Infrastructure, ICT and Firms’ Productivity and Efficiency: An Application to the Indian Manufacturing

Marie-Ange Véganzonès, Arup Mitra and Chandan Sharma
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Arup Mitra: University of Delhi

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Abstract: The Make in India program aims at building best-in-class manufacturing set up in the country. However, public infrastructure is considered to be one of the biggest obstacles for the growth of manufacturing in the country. In this context, this paper examines the role of infrastructure and information & communication technology (ICT) on total factor productivity (TFP) and technical efficiency (TE) of the Indian manufacturing sector for the period 1994-2010. We use advanced estimation techniques to overcome problems of non-stationary, omitted variables, endogeneity and reverse causality by applying fully modified OLS, panel cointegration and System GMM. Estimation results suggest that the impact of infrastructure and ICT is rather strong. Interestingly, sectors exposed to relatively more to foreign competition (e.g. Transport Equipment, Textile, Chemicals, Metal & Metal Products) are more sensitive to infrastructure. In the light of these findings, policy implications are brought out.

Keywords: Infrastructure; Information and Communication Technologies ICT; Firms' Productivity; Firms' Technical Eefficiency; Manufacturing; India (search for similar items in EconPapers)
Date: 2016
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Published in Globalization of Indian Industries: Productivity, Exports and Investment De Beule, Filip, Narayanan, K. (Eds.), Springer, 2016

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Chapter: Infrastructure, ICT and Firms’ Productivity and Efficiency: An Application to the Indian Manufacturing (2016)
Working Paper: Infrastructure, ICT and Firms’ Productivity and Efficiency: An Application to the Indian Manufacturing (2016)
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