Restructuring and Measurement of Efficiency in Firms in Transition

In this paper we try to explain some restructuring patterns of Czech textile and clothing industries from a microeconomic point of view. We introduce two measures of production efficiency (the technical and the allocative efficiency) and look at changes in the behaviour of enterprises. In 1994, after the chaos during the culmination of transition (1991-92), firms’ profits showed the first signs of dependency on efficiency. This fact can be taken as evidence of the creation of a competitive environment and a signal that long-term restructuring has led to economic patterns characteristic for standard market economies.Transition, Efficiency, Production function, Capital hoarding, Czech Republic