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Capital Intensity, Productivity and Returns to scale in Modern Small Industries in India

Author

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  • Ramaswamy, K.V.

Abstract

The paper examines three hypotheses regarding small-scale manufacturing units, namely, 1) Small firms use more labour per unit of capital 2)They produce more output per unit of capitaland 3)Do small firms use resources more efficiently than large firms in terms of Total Factor Productivity(TFP)? The establishment level data from the Reserve Bank of India Survey of small-scale industrial units (1977) has been used. Analysis is confined to four industry groups-namely Motor vehicles parts, Agricultural machinery and parts, Machine tools and parts and Plastic products. The analysis indicates that capital intensity and partial productivities are sensitive to alternative measures of firm size. Firm size and TFP are not found to be systematically related.
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Suggested Citation

  • Ramaswamy, K.V., 1992. "Capital Intensity, Productivity and Returns to scale in Modern Small Industries in India," Papers 73, Indira Gandhi Institute of Development Research-.
    • Handle: RePEc:fth:indgan:73
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    Cited by:

    1. Fikkert, Brian & Hasan, Rana, 1998. "Returns to scale in a highly regulated economy: evidence from Indian firms," Journal of Development Economics, Elsevier, vol. 56(1), pages 51-79, June.
    2. Ritwik Mazumder & Maniklal Adhikary, 2010. "Measuring Technical Efficiency in the Indian Automobile Industry," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 11(1), pages 53-67, March.
    3. Sanu, Md Sahnewaz, 2018. "The Contribution of MSMEs in India’s Total Exports and GDP Growth: Evidence from Cointegration and Causality Tests," MPRA Paper 107892, University Library of Munich, Germany, revised Jan 2019.

    More about this item

    Keywords

    productivity ; capital market;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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