Total Factor Productivity and Technical Efficiency of Indian Manufacturing: The Role of Infrastructure and Information & Communication Technology
AbstractDrawing on a recent dataset of the Indian manufacturing industry for 1994 to 2008, this paper shows for eight sectors that core infrastructure and Information & Communication Technology (ICT) matter for Total Factor Productivity (TFP) and Technical Efficiency (TE).In the analysis, we use a range of advanced estimation techniques to overcome problems of non-stationary, omitted variables, endogeneity and reverse causality (such as System-GMM, panel cointegration and FMOLS). Estimation results suggest that the impact of core infrastructure is rather strong on TFP and TE (elasticity of 0.32 and 0.17 respectively), while the effect of ICT appears slightly smaller (0.12 and 0.08, respectively). This finding is of particular importance in the Indian context of infrastructure bottlenecks. It strongly supports the idea that a lack of infrastructure can hamper growth in developing countries. Our results also reveal that the impact of infrastructure and ICT varies among the industries. Interestingly, Transport Equipments, Metal & Metal Products and Textile, which are sectors relatively more exposed to foreign competition, are also found to be more sensitive to infrastructure endowment. This result can be extended to the Chemical industry for TE. This finding implies that improving core and ICT infrastructure would proportionally benefit more to these sectors, which could play a leading role in the competitiveness and the industrial growth of the Indian economy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CERDI in its series Working Papers with number 201115.
Date of creation: 2011
Date of revision:
infrastructure; Manufacturing Industry; India; Information and Communication Technology; total factor productivity; Technical efficiency;
Other versions of this item:
- Arup Mitra & Chandan Sharma & Marie-Ange Veganzones, 2011. "Total Factor Productivity and Technical Efficiency of Indian Manufacturing: The Role of Infrastructure and Information & Communication Technology," Working Papers halshs-00597656, HAL.
- NEP-ALL-2011-06-11 (All new papers)
- NEP-ICT-2011-06-11 (Information & Communication Technologies)
- NEP-URE-2011-06-11 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Blundell, R. & Bond, S., 1995.
"Initial Conditions and Moment Restrictions in Dynamic Panel Data Models,"
104, Economics Group, Nuffield College, University of Oxford.
- Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
- R Blundell & Steven Bond, . "Initial conditions and moment restrictions in dynamic panel data model," Economics Papers W14&104., Economics Group, Nuffield College, University of Oxford.
- Richard Blundell & Steve Bond, 1995. "Initial conditions and moment restrictions in dynamic panel data models," IFS Working Papers W95/17, Institute for Fiscal Studies.
- Garcia-Mila, Teresa & McGuire, Therese J & Porter, Robert H, 1996.
"The Effect of Public Capital in State-Level Production Functions Reconsidered,"
The Review of Economics and Statistics,
MIT Press, vol. 78(1), pages 177-80, February.
- Teresa Garcia-Milà & Therese J. McGuire & Robert H. Porter, 1993. "The effect of public capital in state-level production functions reconsidered," Economics Working Papers 36, Department of Economics and Business, Universitat Pompeu Fabra.
- M Arellano & O Bover, 1990.
"Another Look at the Instrumental Variable Estimation of Error-Components Models,"
CEP Discussion Papers
dp0007, Centre for Economic Performance, LSE.
- Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
- Syed A. Basher & Mohammed Mohsin, 2003.
""PPP tests in cointegrated panels: Evidence from Asian developing countries","
- Syed Abul Basher & Mohammed Mohsin, 2004. "PPP tests in cointegrated panels: evidence from Asian developing countries," Applied Economics Letters, Taylor & Francis Journals, vol. 11(3), pages 163-166.
- Syed Abul Basher & Mohammed Mohsin, 2002. "Ppp Tests In Cointegrated Panels: Evidence From Asian Developing Countries," Working Papers 2002_05, York University, Department of Economics.
- Syed A. Basher & Mohammed Mohsin, 2003. ""PPP tests in cointegrated panels: Evidence from Asian developing countries"," Macroeconomics 0310013, EconWPA.
- Bronwyn H. Hall & Jacques Mairesse, 1992.
"Exploring the Relationship Between R&D and Productivity in French Manufacturing Firms,"
NBER Working Papers
3956, National Bureau of Economic Research, Inc.
- Hall, Bronwyn H. & Mairesse, Jacques, 1995. "Exploring the relationship between R&D and productivity in French manufacturing firms," Journal of Econometrics, Elsevier, vol. 65(1), pages 263-293, January.
- G. Duggal, Vijaya & Saltzman, Cynthia & Klein, Lawrence R., 1999. "Infrastructure and productivity: a nonlinear approach," Journal of Econometrics, Elsevier, vol. 92(1), pages 47-74, September.
- David Canning & Peter Pedroni, 2008. "Infrastructure, Long-Run Economic Growth And Causality Tests For Cointegrated Panels," Manchester School, University of Manchester, vol. 76(5), pages 504-527, 09.
- Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
- Demetriades, Panicos O & Mamuneas, Theofanis P, 2000. "Intertemporal Output and Employment Effects of Public Infrastructure Capital: Evidence from 12 OECD Economics," Economic Journal, Royal Economic Society, vol. 110(465), pages 687-712, July.
- Bhaumik, Sumon K. & Zhou, Ying, 2014.
"Do Business Groups Help or Hinder Technological Progress in Emerging Markets? Evidence from India,"
IZA Discussion Papers
7885, Institute for the Study of Labor (IZA).
- Sumon K. Bhaumik & Ying Zhou, 2014. "Do business groups help or hinder technological progress in emerging markets? Evidence from India," William Davidson Institute Working Papers Series wp1066, William Davidson Institute at the University of Michigan.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vincent Mazenod).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.