IDEAS home Printed from https://ideas.repec.org/p/sch/wpaper/216.html
   My bibliography  Save this paper

Technological Progress, Scale Effect and Total Factor Productivity Growth in Indian Cement Industry: Panel Estimation of Stochastic Production Frontier

Author

Listed:
  • Sabuj Kumar Mandal

    (Institute for Social and Economic Change)

Abstract

The economic policy reform in respect of Indian cement industry, during the early 80's, resulted in a phenomenal growth of this sector and the industry has, in fact, become the second largest in the world. However, this growth has been associated with a greater use of energy and other resources, resulting in severe environmental degradation. Further development of this industry, without increasing energy demand and thereby reducing emission and waste, would require increased productivity. This paper estimates Total Factor Productivity (TFP) growth in Indian cement industry during the period 1989-90 to 2006-07 using company level data and applying Stochastic Frontier Approach. TFP growth is decomposed into technical progress (TP), technical efficiency change (TEC) and changes in scale component (SC) with a view to gaining some insights into the sources of productivity growth of this industry in the post reform era. Empirical results show that TFP growth is mainly driven by SC and TP and not by TEC since TE is time invariant in nature. In the light of empirical results, the policy implication is that an industrial policy of exploiting the existing economies of scale is required to be implemented; and to boost the growth of this sector; priority should be given to enhance firms' capability of catching-up by adopting efficiency oriented action plan.

Suggested Citation

  • Sabuj Kumar Mandal, 2009. "Technological Progress, Scale Effect and Total Factor Productivity Growth in Indian Cement Industry: Panel Estimation of Stochastic Production Frontier," Working Papers 216, Institute for Social and Economic Change, Bangalore.
    • Handle: RePEc:sch:wpaper:216
    as

    Download full text from publisher

    File URL: http://www.isec.ac.in/WP%20216%20-%20Sabuj%20Mandal%20and%20Madheswaran_1.doc%20%281%29.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. S Madheswaran & Hailin Liao & Badri Narayan RathAuthor-Email: smadhes@yahoo.co.uk, 2007. "Productivity growth of Indian manufacturing sector: panel estimation of stochastic production frontier and technical inefficiency," Journal of Developing Areas, Tennessee State University, College of Business, vol. 40(2), pages 35-50, January-M.
    2. Sangho Kim & Gwangho Han, 2001. "A Decomposition of Total Factor Productivity Growth in Korean Manufacturing Industries: A Stochastic Frontier Approach," Journal of Productivity Analysis, Springer, vol. 16(3), pages 269-281, November.
    3. Yang, Ming, 2006. "Energy efficiency policy impact in India: case study of investment in industrial energy efficiency," Energy Policy, Elsevier, vol. 34(17), pages 3104-3114, November.
    4. Joyashree Roy & Jayant Sathaye & Alan Sanstad & Puran Mongia & Katja Schumacher, 1999. "Productivity Trends in India's Energy Intensive Industries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 33-61.
    5. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, April.
    6. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    7. Seema Sharma, 2007. "Liberalisation and productivity growth: a case of Indian cement industry," International Journal of Productivity and Quality Management, Inderscience Enterprises Ltd, vol. 2(3), pages 307-321.
    8. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.

    More about this item

    Keywords

    Cement Indistry; Economic Reforms;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sch:wpaper:216. 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: (B B Chand). General contact details of provider: http://edirc.repec.org/data/iseccin.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.