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Productivity, Energy Intensity and Output: A Unit Level Analysis of the Indian Manufacturing Sector

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  • Santosh Kumar Sahu

    (Madras School of Economics)

  • Himani Sharma

    (Madras School of Economics)

Abstract

The objective of this study is to calculate total factor productivity and determine factors related to energy intensity for the pre-existing manufacturing plants in India, using data from the annual survey of industries from 2002 to 2008. We use Levinsohn and Petrin (Rev Econ Stud 70:317–342, 2003) technique to estimate total factor productivity. The results indicate that most of the industries achieved positive TFP growth except a few, and thus, within plant efficiency exists in the Indian manufacturing sector. In case of determinants of energy intensity, we found plants with higher TFP and higher output are energy efficient. Also, there exists a nonlinear relationship between energy intensity and output, which validates the productivity dilemma hypothesis for the Indian manufacturing sector.

Suggested Citation

  • Santosh Kumar Sahu & Himani Sharma, 2016. "Productivity, Energy Intensity and Output: A Unit Level Analysis of the Indian Manufacturing Sector," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 14(2), pages 283-300, December.
    • Handle: RePEc:spr:jqecon:v:14:y:2016:i:2:d:10.1007_s40953-016-0034-7
    DOI: 10.1007/s40953-016-0034-7
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    References listed on IDEAS

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    1. Mr. Bulent Unel, 2003. "Productivity Trends in India's Manufacturing Sectors in the Last Two Decades," IMF Working Papers 2003/022, International Monetary Fund.
    2. B.N.Goldar, 2004. "Productivity trends in Indian manufacturing in the pre- and post- reform periods," Indian Council for Research on International Economic Relations, New Delhi Working Papers 137, Indian Council for Research on International Economic Relations, New Delhi, India.
    3. Sahu, Santosh & Narayanan, K, 2009. "Determinants of Energy Intensity: A Preliminary Investigation of Indian Manufacturing," MPRA Paper 16606, University Library of Munich, Germany.
    4. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    5. Goldar, Bishwanath, 1986. "Import Substitution, Industrial Concentration and Productivity Growth in Indian Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 48(2), pages 143-164, May.
    6. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    7. Theodore Papadogonas & John Mylonakis & Demosthenes Georgopoulos, 2007. "Energy consumption and firm characteristics in the Hellenic manufacturing sector," International Journal of Energy Technology and Policy, Inderscience Enterprises Ltd, vol. 5(1), pages 89-96.
    8. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 70(2), pages 317-341.
    9. Albert Bollard & Peter Klenow & Gunjam Sharma, 2013. "India's Mysterious Manufacturing Miracle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 59-85, January.
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    Cited by:

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    2. Haider, Salman & Mishra, Prajna Paramita, 2021. "Does innovative capability enhance the energy efficiency of Indian Iron and Steel firms? A Bayesian stochastic frontier analysis," Energy Economics, Elsevier, vol. 95(C).
    3. Paul, Bino & Patnaik, Unmesh & Sahu, Santosh Kumar & Awasthi, Mansi, 2020. "What Does Increasing Labour Homogeneity Mean for Indian Manufacturing?," MPRA Paper 102904, University Library of Munich, Germany.
    4. Santosh Kumar Sahu & Prantik Bagchi & Ajay Kumar & Kim Hua Tan, 2022. "Technology, price instruments and energy intensity: a study of firms in the manufacturing sector of the Indian economy," Annals of Operations Research, Springer, vol. 313(1), pages 319-339, June.
    5. Haider, Salman & Danish, Mohd Shadab & Sharma, Ruchi, 2019. "Assessing energy efficiency of Indian paper industry and influencing factors: A slack-based firm-level analysis," Energy Economics, Elsevier, vol. 81(C), pages 454-464.
    6. Kawaljeet Kaur & Swati Mehta, 2023. "Modes of Technology Accumulation, Total Factor Productivity and Indian Manufacturing Sector: Firm-Level Analysis," Journal of South Asian Development, , vol. 18(1), pages 7-43, April.
    7. Prantik Bagchi & Santosh Kumar Sahu, 2020. "Energy Intensity, Productivity and Pollution Loads: Empirical Evidence from Manufacturing Sector of India," Studies in Microeconomics, , vol. 8(2), pages 194-211, December.
    8. Alokesh Barua & Bishwanath Goldar & Himani Sharma & Priyanta Ghosh, 2017. "Do Technological Conditions of Production Explain Industrial Growth? The Indian Manufacturing, 1998–1999 to 2007–2008," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 15(3), pages 509-541, September.

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    More about this item

    Keywords

    Total factor productivity; Energy intensity; Indian manufacturing sector;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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