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Import Competition And Efficiency In Indonesia’s Textile And Apparel Industry: A Threshold Autoregressive Model

1831 words - 7 pages

4. Results and discussion

4A. DEA results
DEA generates annual mean score of both technical efficiency and scale efficiency for the two industries. The highest annual mean score of technical efficiency for textile industry is 0.743 which was achieved in 1980 and the lowest one is 0.413 which occurred in 1984. The highest annual mean score of scale efficiency for this industry is 0.857 (1980) while the lowest score is 0.093 (2009). Standard deviations of annual mean score of technical efficiency and scale efficiency for this industry are 0.0716 and 0.1805 respectively.

Furthermore, for apparel industry the highest annual mean score of technical efficiency is 0.506 which was accomplished in 2007 and the lowest one is 0.317 which happened in 1989. As for the highest annual mean score of scale efficiency for this industry is 0.652 (1982) while the lowest score is 0.178 (1985). In addition, standard deviations of annual mean score of technical efficiency and scale efficiency for this industry are 0.0479 and 0.1266 respectively.

If the annual mean scores of technical efficiency and scale efficiency for both industries are graphed, it can be seen that all annual mean scores fluctuated broadly overtime, except for annual mean score of technical efficiency for apparel industry which fluctuated slightly. Additionally all annual mean scores have a tendency to stable eventually, excluding annual mean score of technical efficiency for textile industry which tend to decrease.

4B. TAR model results
The TAR model points out the thresholds which separate two regimes in the relation between import competition and technical efficiency and between import competition and scale efficiency for the two industries. The TAR model shows that the thresholds in the relation between import competition and technical efficiency and between import competition and scale efficiency for textile industry are 0.00678 and 0.24320. The thresholds for apparel industry are 0.00058 and 0.00227 respectively.

The test for the TAR model compares F value of the TAR model to F* value of the distribution of generated critical values. The F value of TAR model between import competition and technical efficiency for textile industry goes beyond 960 F* values of the distribution of generated critical values. The F value of TAR model between import competition and scale efficiency for textile industry surpass 959 F* values of the distribution of generated critical values. The F value of TAR model between import competition and technical efficiency for apparel industry goes over 996 F* values of the distribution of generated critical values. And finally, the F value of TAR model between import competition and scale efficiency for apparel industry exceeds 912 F* values of the distribution of generated critical values.

4C. Discussion
The DEA results reveal that the efficiency of both textile industry and apparel industry are not very satisfying. The highest annual mean...

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