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Firm Dynamics and Productivity Growth in Indian Manufacturing: Evidence from Plant Level Panel Dataset

Author

Listed:
  • Aradhna Aggarwal

    (RIEB, Kobe University (Japan) and Department of Business Economics, University of Delhi (India))

  • Takahiro Sato

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This paper examines the effects of firms dynamics on industry level productivity growth in India during the period 2000-01 to 2005-06 using plant level panel data of 22 manufacturing industries. The empirical analysis is based on decomposition techniques of aggregate productivity growth. The analysis is confined to large sector plants. Results suggest that the contribution of entry of new plants to aggregate productivity growth is positive in most industries. While newly established plants have rather small entry effect, small plants that grow and enter the large size class have substantial effects on industry level productivity growth. In low tech matured industries entry effects are supported by the productivity growth of the continuing firms. In medium tech industries entry effects are modest; productivity growth of the continuing firms is supported by reallocation effects. In high tech industries all the three effects seem to reinforce productivity growth.

Suggested Citation

  • Aradhna Aggarwal & Takahiro Sato, 2011. "Firm Dynamics and Productivity Growth in Indian Manufacturing: Evidence from Plant Level Panel Dataset," Discussion Paper Series DP2011-07, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:dp2011-07
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2011-07.pdf
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    Cited by:

    1. Sandeep Kumar Kujur, 2018. "Impact of Technological Change on Employment: Evidence from the Organised Manufacturing Industry in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 61(2), pages 339-376, June.
    2. Bhaskar Jyoti Neog & Bimal Kishore Sahoo, 2020. "Job Reallocation Dynamics in India: Evidence from Large Manufacturing Plants," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(4), pages 934-959, August.
    3. Aradhna Aggarwal & Takahiro Sato, 2015. "Identifying High Growth Firms in India: An Alternative Approach," Discussion Paper Series DP2015-14, Research Institute for Economics & Business Administration, Kobe University.
    4. Paul, Bino & Patnaik, Unmesh & Sahu, Santosh Kumar & Awasthi, Mansi, 2020. "What Does Increasing Labour Homogeneity Mean for Indian Manufacturing?," MPRA Paper 102904, University Library of Munich, Germany.
    5. Takahiro Sato & Aradhna Aggarwal, 2020. "Productivity Dynamics and Rural Industrialization in India," Journal of Interdisciplinary Economics, , vol. 32(1), pages 23-46, January.

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    More about this item

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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