The purpose of this study is to estimates technical efficiency of Thai footwear and leather industry in five target products: finished leather, leather shoes, sport shoes, handbags with outer surface of leather and trunks, suit-cases and similar con-tainers with outer surface of leather. Using a Translog stochastic production frontier the research examines firm level technical efficiency in the time varying inefficiency effect model with technical inefficiency effects assumed as an independently distributed truncated normal variable. Estimates of the production frontier revealed capital intensive for finished leather, sport shoes and handbags with outer surface of leather products but labour intensive for leather shoes and trunks and suit-cases leather products, and increasing in rate of technical progress for two target products: leather shoes and sport shoes, but decreasing for three target products: finished leather, handbags leather and trunks and suit-cases leather. Estimated coefficients of the explanatory variables for inefficiency effects indicated that technical efficiency varied significantly according to firm’ age, size, capital intensity, ratio of non-production to total workers, ratio of total exports of a firm to aggregate output, ratio of R&D expenditures to total expenditures and type of firm dummy. Predicted firm specific efficiency varied from 0.8 percent to 100 percent and mean efficiency ranged between 18 to 67.7 percent.
