Non-Parametric Developments and Analyses of the CU TE and TFP

In this book we have provided an empirical illustration of nonparametric methods on data from six sectors of Tunisian manufacturing industry between 1961 and 2010. Our empirical results indicate that the average short-run profit of these six sectors was 2011.03 MDT which corresponds to a return of 27.5% in relation to the capital stock. A decomposition of the 83% profit gap due to unused capacity indicates that 35% is due to technical inefficiency and 48% to a type of allocative efficiency-inefficiency effect of a mix of inputs. The results at the sector level show substantial differences in profit differentials and decompositions across sectors and clearly demonstrate the wealth of information that can be generated using these methods.Estimating the efficiency of the six sectors of the manufacturing industry shows that there is a potential for substantial efficiency gains for these sectors since on average their use of production factors could be reduced by 8% in the long term and 10% in the short term without affecting their level of production.