Decomposition of total factor productivity growth: A regional analysis of Indian industrial manufacturing growth

Surender Kumar

Working Papers from National Institute of Public Finance and Policy

Abstract: Total factor productivity (TFP) growth in industrial manufacturing is measured for 15 major Indian states for the period 1982-83 to 2000-01 using non-parametric linear programming methods. TFP growth is decomposed into efficiency and technological changes and also measure for the bias in technical change. The resulting information is used to examine whether the post-reform period shows any improvement in productivity and efficiency in comparison to the pre-reform one. Findings of the present exercise indicate the improvement in TFP. The recent change in TFP is governed by the technical progress in contrast to similar gain caused by the improvement in technical efficiency in the pre-reform regime. The technological progress in state manufacturing exhibited a capital using bias during the study period. Regional differences in TFP persist, although the magnitude of variation has declined in the post-reform period. Moreover, it is also found that there is a tendency of convergence in terms of TFP growth rate among Indian states during the post-reform years and only the states that were technically efficient at the beginning of the reform remain innovative.

Keywords: Industry; Industrial manufacturing; Growth; Total factor productivity (search for similar items in EconPapers)
Pages: 39
Date: 2004-12
Note: Working Paper 22, 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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