p in ing se ices
0.261 0.226 0.245 0.383 0.227 0.342 0.482 0.225 0.298
Basic chemicals 0.264 0.182 0.376 0.419 0.308 0.289 0.491 0.111 0.3
Pain s, a nishes
& mas ics
0.889 1 1 0.771 0.897 0.907 0.309 0.607 0.79
Pha maceu icals
& medicinal
chemicals
0.305 0.682 0.435 0.536 0.595 0.172 0.425 0.175 0.415
Soap and
de e gen s
cleaning
0.332 0.228 0.771 0.469 0.263 0.371 0.239 0.218 0.361
Chemical
p oduc s n.e.c.
1 0.077 0.374 0.38 1 0.258 0.307 0.642 0.504
Rubbe 0.14 0.182 0.577 0.169 0.353 0.366 1 0.894 0.46
Plas ic 0.282 0.224 0.258 0.321 0.281 0.185 0.261 0.216 0.25
(Con inued)
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
Table2. (Con inued)
Sub-sec o s 2010 2011 2012 2013 2014 2015 2016 2017 A e age
Glass 0.21 0.23 0.547 0.364 0.374 0.623 0.226 0.309 0.36
S uc u al clay 0.104 0.213 0.183 0.101 0.191 0.132 0.084 0.182 0.14
Cemen , lime &
plas e
1 0.862 1 0.324 0.946 0.496 0.23 0.242 0.63
A icles o
conc e e &
plas e
0.096 0.129 0.251 0.185 0.315 0.479 0.213 0.277 0.24
Non-me allic
mine al
0.089 0.132 0.34 0.314 0.098 0.151 0.083 0.143 0.168
Basic i on &
s eel
0.278 0.294 0.509 0.377 0.344 0.417 0.291 0.321 0.35
S uc u al me al 0.327 0.142 0.409 0.208 0.141 0.414 0.174 0.284 0.262
Cu le y, hand
ools & gene al
ha dwa e
0.358 0.288 0.69 0.057 0.381 0.35 0.153 0.218 0.31
O he ab ica ed
me al
0.395 1 1 0.554 0.394 0.622 0.225 0.028 0.52
O he gene al-
pu pose
machine y
0.281 0.255 0.158 0.165 0.405 0.518 0.269 0.289 0.29
Pa s &
accesso ies o
mo o ehicles
0.658 0.361 1 0.692 0.457 1 0.273 0.344 0.59
Passenge ca s,
comme cial
ehicles &
busses
0.26 0.375 0.491 1 0.558 0.042 1 0.437 0.52
Fu ni u e 0.308 0.176 0.386 0.224 0.238 0.156 0.197 0.302 0.24
Mean 0.343 0.344 0.507 0.385 0.361 0.347 0.325 0.373 0.37
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
in ixed p opo ions) while emaining wi hin he CRS on ie . Thus, SE measu es he ex en o
which a i m can inc ease ou pu by mo ing o a pa o he on ie wi h mo e bene icial e u ns o
scale cha ac e is ics.
The decomposi ion is needed o iden i y he sou ces o ine iciency by compa ing he PTE and SE.
When PTE exceeds SE, he sou ce o ine iciency is due o scale ine iciency (inapp op ia e selec ion
o scale size). In o he wo ds, i he e is a di e ence be ween he echnical e iciency sco e (CRS
echnical e iciency and VRS PTE), hen i demons a es scale ine iciency. Con e sely, i SE is highe
han PTE, hen he sou ce o ine iciency is due o poo u iliza ion o inpu s, i.e., pu e echnical
ine iciency.
Table 3 epo s esul s ob ained om BCC model VRS. The esul s en ail CRS echnical e iciency,
VRS echnical e iciency, and scale e iciency. We p esen he esul s o he mos ecen h ee yea s
obse a ions in he da a se , 2015–2017 o cla i y.
In 2015, he numbe o echnically e icien sub-sec o s was wo (2), abou 5% o he sample
when VRS TE was assumed, and i e (5), 11.6% when CRS TE was assumed. Th ee sub-sec o s
ound wi h scale e iciency, sugges ing an app op ia e selec ion o inpu s and ope a ing on he
mos p oduc i e scale size. Ou o he ine icien sub-sec o s, 38 sub-sec o s expe ienced poo
u iliza ion o inpu s as he sou ce o ine iciency is pu e echnical ine iciency. Howe e , wo sub-
sec o s had highe PTE han SE which implies ha he sou ce o ine iciency is scale ine iciency.
This indica es he indus ies a e ope a ing a an inapp op ia e scale. When looking a he ype o
scale, wen y-se en (27) sub-sec o s (e.g., dai y p oduc s; bake y p oduc s; oo wea s; ubbe
p oduc s) appea ed o ha e an inc easing e u n o scale, showing ha a p opo iona e inc ease
in inpu s yields a la ge p opo iona e in he ou pu s. These indus ies would imp o e hei
e iciency by expanding he scale o ope a ion. In con as , ele en (11) indus ies (e.g., u ni u e;
soap & de e gen cleaning; plas ic p oduc s; cemen , lime & plas e ) expe ienced a dec easing
e u n o scale i.e., a p opo iona e inc ease in inpu s p oduces a lowe p opo iona e inc ease in
ou pu s. This implies he indus ies ha e sup a-op imal scale size (i.e. ope a es a he ising po ion
o long- un a e age cos cu e) and hus, downscaling is needed o achie ing e iciency on ie .
Fi e sub-sec o s, bake y p oduc s, suga and suga con ec ione y, maca oni and spaghe i, anning
and d essing o lea he , and pa ies and accesso ies o a mo o ehicle ope a e a a la e po ion
o he long- un a e age cos cu e ha means a cons an e u n o scale.
Abou 11.6% o he sub-sec o s ha e expe ienced PTE as compu ed by VRS in 2016. Th ee sub-
sec o s ( obacco p oduc s, ubbe p oduc s, and passenge ca s, comme cial ehicles & busses)
appea ed e icien bo h by CRS TE and VRS TE. All o he scale-ine icien sub-sec o s expe ienced
a dec easing e u n o scale, i.e., an inc ease in p opo iona e usage o inpu p oduces he less
p opo iona e inc ease in ou pu s. On a e age, he sample sub-sec o s eco ded a 0.531 o PTE and
a 0.629 o SE sugges ing he sou ce o ine icien a e pu e echnical ine icien . Gene ally, he
sec o was a poo esou ce managemen and con e ing inpu s o he ou pu .
When looking in 2017, ou sub-sec o s, namely so d ink and mine al wa e , obacco p oduc s,
wea ing appa el, and passenge ca s, comme cial ehicles and busses obse ed as pu e echnical
e iciency as measu ed by VRS whe eas, h ee sub-sec o s ( oo wea s, obacco p oduc s, and so
d ink and mine al wa e ) we e scale e icien . Ou o he ine icien sub-sec o s, 20 sub-sec o s
expe ienced a dec easing e u n o scale and 16 sub-sec o s expe ienced an inc easing e u n o
scale.
On a e age, pu e echnical e iciency sco es declined in 2017 indica ing some sub-sec o s had
used excess inpu s o p oduce ou pu as compa ed o in 2016. Howe e , a scale e icien sco e on
a e age shows imp o emen in he yea . The mean o scale e iciency was highe han he mean o
pu e echnical e iciency. I e eals he sou ce o echnical ine iciencies o he sec o is pu e
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
echnical ine icien . The indus ies need o p ope ly manage hei inpu u iliza ion in o de o be
e icien .
On a e age, he indus ies had aced a 49% o pu e echnical ine iciency o e he obse a ion
pe iods. I shows a i m’s inabili y o exploi inpu s due o he poo skills o bo h ope a i es and
managemen . The o e all scale e iciency o 76% shows an app op ia e sec ion o p oduc ion scale
by he indus ies. I implies he o ganiza ional sou ce o ine iciency. The E hiopian manu ac u ing
sec o is cha ac e ized by a cheap labo o ce. This would bene i he sec o in minimizing p oduc-
ion cos as wage/sala y is low. I could also be de imen al o he sec o because o he
inapp op ia e u iliza ion o he esou ces by unskilled, low-cos labo o ces. In essence, cheap
labo implies less-skilled labo o labo incen i e. I can be assumed ha being labo o capi al-
in ensi e would no yield a gua an ee o e iciency, bu he quali y o labo o capi al u ilized could
de e mine he e iciency o a i m. In o he wo ds, a i m can be e icien , i i `s able o gain he
op imum bene i om he esou ces u ilized such as labo , capi al, aw ma e ials, o elec ic powe .
When looking a he annual a e age e iciency sco e in each obse a ion pe iod, he lowes
a e age TE sco e was epo ed in 2016. The highes a e age TE and PTE we e obse ed in 2012.
The SE wi h he highes e iciency sco e was obse ed in 2010. The sample sub-sec o s had shown
highe SE in all obse a ion pe iods and in he o e all a e age.
We u he classi y he sub-sec o s conside ed in he p e ious analysis in o ou een majo sub-
sec o s unde bo h go e nmen and p i a e owne ship in o de o measu e echnical e iciency and
compa e whe he public sub-sec o s a e mo e e icien o no han p i a e sub-sec o s. To do he
analysis, 2015 and 2017 obse a ions we e aken, assuming he sub-sec o s a e ope a ing in he
same en i onmen and ma ke . The esul s p esen ed in Table 4 and 5 indica es, on a e age,
p i a e-owned sub-sec o s had egis e ed be e o al echnical e iciency (0.821), PTE (0.939) and
SE (0.876) han public-owned sub-sec o s and hey a e ela i ely e icien . When compa ing sub-
sec o o sub-sec o , public-owned ood p oduc s and be e ages and machine y and equipmen
a e e icien bo h unde CRS and VRS models, whe eas he same sub-sec o s unde p i a e own-
e ship a e ine icien . On a e age, he echnical ine iciency o public-owned sub-sec o s highly
d i en by pu e echnical ine iciency sugges ing hey had poo ly managed usage o esou ces. In
con as , scale ine iciency con ibu es mo e o he o al ine iciency o p i a e sub-sec o s. I
implies p i a e-owned sub-sec o s showed an inapp op ia e combina ion o esou ce use in 2015.
In 2017, he e iciency sco e has declined o bo h public and p i a e sub-sec o s in e ms o
o al echnical e iciency (CRS), PTE & SE (VRS). I is no ed ha he mean e iciency sco es o p i a e
sub-sec o s a e much highe han public-owned sub-sec o s, indica ing p i a e sub-sec o s be e
manage esou ces and app op ia ely mix inpu s o ob ain he maximum bene i . Indeed, he
numbe o p i a e i ms in each sub-sec o is qui e la ge han he numbe o public i ms in he
same sub-sec o . One o he easons o he imbalance numbe o i ms is p i a iza ion. The
go e nmen sells s a e-owned i ms o p i a e in es o s ha cause a decline in public i ms and
inc ease p i a e i ms a he same ime. Gi en his p ac ical issue, we assume he a ia ion
be ween he e iciency o he p i a e and public i ms migh pa ially be de ined by size (in
e ms o o al asse p oxy o numbe o employees p oxy). The esul is consis en wi h Al a ez
and C espi (2003) and Gumbau-Albe and Maudos (2002) indings ha public i ms on a e age
end o be less e icien as compa ed o p i a e i ms.
4.5. De e minan s o echnical e iciency: Tobi eg ession esul s
The impo an inding obse ed in his s udy is he capi al expendi u e a io has a posi i e e ec on
echnical e iciency, sugges ing a signi ican in es men in new capi al would lead he i m o an
e iciency le el. A i m wi h ad anced machine y and equipmen mo e likely o engage in inno a-
i e p oduc s which in u n inc eases p oduc ion and sales pe o mance when minimizing he
leng h o p oduc ion ime, in en o y and accoun s ecei able u n o e and o he i ele an cos s.
On he o he hand, a highe dep ecia ion and main enance cos would o se he ad an age o
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160

Table 3. Technical e iciency (TE), pu e echnical e iciency (PTE), scale e iciency (SE), and ype o scale (TFS)
Sub-
sec o s
2015 2016 2017
TE PTE SE TFS TE PTE SE TFS TE PTE SE TFS
P ocessing
&
p ese ing
o mea ,
ui &
ege ables
0.171 0.174 0.983 i s 0.054 0.059 0.913 d s 0.151 0.198 0.762 d s
Vege able &
animal oils
and a s
0.399 0.419 0.95 i s 0.692 0.757 0.915 d s 0.803 0.808 0.993 i s
Dai y 0.355 0.363 0.977 i s 0.326 0.357 0.914 d s 0.486 0.491 0.989 i s
G ain mill 0.341 0.465 0.733 d s 0.141 0.477 0.295 d s 0.232 0.375 0.617 d s
Animal
eeds
0.29 0.335 0.866 i s 0.358 0.468 0.764 d s 0.788 0.869 0.907 d s
Bake y 0.159 0.159 1 - 0.145 0.326 0.446 d s 0.135 0.184 0.734 d s
Suga and
suga
con ec
ione y
1 1 1 - 0.538 1 0.538 d s 0.517 0.518 0.999 -
Maca oni &
spaghe i
0.071 0.071 0.994 - 0.095 0.22 0.431 d s 0.198 0.277 0.713 d s
Food
p oduc s n.
e.c.
0.279 0.281 0.994 i s 0.319 0.386 0.827 d s 0.162 0.303 0.535 d s
Dis illing,
ec i ying &
spi i s
0.293 0.294 0.994 i s 0.147 0.352 0.417 d s 0.31 0.346 0.896 d s
Wines 0.45 0.495 0.909 i s 0.562 0.617 0.91 d s 0.771 0.789 0.977 i s
Mal liquo s
& mal
0.197 1 0.197 d s 0.781 1 0.781 d s 0.677 1 0.677 d s
(Con inued)
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
Table3. (Con inued)
Sub-
sec o s
2015 2016 2017
TE PTE SE TFS TE PTE SE TFS TE PTE SE TFS
So d inks
& mine al
wa e
0.59 0.741 0.796 d s 0.135 0.673 0.2 d s 0.119 0.307 0.387 d s
Tobacco
p oduc s
0.648 0.658 0.986 i s 1 1 1 - 1 1 1 -
Spinning,
wea ing &
ex iles
0.09 0.226 0.398 d s 0.071 0.274 0.259 d s 0.11 0.217 0.507 d s
Co dage,
ope, wine
& ne ing
0.242 0.247 0.981 i s 0.171 0.213 0.8 d s 0.086 0.086 0.995 -
Kni ing
mills
0.03 1 0.03 i s 0.161 0.185 0.87 d s 0.333 0.641 0.519 i s
Wea ing
appa el
excep u
appa el
0.162 0.164 0.992 i s 0.517 0.981 0.527 d s 1 1 1 -
Tanning &
d essing o
lea he ,
luggage &
handbags
0.142 0.142 0.999 - 0.195 0.311 0.627 d s 0.898 0.9 0.997 i s
Foo wea 0.316 0.317 0.998 i s 0.127 0.239 0.529 d s 0.161 0.161 1 -
Wood &
wood
p oduc s
0.153 0.155 0.99 i s 0.192 0.587 0.327 d s 0.181 0.182 0.995 i s
Pape 0.243 0.245 0.991 i s 0.33 0.372 0.886 d s 0.442 0.443 0.999 i s
Publishing &
p in ing
se ices
0.342 0.343 0.998 i s 0.482 0.888 0.543 d s 0.225 0.652 0.346 d s
(Con inued)
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
Table3. (Con inued)
Sub-
sec o s
2015 2016 2017
TE PTE SE TFS TE PTE SE TFS TE PTE SE TFS
Basic
chemicals
0.289 0.3 0.961 i s 0.491 0.564 0.872 d s 0.111 0.117 0.942 i s
Pain s,
a nishes &
mas ics
0.907 0.93 0.973 i s 0.309 0.344 0.898 d s 0.61 0.608 0.998 i s
Pha mac
eu icals
& medicinal
chemicals
0.172 0.17 0.993 i s 0.425 0.627 0.678 d s 0.18 0.176 0.998 -
Soap and
de e gen s
cleaning
0.371 0.37 0.998 d s 0.239 0.564 0.424 d s 0.22 0.34 0.639 d s
Chemical
p oduc s n.
e.c.
0.258 0.27 0.97 i s 0.307 0.456 0.674 d s 0.64 0.666 0.964 i s
Rubbe 0.366 0.42 0.883 i s 1 1 1 - 0.89 0.92 0.972 i s
Plas ic 0.185 0.3 0.622 d s 0.261 0.971 0.269 d s 0.22 0.621 0.347 d s
Glass 0.623 0.73 0.854 i s 0.226 0.296 0.764 d s 0.31 0.313 0.987 d s
S uc u al
clay
0.132 0.14 0.931 i s 0.084 0.118 0.708 d s 0.18 0.183 0.991 i s
Cemen ,
lime &
plas e
0.496 0.87 0.567 d s 0.23 0.594 0.388 d s 0.24 0.755 0.321 d s
A icles o
conc e e &
plas e
0.479 0.67 0.716 d s 0.213 0.662 0.321 d s 0.28 0.466 0.594 d s
Non-
me allic
mine al
0.151 0.15 0.992 i s 0.083 0.163 0.511 d s 0.14 0.143 0.999 -
(Con inued)
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
Table3. (Con inued)
Sub-
sec o s
2015 2016 2017
TE PTE SE TFS TE PTE SE TFS TE PTE SE TFS
Basic i on &
s eel
0.417 0.61 0.679 d s 0.291 0.99 0.294 d s 0.32 0.714 0.45 d s
S uc u al
me al
0.414 0.65 0.635 d s 0.174 0.705 0.247 d s 0.28 0.407 0.697 d s
Cu le y,
hand ools
& gene al
ha dwa e
0.35 1 0.35 i s 0.153 0.158 0.97 d s 0.22 0.226 0.961 i s
O he
ab ica ed
me al
0.622 0.74 0.843 i s 0.225 0.239 0.943 d s 0.03 0.03 0.963 i s
O he
gene al-
pu pose
machine y
0.518 0.6 0.864 i s 0.269 0.499 0.54 d s 0.29 0.309 0.938 i s
Pa s &
accesso ies
o mo o
ehicles
1 1 1 - 0.273 0.67 0.408 d s 0.34 0.533 0.645 d s
Passenge
ca s, comm
e cial
ehicles &
busses
0.042 0.05 0.87 i s 1 1 1 - 0.44 1 0.437 I s
Fu ni u e 0.156 0.29 0.532 d s 0.197 0.471 0.419 d s 0.3 0.874 0.345 d s
Mean 0.347 0.46 0.837 0.325 0.531 0.629 0.37 0.492 0.784
No e: TE- o al echnical e iciency compu ed by CRS model; PTE- pu e echnical e iciency compu ed by VRS model; SE- scale e iciency; TFS- ype o scale; d s-dec easing e u n o scale; i s-inc easing e u n
o scale;—Dash- cons an e u n o scale.
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
Table7. (Con inued)
Sun-sec o s EFFCH TECHCH PTECH SECH TFPCH
Pape 1.084 1.107 1.084 1 1.2
Publishing & p in ing se ices 0.979 1.102 1.11 0.882 1.079
Basic chemicals 0.883 1.052 0.89 0.992 0.93
Pain s, a nishes & mas ics 0.947 1.055 0.943 1.004 0.999
Pha maceu icals & medicinal
chemicals
0.924 1.116 0.923 1.001 1.031
Soap and de e gen s
cleaning
0.942 1.107 0.999 0.942 1.042
Chemical p oduc s n.e.c. 0.939 1.028 0.944 0.995 0.965
Rubbe 1.304 1.153 1.304 1 1.503
Plas ic 0.962 1.109 1.06 0.908 1.068
Glass 1.057 1.143 1.052 1.005 1.208
S uc u al clay 1.083 0.975 1.074 1.008 1.056
Cemen , lime & plas e 0.817 1.37 0.961 0.85 1.119
A icles o conc e e & plas e 1.163 1.119 1.181 0.984 1.302
Non-me allic mine al 1.07 1.062 1.04 1.029 1.137
Basic i on & s eel 1.021 1.156 1.143 0.893 1.18
S uc u al me al 0.98 1.241 1.031 0.95 1.216
Cu le y, hand ools & gene al
ha dwa e
0.931 1.098 0.93 1.001 1.023
O he ab ica ed me al 0.687 1.172 0.69 0.996 0.805
O he gene al-pu pose
machine y
1.004 1.345 1.01 0.994 1.35
Pa s & accesso ies o mo o
ehicles
0.911 1.126 0.968 0.942 1.027
Passenge ca s, comme cial
ehicles & busses
1.077 1.097 1 1.077 1.181
(Con inued)
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160

Table7. (Con inued)
Sun-sec o s EFFCH TECHCH PTECH SECH TFPCH
Fu ni u e 0.997 1.001 1.095 0.911 0.999
Mean 1.022 1.105 1.032 0.991 1.13
Whe e: EFFCH-e iciency change; TECHCH- echnology change; PTECH- pu e echnical e iciency change; SECH—scale e iciency change; TFPCH- o al ac o p oduc i i y change.
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
echnological e og ession was shown which in u n caused nega i e p oduc i i y g ow h. The
echnical e iciency index shows wo sening om 2013 o 2016. Gene ally, he indus ies a e mo e
ocused on echnological p og ess o inno a ion han echnical e iciency du ing he s udy pe iod.
5. Conclusions
This s udy es ima es echnical e iciency and o al p oduc i i y g ow h o medium and la ge-scale
manu ac u ing sub-sec o s using census da a annually collec ed by he E hiopian Cen al
S a is ical Agency. A echnical e iciency sco e is compu ed by a da a en elopmen analysis,
whe eas he Malmquis p oduc i i y index has been employed o es ima e o al p oduc i i y
change. Fu he mo e, a censo ed Tobi eg ession model was used o iden i y po en ial ac o s
which can de ine he a ia ion in o al echnical e iciency sco es.
The esul shows ha on a e age, medium- and la ge-scale manu ac u ing sub-sec o s egis-
e ed a 0.37 (37%) e iciency sco e o e he s udy pe iods 2010 o 2017. I sugges s ha on
a e age, he sec o could minimize i s inpu quan i y by 63% wi hou al e ing he le el o p oduc-
ion o could p oduce abou 63% o p oduc ion om he esou ces assumed in he obse a ion
pe iods. In p ac ice, he sec o has been su e ing om a lack o adequa e ma e ials, elec ic powe
in e up ion, and skilled labo . I also could no app op ia ely u ilize he a ailable esou ces. Thus, i
can be concluded ha he manu ac u ing sec o should look in o i s esou ce u iliza ion me hods
o ob ain he op imal bene i . The Malmquis p oduc i i y index shows on a e age, he sub-sec o s
made echnological p og ess by 10.5%. The echnological change index posi i e alue indica es
a decline in he quan i y o ou pu p oduced by a simila quan i y o inpu . I indica es p og ess in
inno a ion, which has g ea ly con ibu ed o posi i e p oduc i i y g ow h in 31 sub-sec o s. I
sugges s ha mos sub-sec o s ha e paid mo e ocus on echnological change han echnical
e iciency change. Mo eo e , p oduc i i y g ew by 13% o e he s udy pe iods, 2010 o 2017, which
is less han 2% pe annum. As p oduc i i y is he linea combina ion o ca ch-up and on ie shi ,
i ms need o balance hese ac o s in o de o imp o e p oduc i i y.
Fu he mo e, we obse ed ha he o al echnical e iciency sco es compu ed by a cons an
e u n o scale model show conside able a ia ions among he sub-sec o s unde conside a ion. To
unde s and he de e minan ac o s ha can cause a i m o be mo e e icien o less e icien ,
a censo ed Tobi eg ession was un and he esul s showed ha capi al expendi u e a io and
accoun book a io has a signi ican posi i e e ec on echnical e iciency. The capi al expendi u e
a io indica es long- e m in es men s ha can inc ease a i m`s u u e cash low, which in u n
imp o es echnical e iciency. On he o he hand, he accoun book a io e lec s i m in e nal
con ol p ac ice which in ol es inancial managemen p ac ices and how business ansac ions a e
eco ded, main ained, and p ocessed in o in o ma ion help ul o decision-make s in planning,
di ec ing, and con olling ac i i ies. I can be in e ed ha a i m ha designs an e ec i e
Table 8. The Malmquis index summa y o annual means
Yea TE TeChE PTE SE TFP
2011 1.062 1.201 1.12 0.948 1.276
2012 1.544 0.869 1.767 0.873 1.341
2013 0.744 1.225 0.68 1.094 0.911
2014 0.957 1.354 1.036 0.925 1.296
2015 0.948 0.873 0.827 1.147 0.828
2016 0.931 1.46 1.236 0.754 1.36
2017 1.132 0.912 0.876 1.292 1.033
Mean 1.022 1.105 1.032 0.991 1.13
No e: All Malmquis indexes ep esen geome ic means (Coelli, 1996). TE- o al echnical e iciency; TeChE- echnological
change; PTE-pu e echnical e iciency; SE- scale e iciency; TFP- o al ac o p oduc i i y.
E ena e al., Cogen Economics & Finance (2021), 9: 1997160
h ps://doi.o g/10.1080/23322039.2021.1997160
accoun ing sys em and inancial managemen p ac ices mo e likely o be e icien . The coe icien
o capi al in ensi y is posi i e bu no s a ically s ong. This s udy also inds public-owned sub-
sec o s a e less e icien han p i a ely owned sub-sec o s.
E en hough he sec o shows o al p oduc i i y p og ess, i is s ill insigni ican when compa ed
o o he indus ies. Fo example, he sec o 's ne con ibu ion o GDP in 2016/17 was 1.1%, while
ag icul u e and se ices accoun ed o 36.3% and 39.3%, espec i ely (CSA, 2018). G ow h in he
manu ac u ing sec o is expec ed o be a posi i e unc ion o he GDP. To mee hese expec a ions,
he sec o needs o be e icien . E iciency in he sec o can be imp o ed by s eng hening he
co po a e go e nance s uc u e (B is e al., 2008), enhancing R&D, inno a ions, and u iliza ion o
in o ma ion echnology. Finally, human esou ce de elopmen is ano he aspec ha needs o be
add essed. The skills o pe sonnel wo king in manu ac u ing should ma ch he changing equi e-
men s o hese indus ies, which a e o ced upon us by globaliza ion. Wi hou a compe en wo k-
o ce, i is di icul o compe e, pa icula ly in his ype o knowledge-based indus y.
6. P ac ical implica ions o he s udy
The indings o he s udy would ha e implica ions o policymake s and i m owne s in ha i o e s
an insigh in o he sou ce o p oduc i i y g ow h, compe i i eness, and a eas o u he imp o ing
he manu ac u ing sec o . Policymake s would also use he indings in designing s a egic plans
owa ds inc easing he p oduc i i y o he sec o . The main sou ce o p oduc i i y is in e nal ac o s
which in ol e op imal usage o exis ing esou ces o p oducing he op imal p oduc ion om he
exis ing inpu esou ces. Thus, conside able due a en ion should be gi en o he p oduc i i y-
d i en g ow h s a egy han he o eign di ec in es men -d i en g ow h s a egy o he sec o .
7. Limi a ions and u u e esea ch di ec ions
Ou s udy has wo po en ial limi a ions. Fi s , ou analysis ocuses mainly on medium and la ge-
scale i ms, excluding small manu ac u ing i ms ha make up a la ge pe cen age o he sec o .
Fu u e esea ch may ocus on small and medium en e p ises (SME) in de eloping coun ies like
E hiopia. Second, he limi a ions in he da a also o ced us o use sec o al da a ins ead o i m
da a, which would ha e allowed a deepe and mo e in e es ing o no el analysis. The e a e se e al
ac o s ecommended in he empi ical li e a u e (Al a ez & C espi, 2003) like expo pe o mance,
i m owne educa ion le el, impo pe o mance, esea ch & de elopmen , bu we could no
include hese a iables in he model due o da a una ailabili y.
Acknowledgemen s
The au ho s a e hank ul o he O ice o he Vice
P esiden o Resea ch and Technology T ans e o
Hawassa Uni e si y and In e nal G an Agency o he
Facul y o Managemen and Economics, Tomas Ba a
Uni e si y in Zlin (G an Numbe : IGA/FaME/2020/003) o
inancial suppo owa ds ca ying ou his esea ch. The
au ho s also would like o hank P o . Ch is ian Nsiah and
wo anonymous e iewe s o hei ime and e o
de o ed o c i ical e iew, help ul and cons uc i e com-
men s h oughou he e ision p ocess.
Funding
This wo k was suppo ed by he Hawassa Uni e si y and
Tomas Ba a Uni e si y in Zlin (IGA/FaME/2020/003).
Au ho de ails
Obsa Te e i E ena
1
E-mail: [email p o ec ed]
ORCID ID: h p://o cid.o g/0000-0003-4304-5359
Mes in Mala Kalko
2
E-mail: [email p o ec ed]
ORCID ID: h p://o cid.o g/0000-0001-5153-4764
Sa a Adugna Debele
1
E-mail: [email p o ec ed]
ORCID ID: h p://o cid.o g/0000-0002-9832-7049
1
College o Business and Economics, Hawassa Uni e si y,
Hawassa, E hiopia.
2
Facul y o Managemen and Economics, Tomas Ba a
Uni e si y in Zlin, Zlin, Czech Republic.
Disclosu e s a emen
No po en ial con lic o in e es was epo ed by he
au ho (s).
Ci a ion in o ma ion
Ci e his a icle as: Technical e iciency, echnological
p og ess and p oduc i i y g ow h o la ge and medium
manu ac u ing indus ies in E hiopia: A da a en elopmen
analysis, Obsa Te e i E ena, Mes in Mala Kalko & Sa a
Adugna Debele, Cogen Economics & Finance (2021), 9:
1997160.
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