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Impact of infrastructure on output, productivity and efficiency Evidence from the Indian manufacturing industry

Impact of infrastructure on output, productivity and efficiency Evidence from the Indian... Purpose – The purpose of this paper is to provide an empirical evaluation of the impact of infrastructure development on industry‐level productivity, output and efficiency in India over the period 1994‐2006. Design/methodology/approach – The first stage, estimated total factor productivity (TFP) and technical efficiency of eight important industries. In the next stage, the effects of infrastructure were estimated on TFP, output, labor productivity and technical efficiency. Fully modified ordinary least squares procedure was utilized to generate consistent estimates of the relevant panel variables in the cointegrated frameworks. Findings – The results of this study are mixed. On the one hand, TFP, output and technical efficiency appear to be positively and largely affected by infrastructure. On the other hand, the effect of infrastructure on the labor productivity is somewhat negligible. In addition, the effects of information and communication technology on the industrial performance are found to be very weak. Originality/value – This is the first study of its kind in the related literature which attempts to investigate the role of infrastructure in industrial performance, using alternative frameworks, namely, growth accounting and production function approach. The paper uses appropriate techniques to account for the potential endogeneity of regressors as well as for multicollinearity among infrastructure variables. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Indian Growth and Development Review Emerald Publishing

Impact of infrastructure on output, productivity and efficiency Evidence from the Indian manufacturing industry

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References (66)

Publisher
Emerald Publishing
Copyright
Copyright © 2010 Emerald Group Publishing Limited. All rights reserved.
ISSN
1753-8254
DOI
10.1108/17538251011084446
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to provide an empirical evaluation of the impact of infrastructure development on industry‐level productivity, output and efficiency in India over the period 1994‐2006. Design/methodology/approach – The first stage, estimated total factor productivity (TFP) and technical efficiency of eight important industries. In the next stage, the effects of infrastructure were estimated on TFP, output, labor productivity and technical efficiency. Fully modified ordinary least squares procedure was utilized to generate consistent estimates of the relevant panel variables in the cointegrated frameworks. Findings – The results of this study are mixed. On the one hand, TFP, output and technical efficiency appear to be positively and largely affected by infrastructure. On the other hand, the effect of infrastructure on the labor productivity is somewhat negligible. In addition, the effects of information and communication technology on the industrial performance are found to be very weak. Originality/value – This is the first study of its kind in the related literature which attempts to investigate the role of infrastructure in industrial performance, using alternative frameworks, namely, growth accounting and production function approach. The paper uses appropriate techniques to account for the potential endogeneity of regressors as well as for multicollinearity among infrastructure variables.

Journal

Indian Growth and Development ReviewEmerald Publishing

Published: Sep 28, 2010

Keywords: Manufacturing industries; Productivity rate; Plant efficiency; India

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