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Is the post-reform growth of the Indian manufacturing sector efficiency driven? Empirical evidence from plant-level data

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  • Bhaumik, Sumon Kumar
  • Kumbhakar, Subal C.

Abstract

It is generally believed that the structural reforms that were introduced in India following the macro-economic crisis of 1991 ushered in competition and forced companies to become more efficient. However, whether the post-1991 growth is an outcome of more efficient use of resources or greater use of factor inputs remains an open empirical question. In this paper, we use plant-level data from 1989-1990 and 2000-2001 to address this question. Our results indicate that while there was an increase in the productivity of factor inputs during the 1990s, most of the growth in value added is explained by growth in the use of factor inputs. We also find that median technical efficiency declined in all but one of the industries between 1989-1990 and 2000-2001, and that change in technical efficiency explains a very small proportion of the change in gross value added.

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  • 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.
    • Handle: RePEc:eee:asieco:v:21:y:2010:i:2:p:219-232
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    2. 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.
    3. Elitsa R Banalieva & Alvaro Cuervo-Cazurra & Ravi Sarathy, 2018. "Dynamics of pro-market institutions and firm performance," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(7), pages 858-880, September.
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    5. Rawat, Pankaj S. & Sharma, Seema, 2021. "TFP growth, technical efficiency and catch-up dynamics: Evidence from Indian manufacturing," Economic Modelling, Elsevier, vol. 103(C).
    6. Michel Mivumbi & Xiaoling Yuan, 2023. "Sustainable Environmental Economics in Farmers’ Production Factors via Irrigation Resources Utilization Using Technical Efficiency and Allocative Efficiency," Sustainability, MDPI, vol. 15(5), pages 1-12, February.

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