The Assessment of the Impact of Efficiency on Value Added in Selected Industrial Units of Iran (Case Study: Enterprises with 10 or More Employees)

Document Type : applicative

Authors

1 Department of Economic, Ke.C., Islamic Azad University, Kerman, Iran.

2 Department of Economic, Ke.C., Islamic Azad University, Kerman, Iran

10.30473/jier.2026.75832.1513

Abstract

This study investigates the impact of technical, economic, and allocative efficiency indices on the value added of selected industrial workshops with ten or more employees in Iran. Panel data were collected for the period 2011–2021, covering 24 industrial subsectors based on the ISIC classification, using statistics from the Industrial Survey of the Statistical Center of Iran. A stratified sampling method was applied, and the sample size was determined using Cochran’s formula. Four subsectors with the highest shares in employment and value added—namely food products, beverages, apparel, and textiles—were selected for detailed analysis. Efficiency indices were derived using the Stochastic Frontier Analysis (SFA), while the dynamic short-run and long-run relationships were examined through the Autoregressive Distributed Lag (ARDL) model. The estimation results indicate that all three efficiency measures exert a positive and significant effect on value added in the long run, with technical and economic efficiency playing the most influential roles in enhancing industrial performance. In the short run, the effects remain positive but weaker. The negative and significant error correction term confirms the existence of a stable equilibrium relationship between efficiency and value added across industrial subsectors. Furthermore, the coefficients of capital (0.47) and labor (0.39) underscore the essential role of these factors in production and economic growth. Overall, the findings, which align with economic theories of production, emphasize the necessity of policies aimed at improving efficiency, investing in infrastructure, and developing human capital as key drivers of industrial performance in Iran.

Keywords

Main Subjects

References

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Journal of Industrial Economics researches
Volume 9, Issue 33
October 2025

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History

  • Receive Date: 16 September 2025
  • Revise Date: 22 December 2025
  • Accept Date: 12 March 2026

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