Manufacturing plants in Rwanda are pivotal to the country's economic growth. However, there is a need for methodological advancements to enhance efficiency measurement and support strategic planning. Panel data analysis was employed to estimate efficiency across manufacturing firms in Rwanda over a five-year period (-). A stochastic frontier production function model is used: ln (Y₈ₓ) = eta₀ + eta₁ ln (X₈ₓ) + uᵢ + e₈ₓ, where Y represents output, X includes inputs and outputs, eta₀ is the intercept, eta₁ reflects the impact of inputs on output growth, and uᵢ and e₈ₓ account for firm-specific inefficiencies and unobserved heterogeneity. Robust standard errors are applied to ensure the reliability of estimates. The analysis revealed that input intensification had a significant positive effect (p < 0. 01) on output growth, indicating an efficiency improvement in the sector over the study period. This research contributes by developing a robust panel data framework for measuring manufacturing plant efficiencies in Rwanda, providing actionable insights for policymakers and practitioners. Policymakers should prioritise investments that enhance input utilization to drive future growth. Additionally, continuous monitoring of efficiency levels is recommended to ensure sustained improvements.
Karegera et al. (Sat,) studied this question.