Comparison of stochastic frontier approaches for estimating national efficiency: An application to sub-Saharan African countries

Abstract

In this paper, we attempt to estimate pure national (technical) efficiency for 19 SSA countries over the 1960-2010 periods. In doing this, we compare conventional stochastic frontier models for panel data with a number of recently developed models which seek to control for unobserved heterogeneity in the inefficiency component. We find that the ¡®true¡¯ random effects model that treats unobserved heterogeneity in our national dataset generates more reasonable efficiency estimates. Moreover the results confirm that most SSA countries operate far from the efficient frontier.