(jit) principles and systematic layout planning as tools to improve ...

period against the best-practice technology of another period. This study's
estimates represent the inverse of the technology index defined by Equation
(3), so a number greater than 1.0 represents an improvement in productivity
due to technical change (Arnade, 1994). Index numbers are defined so that
the 1983 observation equals 1.0. A Malmquist productivity index are
calculated from a combination of technical efficiency change indices and
technical change indices. The estimated indices represent the inverse of
Malmquist index described in Equation (1), so production improvements are
greater than 1.0.
The Malmquist index indicates a 2.83 percent annual productivity growth
rate. This suggests that in 1993, chemical and related product manufacturing
industries produce about 28.9 percent as much output per unit of resource
consumed as they were produced 11 years earlier. The decomposition of
Malmquist index helps to guide the measured productivity increase. The
results indicate that during the overall period under investigation, an
improvement in productivity efficiency occured. Over the period the
technical change increased productivity by 2.80 percent per annum.
However, there appears to be no trend in the rate of technical efficiency
change. Figure 3 plots the weighted mean Malmquist index over the period
and further disaggregate into output weighted technical efficiency change
and technical change indices. It is immediately apparent that virtually all of
the observed productivity growth is associated with the technical change
effect as the industry moves out to a new frontier. From the illustrative trend
in Figure 3 it appears that the trend rate of productivity growth accelerated
significantly after 1988, that is after recession time.
Table 9 shows the productivity and its component indices for the chemical
subsectors according to their MIC codes. The annual average productivity as
measured by the Malmquist index for all subsectors in the chemical
industries recorded an improvement in productivity. This increase of 1.13 per
cent showed that production processes in the chemical industry had increased
by 113 per cent if compared to the base year. Looking at the individual subsectors,
it can be seen that drugs and medicines (35220) showed the highest
productivity by registering an index of 1.39. Next is the plastics products
(35600) with 1.25, chemical products (35290) with 1.21 and crude oil
(35300) with an index of 1.14. All the other sub-sectors were on average
productive at an index of 1.0 with the exception of industrial gases which
registered 0.88. Thus, industrial gases declined in productivity by as much as
20 per cent if compared to the base year.
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