Economic reforms and industrial performance: An analysis of capacity utilisation in Indian manufacturing
This paper examines the performance of Indian manufacturing sector in terms of economic capacity utilization (CU), over 1974-1998. An attempt is also made to understand the impact of policy changes, inter alia, on the observed movements of CU. The economic CU, defined as the realization of output at which the short run average total cost is minimized, is estimated using a translog cost function. We observe cyclical movements in CU over the period. Three distinct phases have been identified with regard to the movements in CU. While phase one (1974-1984) is characterized by relatively wide fluctuations, phase two (1985-1990) witnessed a roughly stable level of utilization. In the third phase (1991-1998), a variant of the fluctuations witnessed in the first phase is seen to have resurfaced. Interestingly, there has not been any significant correspondence between the observed phases of CU with the corresponding policy environment. While supply and demand side factors are significant in determining CU in Indian manufacturing, the impact of economic reforms per se is not remarkable.
|Date of creation:||Jun 2002|
|Date of revision:|
|Contact details of provider:|| Postal: Peasanth Nagar, Trivandrum 695 011, Kerala|
Phone: +91 471 2448 881
Fax: +91 471 2447 137
Web page: http://www.cds.edu
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jagdish N. Bhagwati & T. N. Srinivasan, 1975. "Foreign Trade Regimes and Economic Development: India," NBER Books, National Bureau of Economic Research, Inc, number bhag75-1.
- Hulten, Charles R., 1986. "Productivity change, capacity utilization, and the sources of efficiency growth," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 31-50.
- Dixit, Avinash, 1980.
"The Role of Investment in Entry-Deterrence,"
Royal Economic Society, vol. 90(357), pages 95-106, March.
- Dixit, Avinash, 1979. "The Role of Investment in Entry-Deterrence," The Warwick Economics Research Paper Series (TWERPS) 140, University of Warwick, Department of Economics.
- Winston, Gordon C, 1974. "The Theory of Capital Utilization and Idleness," Journal of Economic Literature, American Economic Association, vol. 12(4), pages 1301-20, December.
- J. M. Cassels, 1937. "Excess Capacity and Monopolistic Competition," The Quarterly Journal of Economics, Oxford University Press, vol. 51(3), pages 426-443.
- Ernesto HernÃ¡ndez-CatÃ¡, 1997. "Liberalization and the Behavior of Output during the Transition from Plan to Market," IMF Staff Papers, Palgrave Macmillan, vol. 44(4), pages 405-429, December.
- DREZE, Jacques, 1999.
"On the macroeconomics of uncertainty and incomplete markets,"
CORE Discussion Papers
1999064, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Jacques H.DREZE, 2001. "On the Macroeconomics of Uncertainty and Incomplete Markets," Discussion Papers (REL - Recherches Economiques de Louvain) 2001011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Nelson, Randy A, 1989. "On the Measurement of Capacity Utilization," Journal of Industrial Economics, Wiley Blackwell, vol. 37(3), pages 273-86, March.
- Berndt, Ernst R & Morrison, Catherine J, 1981. "Capacity Utilization Measures: Underlying Economic Theory and an Alternative Approach," American Economic Review, American Economic Association, vol. 71(2), pages 48-52, May.
- A. Michael Spence, 1977. "Entry, Capacity, Investment and Oligopolistic Pricing," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 534-544, Autumn.
- Berndt, Ernst R. & Hesse, Dieter M., 1986. "Measuring and assessing capacity utilization in the manufacturing sectors of nine oecd countries," European Economic Review, Elsevier, vol. 30(5), pages 961-989, October.
- Ernesto HernÃ¡ndez-CatÃ¡, 1997. "Liberalization and the Behavior of Output During the Transition From Plan to Market," IMF Working Papers 97/53, International Monetary Fund.
- Lieberman, Marvin B, 1987. "Excess Capacity as a Barrier to Entry: An Empirical Appraisal," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 607-27, June.
- Berndt, Ernst R. & Fuss, Melvyn A., 1986. "Productivity measurement with adjustments for variations in capacity utilization and other forms of temporary equilibrium," Journal of Econometrics, Elsevier, vol. 33(1-2), pages 7-29.
When requesting a correction, please mention this item's handle: RePEc:ind:cdswpp:334. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamprasad M. Pujar)
If references are entirely missing, you can add them using this form.