Economic reforms and technical efficiency: Firm level evidence from selected industries in India

M. Parameswaram
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M. Parameswaram: Centre for Development Studies

Centre for Development Studies, Trivendrum Working Papers from Centre for Development Studies, Trivendrum, India

Abstract: This paper analyses the performance of the manufacturing firms in some selected industries in terms of their technical efficiency against the background of the industrial and trade policy reforms introduced in India since 1991. A stochastic frontier production function and an associated inefficiency model are used to measure time varying firm specific technical efficiency. We define technical change as the shift of the best practice production frontier and technical inefficiency change as the movement within the best practice technology. The results show that all the industries considered registered a higher rate of technical progress in the post reform period along with a decline in the level of technical efficiency. The effect of change in the policy environment on technical efficiency varies among industries. The study also found that firms' involvement in the international trade through export and import of raw materials and technology has a positive effect on technical efficiency.

Keywords: India; Manufacturing; Technical Efficiency; Economic Reforms (search for similar items in EconPapers)
JEL-codes: D24 F13 L60 O30 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2002-10
New Economics Papers: this item is included in nep-com, nep-eff and nep-ino
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