Measuring efficiency in New Zealand manufacturing in 1986/7 using a frontier production function approach

This study estimates cross‐section production functions using a frontier approach and data drawn from individual plants. It therefore provides direct estimates of inefficiency and the extent to which it varies across sectors. Furthermore, an attempt to explain the causes of inter‐plant and inter‐industry differences in inefficiency has been undertaken, in order to provide some guidelines for policy makers. The outcome of this latter exercise suggests that scale economies are important; and the reduction in protection has had substantial benefits.