Super Efficiency and Misallocation: Evidence from Vietnamese Electric-Computer Industry

Nguyen Khac Minh, Pham Van Khanh, Nguyen Thi Phuong
2018 American Journal of Operations Research  
Misallocation means that the source is not distributed efficiently. This leads to an important question of how the relationship between misallocation and efficiency is (see [1] ). The purpose of this study is to address the empirical relationship between misallocation and efficiency in the electric and computer industry in Vietnam during the 2005-2015 periods. To do this, we built a model that allowed us to evaluate the impact of misallocation and other factors on efficiency. The slack-based
more » ... The slack-based measured efficiency (SBM) model (Tone [2]), and the super-efficient model (Tone [3] ) are used to estimate the firms' efficiency. The approach of Hsieh and Klenow [4] is used to measure misallocation in the study area. Estimated results of the model about the relationship between misallocation and efficiency show that the variable representing the misallocation has a negative sign and statistical significance in all models. In other words, the misallocation negatively affects efficiency. The bigger the misallocation, the lower the efficiency.
doi:10.4236/ajor.2018.82006 fatcat:xarwf5nmgngzlpnc43wvbjd7q4