Technological Disruption, Ease of Doing Business, and Manufacturing Resilience: A Study of Competitiveness and Efficiency in Developing Countries

This research aimed to analyze the determinants of efficiency and competitiveness in the manufacturing sector, encompassing GDP per capita, ease of doing business, technology, and several variables indicative of governance quality, such as corruption control and government effectiveness. Competitiveness in this study is measured using the concept of Revealed Comparative Advantages (RCA) introduced by Balassa (1965) employing Panel Corrected Standard Error (PCSE) estimation technique. Simultaneously, manufacturing efficiency is gauged utilizing the Data Envelopment Analysis (DEA) method, a nonparametric approach applied to compute the efficiency of a group of decision-making units (DMU). The findings reveal that GDP per capita, Technology, Government Governance Index, and Nominal Exchange Rate significantly and positively influence RCA. Conversely, Ease of Doing Business is found to exert a significant negative impact on RCA. Furthermore, the DEA efficiency scores indicate values of 1 for several African countries, including the Democratic Republic of Congo, Eswatini, and Burundi, and also find high efficiency in certain Asian countries such as China, Thailand, Malaysia, and Indonesia. Efficient allocation of capital (Gross Fixed Capital Formation) and labor (Labor Force in the Industrial Sector) optimizes output (Manufacturing Share of GDP). This study holds implications for enhancing the driving factors of competitiveness and optimizing efficiency in the manufacturing sector across developing countries worldwide.