Is the post-reform growth of the Indian manufacturing sector efficiency driven? Empirical evidence from plant level data

Sumon Bhaumik, Subal Kumbhakar

Research output: Contribution to journalArticle

Abstract

It is generally believed that the structural reforms that were introduced in India following the macro-economic crisis of 1991 ushered in competition and forced companies to become more efficient. However, whether the post-1991 growth is an outcome of more efficient use of resources or greater use of factor inputs remains an open empirical question. In this paper, we use plant-level data from 1989–1990 and 2000–2001 to address this question. Our results indicate that while there was an increase in the productivity of factor inputs during the 1990s, most of the growth in value added is explained by growth in the use of factor inputs. We also find that median technical efficiency declined in all but one of the industries between 1989–1990 and 2000–2001, and that change in technical efficiency explains a very small proportion of the change in gross value added.
Original languageEnglish
Pages (from-to)219-232
Number of pages14
JournalJournal of Asian Economics
Volume21
Issue number2
DOIs
Publication statusPublished - Apr 2010

Keywords

  • productivity
  • growth decomposition
  • efficiency
  • manufacturing

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