Title: Do exogenous factors matter in the productivity growth trajectory of Indian manufacturing?

Authors: Abhijeet Bag; Sarbapriya Ray

Addresses: Department of Commerce, University of Calcutta, Kolkata, India; Department of Commerce, Cooch Behar Panchanan Barma University, Coochbehar, India ' Department of Commerce, Vivekananda College, University of Calcutta, West Bengal, India

Abstract: The study tries to present total factor productivity growth in Indian manufacturing sector to identify the exogenous factors that led to the growth of productivity in manufacturing sector during 1996-1997 to 2016-2017. Using GMM estimation, the study reveals that FDI inflow, political stability, initial education, research and development expenditure are found to positively impact productivity growth in Indian manufacturing. Trade openness yields adverse impact on TFPG. Female participation and initial investment unexpectedly caused negative impact on TFPG. Negative impact of per capita GDP on TFPG, although insignificant, suggests that economic growth in India is mainly input accumulated rather than productivity driven. Sectoral composition having insignificant negative impact indicates that predominance of agricultural sector would lower productivity growth in manufacturing sector of India. With input accumulated growth prevalent in India, improving TFPG is an urgent need in order to reduce dependence on physical inputs as well to become a productivity driven economy.

Keywords: productivity; growth; India; exogenous factors; manufacturing; sector.

DOI: 10.1504/IJICBM.2023.129006

International Journal of Indian Culture and Business Management, 2023 Vol.28 No.2, pp.198 - 217

Received: 16 Jun 2021
Accepted: 05 Sep 2021
Published online: 14 Feb 2023 *

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