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Infrastructure, ICT and Firms’ Productivity and Efficiency: An Application to the Indian Manufacturing

Author

Listed:
  • Arup Mitra

    (IEG - Institute of Economic Growth - University of Delhi Enclave)

  • Chandan Sharma

    (IIM Lucknow - Indian Institute of Management Lucknow)

  • Marie-Ange Véganzonès-Varoudakis

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper highlights the role of infrastructure and information and communication technology (ICT) in the context of total factor productivity (TFP) and technical efficiency (TE) of the Indian manufacturing sector for the period 1994– 2008. We use advanced estimation techniques to overcome problems of non-stationary, omitted variables, endogeneity and reverse causality by applying fully modified OLS, panel co-integration and system GMM. Estimation results suggest that the impact of infrastructure and ICT is rather strong. Interestingly, sectors exposed relatively more to foreign competition (e.g. Transport Equipment, Textile, Chemicals, Metal and Metal Products) are more sensitive to infrastructure deficiencies. This finding implies that improving infrastructure and ICT would benefit these sectors to a large extent, thus contributing to India's competitiveness. This outcome is of particular importance in the context of infrastructure bottlenecks in India.

Suggested Citation

  • Arup Mitra & Chandan Sharma & Marie-Ange Véganzonès-Varoudakis, 2016. "Infrastructure, ICT and Firms’ Productivity and Efficiency: An Application to the Indian Manufacturing," Post-Print halshs-01241639, HAL.
    • Handle: RePEc:hal:journl:halshs-01241639
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