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Productivity and Technical Efficiency in Indian States’ Manufacturing: The Role of Infrastructure

Author

Listed:
  • Marie-Ange Véganzonès-Varoudakis

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

  • Arup Mitra
  • Chandan Sharma
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.

Suggested Citation

  • Marie-Ange Véganzonès-Varoudakis & Arup Mitra & Chandan Sharma, 2011. "Productivity and Technical Efficiency in Indian States’ Manufacturing: The Role of Infrastructure," Post-Print hal-03058779, HAL.
    • Handle: RePEc:hal:journl:hal-03058779
    as

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