LABOR-PRODUCTIVITY DIFFERENCES IN THE TEXTILE-INDUSTRY

An investigation is reported in which a CES production function was employed to assess differences in labor productivity in the textile industry between countries. Data for 30 countries from 1973 through 1982 were used for the analysis. The differences in labor productivity between countries were decomposed into two factors: efficiency and factor proportions. The results indicated that efficiency was more important than factor proportions. The average efficiency of the developed countries as a group ranged from 63 to 76% of U.S. efficiency compared with values of 98 and 100% for factor proportions. The average efficiency of the developing countries as a group ranged from 21 to 25% of U.S. efficiency compared with values of 88 and 90% for factor proportions. These findings indicate that efficiency levels were considerably higher in the developed countries than in the developing countries and that human capital and management were more important than physical capital in explaining labor-productivity differences between countries and groups of countries.