Technical Efficiency, Technological Change and Total Factor Productivity Growth of Selected Manufacturing Firms in India

Abstract

The present study analyses the performance of selected manufacturing firms in India in terms of the level of efficiency and productivity. The study uses the Malmquist Productivity Index model to estimate the total factor productivity change for the selected manufacturing firms with decomposition into catching up effect and innovation effect from the common set of selected manufacturing firms over the period of study. The study also examines the technical efficiency of manufacturing firms and factors determining the level of technical efficiency of manufacturing firms with the help of the Tobit model. The present study concludes that the firms in steel industry are more efficient than the other manufacturing industries selected in the study. The analysis carried out to identify the results for the productivity change concludes that on an average there is productivity growth for the manufacturing industry. The steel, non ferrous, automobile and electronic firms have shown steady growth over the period of time and conclude that catching up effect is the major contributor for growth. The study also recommends that for the enhancement of technical efficiency the level of exports of goods, age and ownership are the major contributors.