TECHNICAL EFFICIENCY OF NATURAL RUBBER PRODUCTION IN HAINAN STATE-OWNED RUBBER ENTERPRISE

This paper examines the Technical Efficiency (TE) of natural rubber production in the Hainan state-owned rubber enterprise and the factors influencing inefficiency. In particular, Stochastic Frontier Analysis (SFA) is employed to quantitatively analyse the study, aiming to understand possible issues and ongoing developments in the production process. Accordingly, the results indicate a continuous TE decline in the Hainan state owned rubber enterprise, with an average efficiency level measured at 90.4% since 1986. Factors such as workers’ education and rubber trees per area significantly contribute to the technical inefficiency. At the same time, the study reveals that an increase in tree density increases TE and thus increases rubber production. Moreover, the study unexpectedly reports that increasing workers’ education could increase technical inefficiency, highlighting that higher education is often associated with increased knowledge, skills, and critical thinking abilities. However, it does not guarantee better job performance in all cases. Therefore, the Hainan state-owned rubber enterprise should provide the workers with enough on-the-job training.