Estimation comparison of the capacity utilisation at constant and non-constant returns to scale: the case of the Tunisian manufacturing sector

Helali Kamel, Maha Kalai and Mohamed Siala

International Journal of Computational Economics and Econometrics, 2016, vol. 6, issue 1, 56-70

Abstract: The capacity utilisation is a key indicator of a country's economic performance that measures the contribution of assets to the achievement of the output. Measurements of productivity growth are sensitive to the changes of this rate. Therefore, the existence of a capacity utilisation measure is not only useful to the formulation of the economic policy but also to the development of appropriate empirical measures to assess the national and sectoral economic performance. In Tunisia, like in any other developing country, the need to ensure a strong and sustainable economic growth has become a solution to many social problems that mortgage the country's future. From the estimated results of the capacity utilisation, we notice a significant under-utilisation of production capacity in the manufacturing sector. In addition, it seems that the economy, which is represented by a policy of inefficient technology resulting in non-constant returns to scale (NCRS) throughout the study period 1970-2008.

Keywords: capacity utilisation; returns to scale; economic performance; Tunisia; manufacturing industry; estimation comparison; developing countries; economic growth; production capacity. (search for similar items in EconPapers)
Date: 2016
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