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What determines green total factor productivity in the Indian manufacturing sector? A spatial–temporal analysis

Author

Listed:
  • Prerna Thapliyal

    (Indian Institute of Technology Roorkee)

  • Rachita Gulati

    (Indian Institute of Technology Roorkee
    Asian Development Bank Institute)

  • Dinesh Kumar Nauriyal

    (Indian Institute of Technology Roorkee)

Abstract

This paper examines green total factor productivity (TFP) growth in the Indian manufacturing sector using the state-level data from 2005 to 2018. We treated greenhouse gas emissions as undesirable output when estimating green TFP using the Global Malmquist Luenberger Productivity Index. Further, the panel spatial econometric model is employed to predict the spillover effects of environmental regulations and other factors on green TFP. The results reveal that technological progress enhanced green productivity by 0.3 percent on average, with significant inter-state heterogeneity. Overall, environmental regulations have a significant inverted-U-shaped and nonlinear effect on green productivity in the Indian manufacturing industry. When an inverse distance matrix is used in conjunction with the space- and time-fixed spatial Durbin model, regulations also generate spatial spillovers. Additionally, economic development, urbanization, and energy intensity have been identified as potential determinants influencing green productivity. We recommend policies to sustain growth in the sector.

Suggested Citation

  • Prerna Thapliyal & Rachita Gulati & Dinesh Kumar Nauriyal, 2025. "What determines green total factor productivity in the Indian manufacturing sector? A spatial–temporal analysis," Empirical Economics, Springer, vol. 69(3), pages 1079-1116, September.
    • Handle: RePEc:spr:empeco:v:69:y:2025:i:3:d:10.1007_s00181-025-02762-9
    DOI: 10.1007/s00181-025-02762-9
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    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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