Economic Reforms and Total Factor Productivity Growth of Indian Manufacturing: An Inter-State Analysis

Arnab Deb () and Subhash Ray

No 2013-04, Working papers from University of Connecticut, Department of Economics

Abstract: The extent to which Indian organized manufacturing performance changed after the Economic Reform of 1991 has been an important question among empirical analysts. Using input-output data from the Annual Survey of Industries for the period 1970-71 through 2007-08, this paper compares the pre- and post-reform performances of Indian manufacturing in terms of total factor productivity growth. We use the non-parametric method of Data Envelopment Analysis to construct the Biennial Malmquist Index of total factor productivity for Indian states to determine if the states have experienced improvement in manufacturing productivity during the post-reform years. Results show that at the all-India level, total factor productivity growth rate in manufacturing is higher during the post-reform period. Although the majority of states experienced accelerated productivity growth, some states experienced declines in productivity after the reforms. However, the regional variation in the rates of productivity change diminished during the post-reform years. A non-parametric decomposition of the Malmquist productivity index into its components shows that both before and after the reforms technological progress was the most important component of the manufacturing growth process.

Keywords: Economic Reform; Total Factor Productivity; Data Envelopment Analysis; Biennial Malmquist Index (search for similar items in EconPapers)
JEL-codes: C14 C61 D24 L60 O53 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2013-02, Revised 2013-04
New Economics Papers: this item is included in nep-eff
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Citations: View citations in EconPapers (6)

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