Perspectives on the Sources of Heterogeneity in Indian Industry
The authors examine technical efficiency variation across four industrial sectors in India, using a stochastic production frontier technique. The results are comparable to technical efficiency distribution patterns obtained in other countries. The...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2000/11/729386/perspectives-sources-heterogeneity-indian-industry http://hdl.handle.net/10986/19772 |
| Summary: | The authors examine technical efficiency
variation across four industrial sectors in India, using a
stochastic production frontier technique. The results are
comparable to technical efficiency distribution patterns
obtained in other countries. The authors examine
heterogeneity in firm-level efficiency against internal,
firm-level characteristics and against external
characteristics (industry and location). The results suggest
that managerial effectiveness significantly influences
efficiency and that considerable benefits derive from
location within established industrial clusters for
particular industries. The methodology and findings indicate
that the study of industry-specific technical efficiency
patterns is a useful analytical tool for tracking domestic
firms' response to liberalization and the advance of
market forces. An important policy implication of the
authors' results: There is considerable room for
efficiency gains through better organization and management
of production processes and improved supply chain
management, even in the highly organized corporate sector.
These gains could be achieved by purely internal learning
processes with no extra investment in physical plant or
equipment, or with the help of outside consultants, or
through business alliances with partners from industrial
countries (a rising trend). The results also show that
greater technical efficiency correlates with better energy
use and higher investments in plant management. How firms
can be induced to undertake such investments in the
"software" of production is an important issue.
Liberalization and globalization are likely to bring
significant productivity gains even in low-technology
industries as managers gear up to meet the challenges of competition. |
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