Abstract
Purpose The data used in this study is for the period 19802000. Almost midway through this period in 1992, the Kenyan government liberalized the sugar industry and the role of the market increased, while the government's role with respect to control of prices, imports and other aspects in the sector declined. This exposed the local sugar manufacturers to external competition from other sugar producers, especially from the COMESA region. This study aims to find whether there were any changes in efficiency of production between the two periods pre and postliberalization. Designmethodologyapproach The study utilized two methodologies to efficiency estimation data envelopment analysis DEA and the stochastic frontier. DEA uses mathematical programming techniques and does not impose any functional form on the data. However, it attributes all deviation from the mean function to inefficiencies. The stochastic frontier utilizes econometric techniques. Findings The test for structural differences in the two periods does not show any statistically significant differences between the two periods. However, both methodologies show a decline in efficiency levels from 1992, with the lowest period experienced in 1998. From then on, efficiency levels began to increase. Originalityvalue To the best of the authors' knowledge, this is the first paper to use both methodologies in the sugar industry in Kenya. It is shown that in industries where the noise error term is minimal such as manufacturing, the DEA and stochastic frontier give similar results.