Measurement of The production efficiency and it’s determinants in Iran provinces

Abstract

The Inequality of production efficiency is one of the main factors contributing to inequalities in economic growth among different regions. This study examines the factors affecting production efficiency by using province-level data for the period 2006-2015 by applying spatial Tobit model and translog production function approach. Results show that Chaharmahal and Bakhtiari and Khorasan Razavi Provinces, have the highest and lowest efficiency 0.63 and 0.09 respectively. Also, the results of spatial Tobit model estimation show that industrialization with a coefficient of 0.0018 has a positive and significant effect and increase of ratio of credits to production with a coefficient of 0.0013 has a negative and significant effect on the production efficiency of provinces. In addition, the spillover effects of industrialization and the ratio of credits are -0.0104 and 0.0042 respectively. Therefore basic development of industry and allocation of resource on the relative advantage is one of the most important factors for improving the production efficiency and increasing economic growth.

Keywords

• spatial effects production efficiency industrialization tobit