What determines green total factor productivity in the Indian manufacturing sector? A spatial–temporal analysis

Prerna Thapliyal, Rachita Gulati () and Dinesh Kumar Nauriyal
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Prerna Thapliyal: Indian Institute of Technology Roorkee
Rachita Gulati: Indian Institute of Technology Roorkee
Dinesh Kumar Nauriyal: Indian Institute of Technology Roorkee

Empirical Economics, 2025, vol. 69, issue 3, No 1, 1079-1116

Abstract: Abstract This paper examines green total factor productivity (TFP) growth in the Indian manufacturing sector using the state-level data from 2005 to 2018. We treated greenhouse gas emissions as undesirable output when estimating green TFP using the Global Malmquist Luenberger Productivity Index. Further, the panel spatial econometric model is employed to predict the spillover effects of environmental regulations and other factors on green TFP. The results reveal that technological progress enhanced green productivity by 0.3 percent on average, with significant inter-state heterogeneity. Overall, environmental regulations have a significant inverted-U-shaped and nonlinear effect on green productivity in the Indian manufacturing industry. When an inverse distance matrix is used in conjunction with the space- and time-fixed spatial Durbin model, regulations also generate spatial spillovers. Additionally, economic development, urbanization, and energy intensity have been identified as potential determinants influencing green productivity. We recommend policies to sustain growth in the sector.

Keywords: Green total factor productivity; Manufacturing; Spatial econometric model; Undesirable outputs; Spatial spillover effect; Environmental regulation (search for similar items in EconPapers)
JEL-codes: C31 C61 L60 O14 Q01 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s00181-025-02762-9

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