Some of the factors which determine the efficient use of scarce resources in industrial development are: the size of firms in the industry [I ;10 and 22], the type of technology – ‘sophisticated’ or ‘traditional’ – used in the production process [9; 18; 19 and 21] , availability of skilled manpower [7] ,depth of the entrepreneurial talent [2; 6 and IS}, and judicious policies regarding industrial location [20). In the discussion that follows we attempt to quantify the impact of these factors on firm efficiency, using evidence from Pakistan.