Technical efficiency and export performance: evidence for self-selection hypothesis from Indonesian manufacturing sector-level data

摘要

This paper examines the technical efficiency of Indonesian manufacturing industry by estimating a stochastic production frontier and the constant returns to scale output-oriented data envelopment analysis approach. Using fixed effect model, this paper also analyses the determinants of export performance of the industry. The results show that comparing the scores obtained by stochastic production frontier and data envelopment analysis, there are six relatively prominent industries in terms of efficiency achievement, namely iron and steel, tobacco, transport equipment, food products, industrial chemicals, and machinery, (electric). Utilising fixed effect model, we find that all export determinants show the appropriate significant signs and this paperprovides evidence for the presence of self-selection hypothesis.