Implementation of Constant Elasticity of Substitution Function and Data Envelopment Analysis: Productivity and Technical Efficiency of Large Industry Creative Economy in Craft Subsector Indonesia

  • Khusnudin Tri Subhi Zuhoran Badan Pusat Statistik Kabupaten Sigi
  • Budiasih STIS Polytechnic of Statistics
Keywords: CES Production Function, Data Envelopment Analysis, Productivity, Technical Efficiency, Total Factor Productivity


Indonesia has undergone a transformation from agriculture to the manufacturing industry in 1971-1997. In the 2001-2015 period there was de-industrialization in developed countries. Likewise, Indonesia which shows a decrease in the contribution of GDP and manufacturing sector workforce to the economy. However, deindustrialization in Indonesia is premature / too fast. One of the policies to overcome this problem is with attention to the creative industry. With the existence of the creative industry, it can achieve several SDGs goals, namely the 8th goal, namely decent work and economic growth, the creative economy can increase economic growth, create jobs and increase exports (UNCTAD, 2010). However, the creative industry GDP growth that is below the RPJMN target is thought to indicate low productivity of the creative industry. According to IBS data, the craft sub-sector creative industry has a low production value. To see productivity can use technical efficiency. This study aims to evaluate the technical efficiency of creative industry in the craft sub-sector as well as to analyze the trend of variables that affect technical judgments. The method used is the CES production function and Data Envelopment Analysis. The results show that industries that have high total production factor values have a tendency to have high technical efficiency values as well. Furthermore, those arranged according to technical categories and binary logistic regression are used to determine trend variables that affect technical judgments. The technical efficiency of the craft, significantly by wages, investment status and company scale.