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Firm Efficiency in

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Applying a frontier analysis to 2004 firm‐level data, the present paper investigates firm efficiency and its determinants for Cambodia's garment industry. The study finds that firm experience and remuneration are crucial for improving scale efficiency and overall technical efficiency, while effective use of capital and adequate labor‐skill development are important for enhancing a firm's technical capabilities. Foreign‐owned enterprises with a relatively larger share of foreign labor outperform local firms. However, the present study does not reveal evidence of any advantages of a cluster‐type concentration in Phnom Penh and export markets, nor of any positive impacts of product specialization. The findings imply a need to support skill development for workers and local managers at the middle management level, and to streamline foreign direct investment measures to attract greater numbers of efficient foreign enterprises, so as to promote the development of the garment industry as a whole.
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Document Type: Research Article

Publication date: December 1, 2012

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