Determinants of total factor productivity in Indian states

2019 ◽  
Vol 13 (1) ◽  
pp. 259-282
Author(s):  
Biswa Swarup Misra
Keyword(s):  
Productivity Growth ◽  
Global Financial Crisis ◽  
State Level ◽  
Spillover Effects ◽  
Factor Productivity ◽  
Indian States ◽  
Content Type ◽  
Tfp Growth ◽  
Financial Depth ◽  
The Impact

Purpose This paper aims to compute total factor productivity (TFP) growth for India as well as for its 19 major states and to explore the determinants of TFP at the state level by considering the spillover effects. Design/methodology/approach TFP growth has been obtained using growth accounting equation. Further, the TFP growth estimates were used to derive TFP levels using the translog index procedure. Given the policy focus on building infrastructure and expanding financial access, we have estimated the impact of irrigation, electricity, road, health, education and financial depth on TFP using the Spatial Durbin Model to account for spillover effects. Findings Computing TFP growth for two sub periods, namely, 2001-2008 and 2009-2015, the study finds a deterioration in TFP growth for India as well as for 10 of the 19 states under study in the post global financial crisis period. The author find that TFP is positively impacted by irrigation, health and road infrastructure. While financial depth and education were statistically insignificant, installed capacity of electricity had a negative impact on state level TFP. Research limitations/implications 'The author provides rationale for the empirical findings considering the country context. The findings of this study act as pointers for shaping higher growth on a sustained basis in India. The study helps to assess the productivity growth in the new states, namely, Jharkhand, Chhattisgarh and Uttarakhand, that were carved out in 2000 vis a vis their parent states. This assessment is useful especially for the states of Jharkhand and Chhattisgarh which were created to address economic backwardness in certain pockets of the parent states. Originality/value First, it provides TFPG estimates for India as well as 19 major states during the 2000-2015 period. Second, this study helps to understand how TFPG for India as well as each of the 19 states have behaved in the post global financial crisis period. Third, the study helps to assess the productivity growth in the three newly created states in 2000 vis a vis their parent states. Fourth, this is the first attempt which considers the spatial interdependence among the states to estimate the impact of financial and infrastructural development on productivity in the Indian states.

Does innovation matter for total factor productivity growth in India? Evidence from ARDL bound testing approach

2018 ◽  
Vol 13 (5) ◽  
pp. 1311-1329 ◽  
Author(s):  
Seenaiah Kale ◽  
Badri Narayan Rath
Keyword(s):  
Total Factor Productivity ◽  
Productivity Growth ◽  
Growth Accounting ◽  
Factor Productivity ◽  
Content Type ◽  
Tfp Growth ◽  
Innovation Activities ◽  
Long Run ◽  
Short Run ◽  
Testing Approach

Purpose The purpose of this paper is to examine whether innovation plays a significant role in the total factor productivity (TFP) growth in India at an aggregate level. Design/methodology/approach This study first estimates the TFP growth using a growth accounting framework. In the second stage, the authors examine the long-run and short-run impact of innovation on TFP growth using the ARDL bound testing approach. Findings The results indicate a cointegrating relationship between innovation and TFP growth. Further, coefficients of long-run elasticity show that the increase in overall innovation activities improves the TFP growth. Other factors such as human capital, financial development and FDI do not affect the TFP growth in the long run; however, these variables significantly affect the productivity growth in the short run. Practical implications Findings of the study suggest that the innovation-friendly policies such as the strengthening of intellectual property rights, R&D subsidies and innovation rebates may spur the productivity growth, and hence, good growth and prosperity as well. Originality/value Having devoted a large volume of literature to address the sources of economic growth, the present study focuses on the determinants of TFP growth in India which may fall in similar category but differ in several angles: First, the authors construct a TFP index using a growth accounting framework. Second, the authors construct an innovation index using principal component analysis which is new to the literature and also an innovation index. Third, given the scanty innovation activities in low developed countries like India and its widening role in the contemporary literature, special emphasis will be given to this aspect. Finally, the effect of the examined relationship on TFP growth in the long run and short run provides several implications for policy purpose to the developing nations like India.

Do infrastructure and quality of governance matter for manufacturing productivity? Empirical evidence from the Indian states

2018 ◽  
Vol 45 (4) ◽  
pp. 829-854 ◽  
Author(s):  
Rupika Khanna ◽  
Chandan Sharma
Keyword(s):  
State Level ◽  
Indian States ◽  
Content Type ◽  
Financial Infrastructure ◽  
Quality Of Governance ◽  
Governance Quality ◽  
Manufacturing Productivity ◽  
Indian Industries ◽  
The Impact

Purpose The purpose of this paper is to study the impact of infrastructure and governance quality on the state-level productivity of Indian manufacturing for the period 2008–2011. Design/methodology/approach The authors first rank Indian states on their quality of governance using benefit-of-the-doubt approach. Next, to explain state-level differences in total factor productivity (TFP), the authors assess the impact of a composite index of governance on industrial TFP of Indian states using alternate techniques and controlling for endogeneity. The authors also decompose the composite effect of governance in terms of economic, social and financial infrastructure and other key governance dimensions, which serves as another robustness check for the findings. Findings The authors find that TFP varies significantly across states, so does governance quality. Further, results suggest that TFP of Indian industries is sensitive toward public service deliveries of economic, social and financial infrastructure. However, the authors fail to find any impact of law and order indicators, for instance, rate of violent crimes, police strength and judicial service quality on the manufacturing productivity. The estimated coefficient of governance index is robust across alternate methodologies. Originality/value To the authors’ knowledge, this is the first study to assess the impact of regional governance factors on the manufacturing sector of India. The study has identified governance factors that impact manufacturing productivity in the Indian states. Findings suggest that an effective way to eliminate regional growth inequality in India is to ensure that the lagging states initiate reforms to improve the quality of institutions, regulation and governance. Findings of the study contribute to the limited literature on governance at the regional/sub-national level.

Determinants of tourism in Indian states: an empirical analysis

2017 ◽  
Vol 72 (3) ◽  
pp. 330-343 ◽  
Author(s):  
Yashobanta Parida ◽  
Parul Bhardwaj ◽  
Joyita Roy Chowdhury
Keyword(s):  
Economic Development ◽  
Panel Data ◽  
State Level ◽  
Tobit Model ◽  
Indian States ◽  
Content Type ◽  
Prone Area ◽  
Flood Prone Area ◽  
The Impact ◽  
Domestic Tourist

Purpose The purpose of this study is to empirically examine the determinants of foreign and domestic tourist arrivals and revenue receipts from tourism using state-level panel data in 25 Indian states for the period 1995 to 2011. Design/methodology/approach The study uses IV-2SLS method to examine the determinants of foreign and domestic tourist arrivals in Indian states. Economic development (proxied by per capita income, PCI) is an endogenous variable. We have used the state-wise “liable to flood prone area” as an instrument for PCI to control for endogeneity. An inverse relationship exists between state-wise “liable to flood prone area” and real PCI, in a sense that states with greater proportion of area marked as liable to flood experience lower economic development. For robust analysis, the study has also used IV-Tobit model to examine the effects of economic development and crime on revenue receipts from tourism. Findings The empirical results based on IV-2SLS method suggest that, in addition to economic development, other factors such as the presence of world-class monuments, natural landscapes and cultural heritage also encourage both international and domestic visitors in Indian states. While crime activities adversely affect the inflow of foreign and domestic tourist arrivals, terror activities do not significantly impact tourist arrivals and tourism receipts. Finally, the estimates of IV-Tobit model show that economic development and government expenditure on tourism sector leads to a significant increase in tourism receipts. Originality/value To the best of our knowledge, this is the first study done in Indian context in which state-level panel data have been used to examine the impact of economic, social and cultural factors on tourist arrivals and revenue earnings from tourism. Hence, the present study not only contributes to existing tourism literature, but also makes an important contribution to structuring suitable tourism management policies for the Indian states.

scholarly journals Input Structure Effect of Total Factor Productivity Growth of Animal Husbandry

2021 ◽  
Vol 11 (4) ◽  
Author(s):  
LI Xiu-shuang ◽  
ZHAO Liang ◽  
YU Kang
Keyword(s):  
Total Factor Productivity ◽  
Productivity Growth ◽  
Animal Husbandry ◽  
Structure Effect ◽  
Factor Productivity ◽  
Plateau Region ◽  
Tfp Growth ◽  
Input Structure ◽  
Factor Decomposition ◽  
The Impact

This paper uses the input-output panel data of China's animal husbandry industry from 1997 to 2017, based on the total factor decomposition framework of total factor productivity (TFP), and uses the Hicks-Moorsteen index completely decompose the growth of animal husbandry TFP. By measuring the effect of mixed efficiency on the development of TFP in animal husbandry and then evaluating the input structure effect of TFP growth in animal husbandry. The results show that the impact of input structure on the TFP growth of animal husbandry has also changed from negative to positive. From 1997 to 2007, the input structure of the Huanghuaihai region alone contributed to the growth of TFP in animal husbandry, and the rest of the region was the opposite. From 2008 to 2017, the input structure of the Mengxin Plateau region hindered the growth of TFP in animal husbandry, while the rest of the region was the opposite.

scholarly journals Competition, selection, and productivity growth in the Chilean manufacturing industry

2020 ◽  
Vol 29 (3) ◽  
pp. 877-892
Author(s):  
Roberto Álvarez ◽  
Aldo Gonzalez
Keyword(s):  
Productivity Growth ◽  
Manufacturing Industry ◽  
Factor Productivity ◽  
Manufacturing Plants ◽  
Tfp Growth ◽  
Key Driver ◽  
Quantitative Impact ◽  
The Impact ◽  
Firm Selection ◽  
Positive Effect

Abstract Competition is considered as a key driver of productivity growth. However, the empirical evidence on its impact is scant in developing countries. Using information from manufacturing plants for the period 1995–2007, we analyze the impact of competition on firm selection and productivity growth in Chile. Our results indicate that competition has a positive effect on total factor productivity (TFP) growth, especially for laggard firms. We find weaker evidence that competition affects the probability of exit for low-productivity firms. In general, these results for productivity growth are robust to alternative methodologies for calculating productivity and to the inclusion of other variables that may affect firms’ TFP growth. We find support for Schumpeterian forces, but the quantitative impact is small.

scholarly journals The effect of reverse knowledge spillovers on the total factor productivity of emerging markets

2020 ◽  
pp. 21-42
Author(s):  
Andrei Panibratov ◽  
Megan Fitzpatrick
Keyword(s):  
Emerging Markets ◽  
Total Factor Productivity ◽  
Knowledge Spillovers ◽  
Developing Economies ◽  
Spillover Effects ◽  
Factor Productivity ◽  
Developed Markets ◽  
Tfp Growth ◽  
Negative Effect ◽  
The Impact

The aim of this paper is to shed the light on the phenomenon and mechanisms of knowledge spillovers from developed economies to emerging markets through the lens of productivity effects. We hypothesize on the impact of foreign R&D stocks on the total factor productivity growth in emerging markets and on the moderating effect of R&D stocks on the knowledge spillover effects. We use panel data from 38 countries for the period of 2001–2014. Our findings suggest that firms investing in developed markets are able to improve TFP growth via reverse spillovers. Two important findings having managerial value are that, on average, the effect of OFDI on productivity becomes apparent three years after the initial investment. The study also indicates that investment efforts have a negative effect on TFP growth in the year of investment. This research contributes to the ex- isting literature by analyzing bilateral FDI stocks between emerging and developed markets and the impact of both traditional and reverse spillovers on TFP growth in developing economies.

scholarly journals Credit volatility and productivity growth

Equilibrium ◽  
2018 ◽  
Vol 13 (2) ◽  
pp. 215-232
Author(s):  
Michał Brzozowski
Keyword(s):  
Productivity Growth ◽  
Negative Impact ◽  
Technological Development ◽  
Value Added ◽  
Banking Crises ◽  
Negative Influence ◽  
Financial Instability ◽  
Tfp Growth ◽  
Financial Depth ◽  
The Impact

Research background: The issues of finance-growth nexus and financial instability have attracted considerable attention, but have been studied in isolation. This paper aims at filling this gap by providing insights into the implications of financial instability for long term productivity growth. Purpose of the article: This paper sheds light on the relationship between credit-to-GDP ratio volatility and the total factor productivity (TFP) growth rate. The impact of systemic banking crises and financial depth on productivity growth is also studied. Methods: The System GMM estimation of panel data for over 100 countries and spanning the period of 1970–2009 is used. The decomposition of credit-to-GDP ratio into trend and cyclical component is performed using the Hodrick-Prescott filter and a regression analysis with country-specific intercepts and slopes. The data on TFP comes from the Penn World Tables database. Findings & Value added: TFP growth is negatively affected by credit volatility, mainly in less technologically advanced countries, while financial depth exerts a negative influence on TFP growth in economies with superior technology. Systemic banking crises and the concomitant credit crunches have a negative impact on productivity growth, regardless of the level of technological development. Moreover, the level of human capital, patents and globalization fuel productivity growth. Macroeconomic instability, measured by the rate of inflation, hampers TFP growth.

Farm wages and public works

2015 ◽  
Vol 8 (1) ◽  
pp. 19-72 ◽  
Author(s):  
Kanika Mahajan
Keyword(s):  
Theoretical Model ◽  
Wage Rate ◽  
Fixed Effects ◽  
Positive Impact ◽  
Wage Growth ◽  
State Level ◽  
Random Allocation ◽  
Farm Sector ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this paper is to examine the impact of National Rural Employment Guarantee Scheme (NREGS) on farm sector wage rate. This identification strategy rests on the assumption that all districts across India would have had similar wage trends in the absence of the program. The author argues that this assumption may not be true due to non-random allocation of districts to the program’s three phases across states and different economic growth paths of the states post the implementation of NREGS. Design/methodology/approach – To control for overall macroeconomic trends, the author allows for state-level time fixed effects to capture the differences in growth trajectories across districts due to changing economic landscape in the parent-state over time. The author also estimates the expected farm sector wage growth due to the increased public work employment provision using a theoretical model. Findings – The results, contrary to the existing studies, do not find support for a significantly positive impact of NREGS treatment on private cultivation wage rate. The theoretical model also shows that an increase in public employment work days explains very little of the total growth in cultivation wage post 2004. Originality/value – This paper looks specifically at farm sector wage growth and the possible impact of NREGS on it, accounting for state specific factors in shaping farm wages. Theoretical estimates are presented to overcome econometric limitations.

The impact of labor freedom on geographic cost of living differentials

2017 ◽  
Vol 6 (3) ◽  
pp. 385-395
Author(s):  
Richard Cebula ◽  
James E. Payne ◽  
Donnie Horner ◽  
Robert Boylan
Keyword(s):  
Labor Market ◽  
State Level ◽  
The State ◽  
Annual Data ◽  
Significant Finding ◽  
Cost Of Living ◽  
Content Type ◽  
The Usa ◽  
The Cost ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of labor market freedom on state-level cost of living differentials in the USA using cross-sectional data for 2016 after allowing for the impacts of economic and quality of life factors. Design/methodology/approach The study uses two-stage least squares estimation controlling for factors contributing to cost of living differences across states. Findings The results reveal that an increase in labor market freedom reduces the overall cost of living. Research limitations/implications The study can be extended using panel data and alternative measures of labor market freedom. Practical implications In general, the finding that less intrusive government and greater labor freedom are associated with a reduced cost of living should not be surprising. This is because less government intrusion and greater labor freedom both inherently allow markets to be more efficient in the rationalization of and interplay with forces of supply and demand. Social implications The findings of this and future related studies could prove very useful to policy makers and entrepreneurs, as well as small business owners and public corporations of all sizes – particularly those considering either location in, relocation to, or expansion into other markets within the USA. Furthermore, the potential benefits of the National Right-to-Work Law currently under consideration in Congress could add cost of living reductions to the debate. Originality/value The authors extend the literature on cost of living differentials by investigating whether higher amounts of state-level labor market freedom act to reduce the states’ cost of living using the most recent annual data available (2016). That labor freedom has a systemic efficiency impact on the state-level cost of living is a significant finding. In our opinion, it is likely that labor market freedom is increasing the efficiency of labor market transactions in the production and distribution of goods and services, and acts to reduce the cost of living in states. In addition, unlike previous related studies, the authors investigate the impact of not only overall labor market freedom on the state-level cost of living, but also how the three sub-indices of labor market freedom, as identified and measured by Stansel et al. (2014, 2015), impact the cost of living state by state.

Economic slowdown, NPA crisis and productivity behavior of Indian banks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anju Goswami ◽  
Rachita Gulati
Keyword(s):  
Production Process ◽  
Global Financial Crisis ◽  
Banking Industry ◽  
Economic Stress ◽  
Productivity Index ◽  
Undesirable Output ◽  
Content Type ◽  
Tfp Growth ◽  
Robust Estimates ◽  
Indian Banks

PurposeThis paper aims to investigate the productivity behavior of Indian banks in the presence of non-performing assets (NPAs) over the period 1999 to 2017. The study examines whether Indian banks withstand the shocks of the global financial crisis (GFC) of 2007–2009 and sustain their total factor productivity (TFP) levels in the post-crisis economic turbulent period or not.Design/methodology/approachThe robust estimates of TFP and its components: efficiency change and technical change are obtained using the state-of-the-art and innovative sequential Malmquist-Luenberger productivity index (SMLPI) approach. The key advantages of this approach are that it explicitly allows the joint production of undesirable output (NPAs in our case) along with desirable inputs and outputs in the production process and precludes the possibility of spurious technical regress.FindingsThe empirical results of the study reveal that the Indian banking system has experienced a (−1) percent TFP regress, contributed solely by efficiency loss during the period under investigation. The GFC has slowed down the growth trajectory of TFP growth in the Indian banking industry. Among ownership groups, the effect of the GFC was pronounced on the public sector banks.Practical implicationsThe practical implication drawn from the study is that the Indian banks have not been able to successfully transmit the use of installed technology in a way to generate early warning signals and mitigate the risk of defaults so as to maximize their productivity gains in the banking industry.Originality/valueThis study is perhaps the first one to understand the productivity dynamics of the Indian banks in response to both endogenous (i.e. NPA crisis) and exogenous (i.e. global financial and economic stress) crises. Moreover, the authors obtain the robust estimates of TFP growth of Indian banks by explicitly accounting for NPAs as an undesirable output and equity as a quasi-fixed input in the bank production process.

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