Input Shortages in Mixed Economies: An Application to Indian Manufacturing Industries

Ratna Sahay

No 1991/056, IMF Working Papers from International Monetary Fund

Abstract: Widespread shortages in key inputs are common in mixed economies of developing countries. These shortages appear to occur at the same time that relatively high rates of capacity underutilization in manufacturing industries are observed. This paper develops a simple model which explains the existence of excess capacity when there are quantitative restrictions on key inputs. This model is tested using data for manufacturing industries in India, and the results indicate that shortages in domestic rather than imported inputs imposed binding constraints on capacity utilization rates.

Keywords: WP; economic system; least squares; representative firm; industry index; gth industry; quota allocation rule; infant industry; rail service input coefficient in industry; Capacity utilization; Trade barriers; Manufacturing; Import licensing; Electricity; Eastern Europe (search for similar items in EconPapers)
Pages: 30
Date: 1991-06-01
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