Ownership and technical efficiency in Malaysia's automotive industry: A stochastic frontier production function analysis

Noor Aini Khalifah

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

This article examines the direct effect of the extent of foreign ownership on technical efficiency in Malaysia's automotive industry by applying a stochastic frontier production function analysis to micro-panel data over the years 2000-2004. Technical efficiency in the overall automotive industry is positively related to the degree of vertical integration, the size of establishments in the respective sub-sectors, a higher quality of the work force, and a higher foreign ownership share in the establishment combined with higher net-import intensity. Foreign ownership and net-export intensity are not significant determinants of technical efficiency inthe parts sub-sector. Although majority foreign ownership is not allowed in the assembly sub-sector, this sub-sector is large, with asmall number of establishments generating scale economies in the automotive industry. The determinants of technical efficiency in the parts sub-sector show that foreign ownership per se does not enhance technical efficiency since other determinants like the degree of vertical integration and the size of establishments are significant determinants of technical efficiency.

Original languageEnglish
Pages (from-to)509-535
Number of pages27
JournalJournal of International Trade and Economic Development
Volume22
Issue number4
DOIs
Publication statusPublished - Jun 2013

Fingerprint

automotive industry
technical efficiency
production function
Automotive industry
ownership
Malaysia
efficiency
industry
determinants
vertical integration
work force
panel data
import
analysis
economy

Keywords

  • automobiles
  • industrialization
  • multinational firms
  • organization of production
  • productivity

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development
  • Aerospace Engineering

Cite this

Ownership and technical efficiency in Malaysia's automotive industry : A stochastic frontier production function analysis. / Khalifah, Noor Aini.

In: Journal of International Trade and Economic Development, Vol. 22, No. 4, 06.2013, p. 509-535.

Research output: Contribution to journalArticle

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