Publication Date


Series Number

90-WP 64


Technical efficiency is the ability of the firm to produce the maximum output from its resources. One firm is more technically efficient if it produces a level of output higher than another firm with the same level of input usage and technology. Measures of technical efficiency give an indication of the potential gains in output if inefficiencies in production were to be eliminated.

Recent measures of technical efficiency in the Soviet Union have been incongruous with the presumption that bureaucratic obstacles in the command-economy system inherently foster waste in resource utilization and inefficiencies in production. Koopman (1989), in his analysis of time-series data of aggregate Soviet Republic agricultural production, estimated that the average level of technical efficiency in Soviet agriculture is almost 95 percent, with little variability among the republics. similar results were found by Danilin et al. (1985) in a 1974 cross-section sample of Soviet cotton refining plants. They found a mean level of technical efficiency of 92.9 percent, with little dispersion in the sample.