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Economic Reforms, Capacity Utilization, and Productivity Growth in Indian Manufacturing

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  • Arnab Deb

    (International Management Institute)

Abstract

In this study, we attempt to identify the channels through which economic reforms enhanced the productivity growth in total manufacturing sector in India. Because one possible channel is better utilization of plant capacity, we estimate capacity utilization rate in Indian manufacturing. Empirical estimates show that the annual average capacity utilization rate in Indian manufacturing was lower over the post-reform years. However, after the reforms capacity utilization rate grew faster at the all India level as well as for most of the major industrial states. Subsequent regression analysis confirms that there was evidence of a favorable impact of economic reforms on productivity growth in total manufacturing, beyond the positive impact of improved capacity utilization.

Suggested Citation

  • Arnab Deb, 2013. "Economic Reforms, Capacity Utilization, and Productivity Growth in Indian Manufacturing," Alumni working papers 2013-05, University of Connecticut, Department of Economics.
    • Handle: RePEc:uct:alumni:2013-05
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic Reform; Total Factor Productivity; Data Envelopment Analysis; Malmquist Index; Gross Capacity Utilization; Net Capacity Utilization;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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