Productivity Growth in Indian Cement Industry: A Panel Estimation of Stochastic Production Frontier

Mandal, Sabuj Kumar and Madheswaran, S (2012) Productivity Growth in Indian Cement Industry: A Panel Estimation of Stochastic Production Frontier. The Journal of Developing Areas, 46 (1). pp. 287-303.

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Abstract

The economic policy reform in respect of Indian cement indu stry, during the early 80’s, resulted in a phenomenal growth of this sector.Cement industry being highly energy intensive in nature, further development of this industry, without increasing pressure on energy demand , would require growth in productivity. Thus, aim of this paper is to estimate Total Factor Productivity (TFP) growth in Indian cement industry as growth in TFP could ensure grow th of this sector which is less dependent on energy and other inputs. Applying Stochastic Frontier Approach, the study first estimates TFP growth and then decomposes it into its components for the period 1989 - 90 to 2006 -07. Empirical results show that the industry has experienced TFP growth during the study period and this growth is driven mainly by scale component and technical progress and not by technical efficiency change as technical efficiency has come out to be time invariant in this context. In the light of empirical results, the policy implication is that an industrial policy of exploiting the existing economies of scale is required to be implemented;and to boost the growth of this sector, priority should be given to enhance firms’ capability of catching -up by adopting efficiency oriented action plans

Item Type:	Article
Uncontrolled Keywords:	Cement industry, Productivity growth, Production functions, Production estimates; Industrial efficiency; Cements; Production efficiency; Productive efficiency; Stochastic models
Subjects:	Operations Management > Production/Operations Management
Divisions:	Operations and Information Science
Depositing User:	Mr. Muralidhara D
Date Deposited:	22 Sep 2018 16:05
Last Modified:	04 Feb 2019 11:16
URI:	http://tapmi.informaticsglobal.com/id/eprint/126

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