Efficiency and productivity of the cement industry: Pakistani experience of deregulation and privatisation

• We evaluate the post privatisation productivity of the Pakistani cement industry.
• Firms on average became less efficient in the post - privatisation period.
• Privatisation had a positive effect on productivity due to technological progress.
• Improvement in productivity could be linked to better economic conditions.

This study evaluates the impact of privatisation on efficiency and productivity of the Pakistani cement industry. To address some of the serious concerns about the problem of dimension and outlier, we use a newly developed unconditional hyperbolic α-quantile estimator of Wheelock and Wilson to estimate efficiency (Wheelock DC, Wilson PW. Non-parametric, unconditional quantile estimation for efficiency analysis with an application to Federal Reserve check processing operations. Journal of Econometrics; 2008: 209–25). Subsequently, we use these efficiency estimates to calculate the Malmquist productivity growth and its components. The results show that deregulation and privatisation had the desired positive effect on productivity growth due to technological progress. We conclude that this improvement in the post reform period could be linked to political stability, improved economic conditions and a competitive industry.