Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Trade Liberalization and Firm Level Productivity in Indian Cement Industry:Evidences from Post-Reform Period


Affiliations
1 Centre for International Trade, Economics and Environment, CUTS International, Jaipur 302016, Rajasthan, India
     

   Subscribe/Renew Journal


Productivity growth has an important linkage with economic growth and standard of living. It increases output and also improves the efficiency of firms/industries through better utilization of factors of production. This study estimates firm level productivity in cement industry in India and examines the impact of trade liberalization. The period of the study is from 1991-1992 to 2012-2013 which is sub-divided into two sub-periods, i.e., from 1991-1992 to 2001-2002 and from 2002-2003 to 2012-2013. Productivity has been estimated using Levinshon-Petrin (gross revenue case) method. The firm levels productivity growth (semi-log trend rate of growth) in cement industry in balanced and unbalanced panels are negative 0.14 per cent and negative 0.01 per cent respectively. A significant difference in productivity growth among large, medium and small scale firms is found. Trade liberalization has led to decline in input-tariffs, output-tariffs and effective rate of protection. Increase in trade openness led to increased productivity. The study shows positive impact of increase in construction sector growth rate and decline in rate of interest and inflation rate on firm level productivity in this industry.
Subscription Login to verify subscription
User
Notifications
Font Size

  • Ahluwalia, I.J. (1991), Productivity and Growth in Indian Manufacturing, Delhi: Oxford University Press.

  • Arellano, M., and O. Bover (1995), Another Look at the Instrumental Variable Estimation of Error-Components Models, Journal of Econometrics, 68(1): 29–51.

  • Arellano, M., and S. Bond (1991), Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations, Review of Economic Studies, 58(2): 277–297.

  • Arora, P. (1987), Productivity and Research and Development: A Study of Some Selected Industries, M.Phil. Thesis, Delhi School of Economics, University of Delhi, Delhi.

  • Arya, I.C. (1981), On Measuring Technological Change in Cement Industry in India, Artha Vijnana, 23(2): 167-179.

  • Balakrishnan, P., K. Pushpangadan and M.S. Babu (2000), Trade Liberalization and Productivity Growth in Manufacturing: Evidence from Firm-level Panel Data, Economic and Political Weekly, 35(41): 3679-3682, October 7.

  • Banga, R., and B. Goldar (2004), Contribution of Services to Output Growth and Productivity in Indian Manufacturing: Pre and Post Reforms, ICRIER Working Paper No. 139, Indian Council for Research on International Economic Relations, New Delhi.

  • Cement Manufacturing Association of India (various years), Annual Reports from 2008-09 to 2013-14.

  • Central Statistical Office (1981), Wages and Productivity in Selected Industries: 1960 to 1977, Ministry of Planning, Government of India, October.

  • ---------- (various years), National Accounts Statistics, Central Statistical Office, MOSPI.

  • Central Statistical Organization, National Industrial Classification Manuals: 1970, 1987, 1998, 2004 and 2008, Central Statistical Organization, MOSPI.

  • Corden, M. (1966), The Structure of a Tariffs System and the Effective Protective Rate, Journal of Political Economy, 74(3): 221-237.

  • Ferreira, P.C., and J.L. Rossi (2003), New Evidence from Brazil on Trade Liberalization and Productivity Growth, International Economic Review, 44(4): 1383-1405.

  • Goldar, B.N. (1986), Productivity Growth in Indian Industry, Allied Publishers, Delhi.

  • Goldar, B.N. and A. Kumari (2003), Import Liberalization and Productivity Growth in Indian Manufacturing Industries in the 1990s, The Developing Economies, XLI(4): 436-460.

  • Gupta, G.S. (1973), Production Function and Factor Productivity in Indian Cement Industry, Indian Journal of Industrial Relations, 8(3): 359-386.

  • Halkos, G.E., and N.G. Tzeremes (2007), Productivity Efficiency and Firm Size: An Empirical Analysis of Foreign Owned Companies, International Business Review, 16(6): 713-731.

  • Hashim, A.H., A. Kumar and A. Virmani (2009), Impact of Major Liberalization on Productivity: The J Curve Hypothesis, Department of Economic Affairs Working Paper No. 5/2009-DEA, Department of Economic Affairs, Ministry of Finance, Government of India, New Delhi.

  • Hashim, D.A. (2004), Cost and Productivity in Indian Textiles: Post MFA Implication, ICRIER Working Paper No. 147, Indian Council for Research on International Economic Relations, New Delhi.

  • Jajri, I. (2007), Determinants of Total Factor Productivity Growth in Malaysia, Journal of Economic Cooperation, 28(3): 41-58.

  • Khan, S.U. (2006), Macro Determinants of Total Factor Productivity in Pakistan, SBP Research Bulletin, 2(2): 383-401.

  • Levinsohn, J. and A. Petrin (2003), Estimating Production Functions using Inputs to Control for Unobservable, Review of Economic Studies, 70(2): 317-341.

  • Mahopatra, B.K. (1970). The Rate of Technical Change in Indian Cement Industry: 1949-1964, Asian Economic Review, 12(3): 297-309.

  • Majumdar, S.K. (1997), The Impact of Size and Age on Firm-level Performance: Some Evidence from India, Review of Industrial Organization, 12(2): 231-241.

  • Mandal, S.K., and S. Madheswaran (2009), Technical Progress, Scale Effect and Total Factor Productivity Growth in Indian Cement Industry: Panel Estimation of Stochastic Production Frontier, ISEC Working Paper, The Institute for Social and Economic Change, Bangalore.

  • Mehta, S.S. (1980), Productivity, Production Function and Technical Change, Concept Publishing Co., Delhi.

  • Ministry of Statistics and Programme Implementation (various years), Annual Survey of Industries, Vol. 1, from 1982-83 to 2012-13, Government of India.

  • Office of the Economic Advisor (various issues), Handbook of Industrial Policy and Statistics, Office of the Economic Advisor, DIPP, Ministry of Commerce and Industry, Government of India.

  • Olley, S. and A. Pakes (1996), The Dynamics of Productivity in the Telecommunications Equipment Industry, Econometrica, 64(6): 1263-1297.

  • Pattnayak, S.S., and S.M. Thangavelu (2001), Economic Liberalization and Productivity Growth: A Disaggregated Analysis of Indian Manufacturing Industries, Paper presented at the 2001 Australasian Meeting of the Econometric Society, Kobe, Japan, July 20-21.

  • Pradhan, G. and K. Barik (1998), Fluctuating Total Factor Productivity in India: Evidence from Selected Polluting Industries, Economic and Political Weekly, 33(9): M25-M30, February 28.

  • Ray, S. (2012), Determinants of Total Factor Productivity Growth in Selected Manufacturing industries in India, Research and Social Practices in Social Sciences, 7(2): 25-43.

  • ---------- (2012a), Productivity Growth in Some Energy Intensive Manufacturing Industries in India: An Analytical Assessment, International Journal of Economics and Financial Issues, 2(1): 54-70.

  • Reserve Bank of India, Handbook of Statistics on Indian Economy (various issues), Reserve Bank of India, Mumbai.

  • Sahu, S.K. and K. Narayanan (2011), Total Factor Productivity and Energy Intensity in Indian Manufacturing: A Cross-sectional Study, International Journal of Energy Economics and Policy, 1(2): 47-58.

  • Sawhney, P.K. (1967), Productivity Trends in Indian Cement Industry, Asian Economic Review, 9(3): 255-272.

  • Schumacher, K. and J. Sathaye (1999), India’s Cement Industry: Productivity, Energy Efficiency and Carbon Emissions, LBNL Working Paper No. 41842, Berkeley, Lawrence Berkeley National Laboratory, California.

  • Sharma, S. (2007), Liberalization and Productivity Growth: A Case of Indian Cement Industry, International Journal of Productivity and Quality Management, 2(3): 307-321.

  • Sinha, J.N. and P.K. Sawhney (1970), Wages and Productivity in selected Indian Industries, Vikas Publications, Delhi.

  • Srivastava, V. (1996), Liberalization, Productivity and Competition: A Panel Study of Indian Manufacturing, Oxford University Press, Delhi.

  • Topalova, P. and A. Khandelwal (2011), Trade Liberalization and Firm Productivity: The Case of India, The Review of Economics and Statistics, 93(3): 995-1009.


Abstract Views: 485

PDF Views: 2




  • Trade Liberalization and Firm Level Productivity in Indian Cement Industry:Evidences from Post-Reform Period

Abstract Views: 485  |  PDF Views: 2

Authors

Sanjay Kumar Mangla
Centre for International Trade, Economics and Environment, CUTS International, Jaipur 302016, Rajasthan, India

Abstract


Productivity growth has an important linkage with economic growth and standard of living. It increases output and also improves the efficiency of firms/industries through better utilization of factors of production. This study estimates firm level productivity in cement industry in India and examines the impact of trade liberalization. The period of the study is from 1991-1992 to 2012-2013 which is sub-divided into two sub-periods, i.e., from 1991-1992 to 2001-2002 and from 2002-2003 to 2012-2013. Productivity has been estimated using Levinshon-Petrin (gross revenue case) method. The firm levels productivity growth (semi-log trend rate of growth) in cement industry in balanced and unbalanced panels are negative 0.14 per cent and negative 0.01 per cent respectively. A significant difference in productivity growth among large, medium and small scale firms is found. Trade liberalization has led to decline in input-tariffs, output-tariffs and effective rate of protection. Increase in trade openness led to increased productivity. The study shows positive impact of increase in construction sector growth rate and decline in rate of interest and inflation rate on firm level productivity in this industry.

References





DOI: https://doi.org/10.21648/arthavij%2F2017%2Fv59%2Fi3%2F167649