The Determinants of Technical Efficiency of Manufacturing Firms in Ghana

This paper uses the Data Envelopment Analysis (DEA) technique to estimate the technical efficiency of firms in Ghana across six manufacturing industries during 1991-2002. We observe that manufacturing firms in Ghana are significantly less efficient than their counterparts in other countries. In addition, we find that firm characteristics such as size, age, foreign ownership, and the mix of labor and capital used during the production process have positive effects on firm efficiency. These results have implications for Ghana’s import-substitution industrialization and foreign investment policies.