Surviving or thriving: Efficiency level of production units and its determinants in Madagascar: A heterogeneous sector

r4d Working Paper 2016/7 by Paul Gérard Ravelomanantsoa, Ida Rajaonera and Faly Rakotomanana

ABSTRACT: The main objectives of this study are to analyse the technical efficiency level in these activities and to identify its determinants. The technical efficiency of production units is partly the result of factors related to the economic environment, and partly of specific factors of production units. It has shown that the current efficiency level of informal production units in Madagascar is very low. With the same factors of production they are currently using, they could increase by more than 60% of their production level. On the one hand, too narrow market dominated by low household purchasing power is the main obstacles to the development of these activities. On the other hand, supply constraints such as difficult access to credit and lack of training affect negatively the efficiency level.