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Measuring and Decomposing Sources of Productivity Performance in India's Paper and Pulp Industry under Liberalized Regime: A Nonparametric Approach


  • Sarbapriya Ray

    () (Department of Commerce, Shyampur Siddheswari Mahavidyalaya University of Calcutta, India)


The purpose of this study is to develop a methodology in measuring productivity growth by decomposing it into technical change and technical efficiency change in India's paper industry. The prime objective of this article is to assess the impact of liberalization on productivity growth of India's paper industry. Specifically, this study quantifies the level of technical efficiency and technical change in this particular manufacturing sector. The paper applies Malmquist Productivity Index method to different sub-sectors of India’s Paper and pulp industry at aggregate level in order to have trend in productivity growth covering a period of 28 years commencing from 1979-80 to 2006-07. Finally, regressing the log difference of the measured productivity growth on the log difference of the capacity utilization rate which is a proxy for business cycle, attempt has been made to find out capacity utilization adjusted TFP growth. The result of this study reveals decline in growth rate of TFP during post-reforms (1991-92 to 2006-07) period showing adverse impact of liberalization at aggregate level. Results also indicate that during the study period, industry also experienced regress in technological progress along with stagnation in technical efficiency. Non-responding technical efficiency change and the deteriorating technical change were the main ingredients responsible for declining productivity change in Indian paper and pulp industry. Moreover, removal of short run variations in capacity utilization from the estimated TFP growth hardly affects its overall movement but remarkably mitigates its variation because variations between sub-periods are lesser after adjusting capacity utilization as cyclical factor.

Suggested Citation

  • Sarbapriya Ray, 2012. "Measuring and Decomposing Sources of Productivity Performance in India's Paper and Pulp Industry under Liberalized Regime: A Nonparametric Approach," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 5(1), pages 147-171, April.
  • Handle: RePEc:tei:journl:v:5:y:2012:i:1:p:147-171

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    References listed on IDEAS

    1. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," Review of Economic Studies, Oxford University Press, vol. 34(3), pages 249-283.
    2. J. R. Norsworthy & Michael J. Harper & Kent Kunze, 1979. "The Slowdown in Productivity Growth: Analysis of Some Contributing factors," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(2), pages 387-422.
    3. Chand, Satish & Sne, Kunal, 2002. "Trade Liberalization and Productivity Growth: Evidence from Indian Manufacturing," Review of Development Economics, Wiley Blackwell, vol. 6(1), pages 120-132, February.
    4. David K. Lambert & Elliott Parker, 1998. "Productivity in Chinese Provincial Agriculture," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 378-392.
    5. Krishna, Pravin & Mitra, Devashish, 1998. "Trade liberalization, market discipline and productivity growth: new evidence from India," Journal of Development Economics, Elsevier, vol. 56(2), pages 447-462, August.
    6. Bulent Unel, 2003. "Productivity Trends in India's Manufacturing Sectors in the Last Two Decades," IMF Working Papers 03/22, International Monetary Fund.
    7. Mahadevan, R., 2001. "Assessing the output and productivity growth of Malaysia's manufacturing sector," Journal of Asian Economics, Elsevier, vol. 12(4), pages 587-597.
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    Cited by:

    1. Joseph Kangile, Rajabu, 2015. "Efficiency in Production By Smallholder Rice Farmers Under Cooperative Irrigation Schemes in Pwani and Morogoro Regions, Tanzania," Research Theses 243447, Collaborative Masters Program in Agricultural and Applied Economics.

    More about this item


    Indian Paper Industry; Total Factor Productivity; Economic Reforms; Malmquist Index; Data Envelopment Analysis;

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity


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