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Infrastructure, information & communication technology and firms’ productive performance of the Indian manufacturing
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Infrastructure, information & communication technology and firms’ productive performance of the Indian manufacturing

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  • Mitra, Arup
  • Sharma, Chandan
  • Véganzonès-Varoudakis, Marie-Ange

Abstract

The Make in India program aims at building best-in-class manufacturing set up in the country. However, public infrastructure is considered to be one of the biggest obstacles for the growth of manufacturing in the country. In this context, this paper examines the role of infrastructure and information & communication technology (ICT) on total factor productivity (TFP) and technical efficiency (TE) of the Indian manufacturing sector for the period 1994–2010. We use advanced estimation techniques to overcome problems of non-stationarity, omitted variables, endogeneity and reverse causality by applying fully modified OLS, panel cointegration and System GMM. Estimation results suggest that the impact of infrastructure and ICT is rather strong. Importantly, industries, such as Transport Equipment, Textile, Chemicals, Metal & Metal Products, which are more exposed to foreign competition, are found to be more sensitive to infrastructure endowments. In the light of these findings, policy implications are brought out.

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  • Mitra, Arup & Sharma, Chandan & Véganzonès-Varoudakis, Marie-Ange, 2016. "Infrastructure, information & communication technology and firms’ productive performance of the Indian manufacturing," Journal of Policy Modeling, Elsevier, vol. 38(2), pages 353-371.
    • Handle: RePEc:eee:jpolmo:v:38:y:2016:i:2:p:353-371
    DOI: 10.1016/j.jpolmod.2016.02.013
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    4. Li, Chunying & Zhang, Jinning & Lyu, Yanwei, 2022. "Does the opening of China railway express promote urban total factor productivity? New evidence based on SDID and SDDD model," Socio-Economic Planning Sciences, Elsevier, vol. 80(C).
    5. Chandan Sharma, 2018. "Productivity and Size of Firms: Evidence from Indian Manufacturing," Economics Bulletin, AccessEcon, vol. 38(2), pages 791-798.
    6. John Bosco Nnyanzi & Susan Kavuma & John Sseruyange & Aisha Nanyiti, 2022. "The manufacturing output effects of infrastructure development, liberalization and governance: evidence from Sub-Saharan Africa," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(2), pages 369-400, June.
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    8. Rawat, Pankaj S. & Sharma, Seema, 2021. "TFP growth, technical efficiency and catch-up dynamics: Evidence from Indian manufacturing," Economic Modelling, Elsevier, vol. 103(C).
    9. Khanna, Rupika & Sharma, Chandan, 2022. "Impact of information technology on firm performance: New evidence from Indian manufacturing," Information Economics and Policy, Elsevier, vol. 60(C).
    10. Xin Du & Hengming Zhang & Yawen Han, 2022. "How Does New Infrastructure Investment Affect Economic Growth Quality? Empirical Evidence from China," Sustainability, MDPI, vol. 14(6), pages 1-30, March.
    11. Rath, Badri Narayan, 2018. "Productivity growth and efficiency change: Comparing manufacturing- and service-based firms in India," Economic Modelling, Elsevier, vol. 70(C), pages 447-457.
    12. Timilsina,Govinda R. & Sahoo,Pravakar & Dash,Ranjan Kumar, 2022. "Why Do Indian States Differ in Their Infrastructure Development ?," Policy Research Working Paper Series 10086, The World Bank.
    13. Dong Hyun Lee & Ga Youn Hong & Sang-Gun Lee, 2019. "The relationship among competitive advantage, catch-up, and linkage effects: a comparative study on ICT industry between South Korea and India," Service Business, Springer;Pan-Pacific Business Association, vol. 13(3), pages 603-624, September.
    14. Moein Khazaei & Mohammad Ramezani & Amin Padash & Dorien DeTombe, 2021. "Creating shared value to redesigning IT-service products using SYRCS; Diagnosing and tackling complex problems," Information Systems and e-Business Management, Springer, vol. 19(3), pages 957-992, September.
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    More about this item

    Keywords

    India; Manufacturing; Productive performances; Infrastructure; Information & communication technology;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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