On estimating efficiency differentials between the public and private sectors in a developing economy—Iraq

Abstract

This study compares the allocational and technical efficiency of private and public firms in three industries in Iraq. The Hicks-neutral index of technology is found to be lower in private firms than in public firms, while the ratio of the marginal product of labor to real wages is about unity in private firms but significantly more than unity in public firms. These findings imply that the public firms in Iraq tend to be more technologically efficient but less allocationally efficient than the private firms.