The Impact of Ethiopian Intervention Economic Policies on Cost Efficiency in State Owned Enterprises: Application of a Data Envelopment Analysis Approach on Ethio-Telecom from 2007 to 2015
No Thumbnail Available
Date
2019-05
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
The role of government in the economy is contentious issue to date. In due, following EPRDF’s announcement of recent massive privatization policy of huge SOE; the issue again becomes argumentative. Thus, the researcher tries to evaluate merits and demerits of incumbent massive privatization policy decision by investigating the impact of intervention economic policy on cost efficiency of ethio telecom. Along with, the research has also an objective of identifying sources of efficiency and indicating alternative paths for improvement. The study used secondary panel data of three decision making units for years between 2007 and 2015G.C.To attain these research objectives in ontologically, positivist research philosophy is designed and aligned with research techniques. Moreover, data is collected using cluster sampling techniques. Also, the research employed a non-parametric linear programing model called Cost efficiency Data Envelopment Analysis to analyses impact of intervention economic policy via comparing cost efficiency scores of DMU which are owned privately and operate in a competitive market structure (Vodacom and Sfaricom) with state owned monopoly (ethio telecom).The study has found outputs which depicts that ethio telecom is in efficient by 32% as compared to a benchmark operator —Vodacom. Also, source of inefficiency is aroused from allocative inefficiency as compared to technical efficiency since cost in efficiency which arises from technical inefficiency is only 11% whereas cost inefficiency that arises from allocative in efficiency amounts as high as 32%. Furthermore, slack movements has recommended input adjustment to reduce capital expenditure by 241.9 million USD and employee number by 4,297 whereas to be increase total asset by 7.9 million USD on average to attain 94% cost efficiency realized by Vodacom — which a bench mark operator. Thus, Based on research findings and theoretical triangulation, the researcher extends the following policy recommends; ethio telecom to realize the level of efficiencies achieved by Vodacom and Sfaricom, the government doesn’t only has to privatize but also transcend the market from monopoly structure to competitive market structure.
Description
A Thesis Submitted to Department of Public Management and Policy of Addis Ababa University in partial fulfillment of the requirements for the Degree of Masters in Public Management and Policy (MPMP)
Keywords
Cost efficiency, Ethio telecom, Intervention policy, Monopoly