The purpose of this study is to identify the sources of technical efficiency in the iron and steel industry for the 23 countries using a time-varying stochastic frontier model. The empirical results show that POSCO and NIPPON STEEL marked the highest in technical efficiency among the 52 companies during the study period of 1978-1997: POSCO and NIPPON STEEL achieved, on the average, 96 and 95 percents of their potential output, respectively.USX, once the leading company in the iron and steel industry, achieved only 88 percents due to the sudden drop of efficiency in the early 80`s.
It is also found that the average age of facilities is negatively related to technical efficiency and the share of production in the western world for inspecting economies of scale is positively related. In addition, the findings of the paper suggest significant impact of firm ownership (private or public) on technical efficiency. A privatization policy is also found to be effective for improving efficiency in the iron and steel industry.