The Impact of Export on the Technical Efficiency of Chemical and Fundamental Metal Subdivisions (A Stochastic Frontier Production Function and Dynamic Panel Data Approach)

Nowadays regarding the scarcity of production factors and human countless needs, there should be more emphasis placed on optimal use of available resources and higher growth rates of productivity and efficiency in order to meet the national development goals. One of the preconditions to enhance productivity and efficiency is to have access to foreign markets and promote exports. For this purpose, the main objective of this study is to investigate the impact of exports on technical efficiency in chemical and fundamental metal subdivisions in Iran, over the period (2000-2009). Therefore, at first, the technical efficiency in chemical and fundamental metal subdivisions has been estimated by using stochastic frontier production function, which indicates that average technical efficiency is 0.77. Then, the link between technical efficiency and chemical and fundamental metal exports has been estimated by using dynamic panel data approach. The empirical results show that export, foreign technology import, human capital and firm size have positive and significant effects on technical efficiency of chemical and fundamental metal subdivisions in Iran.