Economic Reforms and Total Factor Productivity Growth of Indian Manufacturing: An Inter-State Analysis (original) (raw)
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ECONOMIC REFORMS AND PRODUCTIVITY GROWTH IN INDIAN MANUFACTURING SECTOR – AN INTER STATE ANALYSIS
The present paper endeavors to analyze the TFP growth trends in Indian manufacturing sector at both aggregated and disaggregated interstate levels. Using the Malmquist productivity index for panel dataset of 16 major industrial state over a period of 29 years spanning over 1979-80 to 2007-08, the study observed manufacturing sector of India is growing with 9.1 percent per annum growth of Total Factor Productivity (TFP) during the entire study period. Out of Sixteen Industrial states there are five states namely Uttar Pradesh, Madhya Pradesh, Gujarat, Orissa and Rajasthan where double digit TFP growth has been noticed. The manufacturing sector of Uttar Pradesh is growing with highest TFP growth at the rate of 12.8 percent per annum followed by Madhya Pradesh with TFP growth of 11.8 percent per annum. The analysis of the sources of the TFP growth in Indian manufacturing sector reveals that both technical progress and technical change are equally contributing TFP growth in sector under evaluation. It has also been observed that at all India level efficiency change is greater than technical progress.
Productivity Change in Indian Manufacturing: A Comparison of Pre Reform and Post Reform Period
ANUSANDHAN – NDIM's Journal of Business and Management Research
The economic reforms were initiated in 1991 as part of the structural adjustment programme in India. It constituted of the three-pronged approach of Liberalization, Privatization and Globalization to boost investment, production and productivity in the economy. This paper attempts to analyse the trend of, technical efficiency, technological change and TFP growth in the Indian manufacturing sector during 1981-82 to 2011-12. The period up to 1990-91 is considered as pre-reform while the subsequent period is regarded as post-reform. The data used in this study for calculating productivity and its various components have been sourced from the Annual Survey of Industries (ASI) for the relevant years. The manufacturing sector is modelled as an industry producing a scalar output measured by the gross value added at constant prices by employing two-factor inputs namely labour and capital. Data Envelopment Analysis based Malmquist Index has been calculated to arrive at the estimates of techn...
Growth and spread of manufacturing productivity across regions in India
SpringerPlus, 2013
An expected outcome of economic reforms in India is enhanced pace of industrialization with manufacturing sector playing a crucial role by increasing its share in output via higher investments and increased productivity. This process of industrialization was also expected to usher in possibilities for the slow growing states to catch up with the fast growing ones. This paper assesses the extent of regional manufacturing performance in India by analyzing the trends in labour and total factor productivity for the organized manufacturing sector of 15 major Indian states. Data Envelopment Analysis is used to compute Malmquist total factor productivity index and its components. The results indicate that labour productivity diverges in the reform era and its growth and TFPG follow more or less a similar pattern. The study also finds that growth in productivity vary considerably across states and this variation in productivity growth can be explained, to a great extent, by differences in i...
International Journal of Business Analytics and Intelligence, 2020
The study estimates and decomposes the sources of total factor productivity growth (TFPG) of the 2-digit manufacturing industries as well as total manufacturing industry in 15 major industrialized states in India as well as in All-India during the period from 1981-82 to 2010-11 (total study period), pre-reform period (1981-82 to 1990-91), post-reform period (1991-92 to 2010-11) and for two decades of the post-reform period (i.e., 1990-91 to 2000-01 and 2001-02 to 2010-11), using stochastic frontier production function. The methodology necessitates decomposition of the sources of TFPG into technological change, technical efficiency change, allocation efficiency change and scale change. The main findings of our decomposition are that the growth rates of TFP in most of the 2-digit industries in the major industrialized states in India as well as in All-India have declined during the post-reform period. Also, this decline in TFPG is mainly accounted for by the decline in technical efficiency change and allocation efficiency effect that happened during that period. With respect to scale effect, its contribution to TFPG in the 2-digit industries in the major industrialized states has become very negligible although the manufacturing industries of different states under study and India as a whole have benefitted from economies of scale. The behaviour of the allocation efficiency component clearly indicates inefficient resource allocation in almost all the 2-digit industries under study during the post-reform period. This implies that liberalization of the economy during the post-reform period has increased the price distortion measured by the gap between price and marginal cost of the product of 2-digit manufacturing industries in the major industrialized states in India and in All-India as well. However, the rates of technological progress of almost all the 2-digit industries in most of the states under study have increased. Notwithstanding, as the combined effect of technical efficiency change and allocation efficiency change of these industries outweigh the joint effect of scale change and technological change of the same, TFPG of these industries has declined during the post-reform period.
2010
This article studies the effects of the economic reforms on the Indian manufacturing industries. Data Envelopment Analysis was used to estimate technical and scale efficiency changes after the 1991 reform initiatives. The estimates suggest, however, that the efficiency of manufacturing industries declined during the post-reform era. The variations are different across industries, and the findings demonstrate the importance of technological progress for improving manufacturing efficiency and productivity in India.
The Indian Economic Journal, 2011
The paper measures Malmquist Productivity Index (MPI) of Total Factor Productivity Growth (TFPG) of 14 manufacturing industries using non-parametric Data Envelopment Analysis (DEA), considering three-digit Annual Survey of Industries data of West Bengal as a case study. Decomposition of MPI reveals that technical change is the prime source of productivity increase and taking all the industries together, the average TFPG is exhibited as 3.38 per cent per annum. Second-stage regression analysis highlights absence of unanimous relationship within industry groups. Individual TFPG varies with industry-specific characteristics like firm size, capital-labour ratio, employees per production worker, real wage and its change. Tradeliberalisation, as reflected through lowering of tariff and relative adjustment of real effective exchange rate, has contributed positively to TFPG. The study highlights the need for adopting industry-specific policies for fostering TFPG.
This article studies the effects of the economic reforms on the Indian manufacturing industries. Data Envelopment Analysis was used to estimate technical and scale efficiency changes after the 1991 reform initiatives. The estimates suggest, however, that the efficiency of manufacturing industries declined during the post-reform era. The variations are different across industries, and the findings demonstrate the importance of technological progress for improving manufacturing efficiency and productivity in India.
Are reforms productive? Explaining productivity and efficiency in the Indian manufacturing
2012
India's economic liberalization in the 1990s provides scope for research on the effect of policy reforms on economic performance. This paper addresses the question of some of these policy changes and their impact on firms' productivity and efficiency. We test specifically the role of export, import (total, intermediary and capital goods), R&D, technology transfer and infrastructure endowment over the period 1994-2008. Result of the analysis suggests that infrastructure is a crucial determinant of manufacturing performance in India. This is true for a wide range of variables such as transport, energy and information & communication technology (ICT). This result is important in the Indian context of infrastructure bottlenecks. Empirical results also suggest that knowledge transfers through exports are more important than through imports. Other findings indicate that R&D is not a productivity-enhancing activity in India and that firms rely more on purchase of foreign technology. This outcome does not come as a surprise because Indian firms are known for low in-house research and innovation-oriented activities.