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Decomposition of total factor productivity growth: A regional analysis of Indian industrial manufacturing growth

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  • Kumar, Surender

    ()
    (National Institute of Public Finance and Policy)

Abstract

Total factor productivity (TFP) growth in industrial manufacturing is measured for 15 major Indian states for the period 1982-83 to 2000-01 using non-parametric linear programming methods. TFP growth is decomposed into efficiency and technological changes and also measure for the bias in technical change. The resulting information is used to examine whether the post-reform period shows any improvement in productivity and efficiency in comparison to the pre-reform one. Findings of the present exercise indicate the improvement in TFP. The recent change in TFP is governed by the technical progress in contrast to similar gain caused by the improvement in technical efficiency in the pre-reform regime. The technological progress in state manufacturing exhibited a capital using bias during the study period. Regional differences in TFP persist, although the magnitude of variation has declined in the post-reform period. Moreover, it is also found that there is a tendency of convergence in terms of TFP growth rate among Indian states during the post-reform years and only the states that were technically efficient at the beginning of the reform remain innovative.

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File URL: http://www.nipfp.org.in/working_paper/wp04_nipfp_022.pdf
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Bibliographic Info

Paper provided by National Institute of Public Finance and Policy in its series Working Papers with number 04/22.

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Length: 39
Date of creation: Dec 2004
Date of revision:
Handle: RePEc:npf:wpaper:04/22

Note: Working Paper 22, 2004
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Web page: http://www.nipfp.org.in

Related research

Keywords: Industry ; Industrial manufacturing ; Growth ; Total factor productivity;

References

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  1. Fare, Rolf, et al, 1997. " Biased Technical Change and the Malmquist Productivity Index," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(1), pages 119-27, March.
  2. R. Fare & Shawna Grosskopf & W-F Lee, 1995. "Productivity and Technical Change: The Case of Taiwan," GE, Growth, Math methods 9509001, EconWPA.
  3. Bulent Unel, 2003. "Productivity Trends in India's Manufacturing Sectors in the Last Two Decades," IMF Working Papers 03/22, International Monetary Fund.
  4. Subhash C. Ray, 2002. "Did India's Economic Reforms improve Efficiency and Productivity? A Nonparametric Analysis of the Initial Evidence from Manufacturing," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 37(1), pages 23-57, January.
  5. Grosskopf, S, 1986. "The Role of the Reference Technology in Measuring Productive Efficiency," Economic Journal, Royal Economic Society, vol. 96(382), pages 499-513, June.
  6. MA Hossain & ND Karunaratne, 2004. "Trade Liberalisation and Technical Efficiency: Evidence from Bangladesh Manufacturing Industries," Journal of Development Studies, Taylor & Francis Journals, vol. 40(3), pages 87-114.
  7. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
  8. Gopinath Pradhan & Kaustuva Barik, 2004. "Sustainability of Output Growth in Indian Manufacturing: A Decomposition Analysis of Selected Industries," Microeconomics 0405003, EconWPA.
  9. Weber, William L. & Domazlicky, Bruce R., 1999. "Total factor productivity growth in manufacturing: a regional approach using linear programming," Regional Science and Urban Economics, Elsevier, vol. 29(1), pages 105-122, January.
  10. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-98, October.
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Cited by:
  1. Chandan Sharma & Sanjay Sehgal, 2010. "Impact of infrastructure on output, productivity and efficiency: Evidence from the Indian manufacturing industry," Indian Growth and Development Review, Emerald Group Publishing, vol. 3(2), pages 100-121, October.
  2. Rajesh Natarajan & Malathy Duraisamy, 2008. "Efficiency and productivity in the Indian unorganized manufacturing sector: did reforms matter?," International Review of Economics, Springer, vol. 55(4), pages 373-399, December.
  3. Nitin Arora & Sunil Kumar, 2013. "Does Factor Accumulation or Productivity Change Drive Output Growth in the Indian Sugar Industry? An Inter-state Analysis," Contemporary Economics, University of Finance and Management in Warsaw, vol. 7(2), June.
  4. Yasemin Keskin Benli & Suleyman Degirmen, 2013. "The Application of Data Envelopment Analysis Based Malmquist Total Factor Productivity Index: Empirical Evidence in Turkish Banking Sector," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(2), pages 139-159, April.
  5. Bhaumik, Sumon Kumar & Kumbhakar, Subal C., 2010. "Is the post-reform growth of the Indian manufacturing sector efficiency driven? Empirical evidence from plant-level data," Journal of Asian Economics, Elsevier, vol. 21(2), pages 219-232, April.
  6. Kathuria, Vinish & Seethamma Natarajan, Rajesh Raj & Sen, Kunal, 2010. "Organized versus Unorganized Manufacturing Performance in India in the Post-Reform Period," MPRA Paper 20317, University Library of Munich, Germany.
  7. Kumar, Surender & Managi, Shunsuke, 2012. "Productivity and convergence in India: A state-level analysis," Journal of Asian Economics, Elsevier, vol. 23(5), pages 548-559.
  8. Shreekant Gupta & Surender Kumar & Gopal K. Sarangi, 2011. "Does Greater Autonomy Improve Performance? Evidence From Water Service Providers In Indian Cities," Working papers 205, Centre for Development Economics, Delhi School of Economics.
  9. Arnab K. Deb & Subhash C. Ray, 2013. "Economic Reforms and Total Factor Productivity Growth of Indian Manufacturing: An Inter-State Analysis," Working papers 2013-04, University of Connecticut, Department of Economics, revised Apr 2013.

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