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Efficiency, technological progress and regional comparative advantage: a study of the organized manufacturing sector in India

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  • Dipa Mukherjee

    (Department of Economics, Narasinha Dutt College, Howrah, West Bengal)

  • Rajarshi Majumder

    (Department of Economics, University of Burdwan, West Bengal)

Abstract

Technological upgrading and increases in capital intensity have been championed in the organized manufacturing sector in India on the grounds that such measures improve productivity, efficiency and competitiveness. In a developing economy, these are costly propositions. Also, the effect of technological changes on productivity and efficiency levels must be estimated before implementing such policies. This paper seeks to estimate trends in factor productivity, technological progress and technological efficiency in the manufacturing sector in India and examines the relative importance of each component. It is observed that technical efficiency was moderate in the period studied, showing declines in the 1990s. Substantial disparity exists among regions and product groups regarding efficiency, technological progress and efficiency changes. It is found that increasing capital intensity was associated with falling productivity, efficiency and technological deceleration in the 1990s. Wider diffusion of technology, rather than greater capital use, is thus recommended for increasing productivity. A regional efficiency matrix is also provided to help states focus on the specific areas in which they have comparative advantages.

Suggested Citation

  • Dipa Mukherjee & Rajarshi Majumder, 2007. "Efficiency, technological progress and regional comparative advantage: a study of the organized manufacturing sector in India," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 14(2), pages 23-54, December.
    • Handle: RePEc:unt:jnapdj:v:14:y:2007:i:2:p:23-54
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    More about this item

    Keywords

    Productivity; Technical Efficiency; Technological Progress; Organised Manufacturing; Diffusion; Regional Comparative Advantage;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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