Analysis using stochastic frontier shows declining technical efficiency in Bangladesh's manufacturing, highlighting need for workforce training and infrastructure development.
This study investigates the technical efficiency (TE) trends in Bangladesh’s large-scale manufacturing sector using stochastic frontier analysis (SFA) on panel data from 98 four-digit industries across four census years (2001, 2006, 2012, and 2019). The findings reveal that TE initially improved in 2006 but declined in 2012 and 2019, indicating that early industrial gains were not sustained due to structural inefficiencies. Export-driven industries, such as textiles, pharmaceuticals, and furniture manufacturing, demonstrate higher efficiency, benefiting from global integration and technological investment. Conversely, domestic-market-dependent industries, including metal, rubber and plastic, tobacco, and printing and publishing, exhibit persistently low efficiency, primarily due to capital underinvestment, outdated production techniques, and weak supply chain integration. Moreover, despite raw material availability, jute and sugar manufacturing continue to decline in efficiency, highlighting the need for modernization and strategic policy interventions. These results underscore the urgency of technological upgradation, workforce training, R&D investment, and infrastructure development to enhance industrial competitiveness.
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Tara et al. (2025) studied this question.
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