A nonparametric approach to productive efficiency measurement : an application of bootstrap DEA to gold mining

Mutemererwa, Anderson Mufudzi

Abstract

In this dissertation the technical efficiency in gold mining is investigated. To the best available knowledge, this is the first such study on gold mining, whether on a localised (one country) or for a cross-section of countries. Since the work by Farrell (1957), much work has been done using nonparametric methods such as DEA. Although extensions in DEA technique, such as bootstrapping have been available for some time, their use has been limited in comparison with the number of overall DEA studies carried out. In this dissertation both DEA and bootstrap DEA are applied to two gold mining cross sectional samples, one on Zimbabwe consisting of thirty-four mines, and the an international one which also included some Zimbabwean mines which comprise fifty-nine observations.

The main reason for carrying out the study is an interest in gold mining in general and its importance to Zimbabwe in particular. As will be noted in Chapter 2, the economic development of Zimbabwe has been linked, to a varying extent over the ages, to its growth of the gold mining sector.

The results of the dissertation provide some useful insights into the relative performances of gold mines and also some characteristics of the Zimbabwean gold mining sector. The main results indicate that gold mining is characterised mainly by technical efficiency dominating scale efficiency. This is particular relevant when the Zimbabwean mines are compared with their international counterparts. Zimbabwean mines are found to be relatively technically efficient but less so when overall efficiency is considered. In fact they have the lowest overall efficiency scores in the international sample. The results also indicate that mines from the so-called developed mining economies, Australia, Canada, the US and South Africa are the benchmarks in terms of optimal operations. It is mines from these countries which define the overall efficiency frontier.

The results of both the samples highlight potential shortcomings in applying DEA and bootstrap extension to gold mining, both for single country and for cross-country cases. Additionally, there are possibilities, with adequate data, of relating country-specific characteristics to differences in overall efficiency among countries.

Finally there are indications that including mineralogical factors such as the recovery rate in the production technology has an effect on technical efficiency. Mines with low recovery rates tend to exhibit comparatively higher technical efficiency. The study does have some limitations, mainly because of lack of data. In particular, there were problems in coming with attributing the contribution of capital services to efficiency with the result that a different measure for the flow of capital services is used for each sample. In addition, the two samples are for different time periods. This limits comparative analysis.

Citation

Mutemererwa, A. M. (2007). A nonparametric approach to productive efficiency measurement : an application of bootstrap DEA to gold mining. (Thesis). University of Hull. Retrieved from https://hull-repository.worktribe.com/output/4217755

• Thesis Type: Thesis
• Deposit Date: Mar 9, 2016
• Publicly Available Date: Feb 23, 2023
• Keywords: Business
• Public URL: https://hull-repository.worktribe.com/output/4217755
• Additional Information: Business School, The University of Hull
• Award Date: Feb 1, 2007