This paper examines technical efficieny in the Indonesian garment industry, based on the country's 1986 Census of Small Industry. Drawing on a sample of 2250 firms, our analysis suggests that inter-firm variations in efficiency are very considerable. The paper then investigates the correlates of these variations finding, in particular, a positive correlation between technical efficiency and each of export orientation, financial integration and female participation in the workforce. It is also found that there is a significant level of labour–capital substitution in the industry.
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Hill et al. (1993) studied this question.
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