Total Factor Productivity
Table of Contents Abstract 4 Chapter 1 - Overview 5 CHAPTER 2 – Literature review 7 Chapter 3 –Results and discussion 9 Output trends 9 Growth Rates of Total Factor Productivity 10 Growth Rates of Total Factor Productivity in Selected Industries 10 chapter 4 - CONCLUSION 12 Bibliography 13
Abstract
Chapter 1 - Overview
Industrial performance of a country needs to be viewed in totality, i.e, with respect to growth of output, employment and productivity. Moreover, productivity levels are as important as productivity growth trends, as both are pertinent in the convergence process.
Productivity growth is essential not only to increase output, but also to improve the competitiveness of an industry both in the domestic and international markets.
The planning process in India emphasized creation of a well-diversified industrial base and also channeled a significant proportion of resources to meet this end. This was coupled with a host of policy measures to protect the domestic industry which resulted in escalation of costs and lack of competition in India 's manufacturing sector. The regulatory framework, inter alia, has been held responsible for low growth rate of productivity of India 's manufacturing sector. Liberalization process, therefore, accelerated productivity growth rates. Increasing growth rates of output, productivity and employment in manufacturing sector are important due to their linkages with agricultural and service sectors. From the point of view of sustainability, a higher growth path of output on account of increased total factor productivity is considered to be a preferable alternative as compared with that due to increased application of inputs (Krugman (1994)). However, this can be a contentious issue. If increased productivity is brought about by shrinking employment of labour, it may not bode well for the social fabric of the country and should be a cause for concern to the policy makers. Moreover, the basic objective
Abstract
Chapter 1 - Overview
Industrial performance of a country needs to be viewed in totality, i.e, with respect to growth of output, employment and productivity. Moreover, productivity levels are as important as productivity growth trends, as both are pertinent in the convergence process.
Productivity growth is essential not only to increase output, but also to improve the competitiveness of an industry both in the domestic and international markets.
The planning process in India emphasized creation of a well-diversified industrial base and also channeled a significant proportion of resources to meet this end. This was coupled with a host of policy measures to protect the domestic industry which resulted in escalation of costs and lack of competition in India 's manufacturing sector. The regulatory framework, inter alia, has been held responsible for low growth rate of productivity of India 's manufacturing sector. Liberalization process, therefore, accelerated productivity growth rates. Increasing growth rates of output, productivity and employment in manufacturing sector are important due to their linkages with agricultural and service sectors. From the point of view of sustainability, a higher growth path of output on account of increased total factor productivity is considered to be a preferable alternative as compared with that due to increased application of inputs (Krugman (1994)). However, this can be a contentious issue. If increased productivity is brought about by shrinking employment of labour, it may not bode well for the social fabric of the country and should be a cause for concern to the policy makers. Moreover, the basic objective
Bibliography: 1. Pushpa Trivedi “An Inter-State Perspective on Manufacturing Productivity in India: 1980-81 to 2000-01” 2. Sehgal et al “Total Factor Productivity of Manufacturing Sector in India: A Regional Analysis for the State of Haryana”