Determinants of Industrial Productivity in India Before and After Liberalisation - An application of Discriminant Function
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Date
2012
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Abstract
A well developed industrial sector covering various different areas is vital to
economic development of a country. Since a variety of different industrial sectors are
connected with each other thorough inter dependence of demand and supply, a well
balanced industrial growth is at the centre of economic development. Estimation
and analysis Productivity growth and productivity differential in manufacturing sector have been
the most popular areas of applied economic research as it is based on
the well-defined analytical framework of the standard economic theory ofproductivity.
The reference period chosen for the study covers both pre and post liberalization
period. The pre liberalization period covers between 1972-73 and 1990-91
and post liberalization period between 1991-92 and 2009-10. In this paper, a
Discriminant Function Analysis is applied to find out the dominant factors which
determine the productivity in manufacturing sector of Indian states. It was found that time factor
was the first dominant factor to determine the pre and post liberalization
period labour productivity. Both in the pre and post liberalization period capital
productivity was dominated by wage rate. In determining the total factor
productivity net value added was the prime factor between pre and post liberalization period.