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Aggregate Productivity Growth in Indian Manufacturing: An Application of Domar Aggregation

Author

Listed:
  • Deb Kusum Das

    (Indian Council for Research on International Economic Rela)

  • Gunajit Kalita

    (Indian Council for Research on International Economic Rela)

Abstract

Productivity growth in Indian manufacturing is an important driver of overall growth, yet the issues related to its measurement have still not been resolved. The issue of how to compute an aggregate productivity measure holds significance for two reasons: one, the productivity of a firm should reflect the productivity of the lower levels, which comprise the aggregate; and two, aggregate productivity should also emphasize the importance of inter-industry transactions in an analysis of productivity growth. Contributions from Domar (1961), Hulten (1978) and Jorgenson et al. (1987) have addressed the issue of measuring aggregate productivity. We have made an attempt to compute the aggregate productivity growth using the Domar aggregation technique. Building up from the Total Factor Productivity Growth (TFPG) estimates for 3-digit industries, we have used Domar weights to computed total factor productivity (TFP) growth for selected 10, 2-digit industries for the period 1980-2000. Comparing the estimates based on the Domar aggregation technique with those based on the traditional aggregate value added approach, we observe that the preferred estimates are about half of that obtained by the traditional aggregate value added method. This holds immense significance for any underlying productivity numbers

Suggested Citation

  • Deb Kusum Das & Gunajit Kalita, "undated". "Aggregate Productivity Growth in Indian Manufacturing: An Application of Domar Aggregation," Indian Council for Research on International Economic Relations, New Delhi Working Papers 239, Indian Council for Research on International Economic Relations, New Delhi, India.
    • Handle: RePEc:ind:icrier:239
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    File URL: http://www.icrier.org/publication/WorkingPaper239.pdf
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    Citations

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    Cited by:

    1. Arnab K. Deb & Subhash C. Ray, 2014. "An Inter-state Analysis of Total Factor Productivity Growth in Selected Two-digit Manufacturing Industries in India," Global Business Review, International Management Institute, vol. 15(4_suppl), pages 59-86, December.
    2. K. L. Krishna & Bishwanath Goldar & Suresh Chand Aggarwal & Deb Kusum Das & Abdul A. Erumban & Pilu Chandra Das, 2018. "Productivity Growth and Levels - A comparison of Formal and Informal Manufacturing in India," Working papers 291, Centre for Development Economics, Delhi School of Economics.
    3. Erumban, Abdul A. & Das, Deb Kusum, 2016. "Information and communication technology and economic growth in India," Telecommunications Policy, Elsevier, vol. 40(5), pages 412-431.
    4. Bishwanath Goldar & K. L. Krishna & Suresh Chand Aggarwal & Deb Kusum Das & Abdul Azeez Erumban & Pilu Chandra Das, 2017. "Productivity growth in India since the 1980s: the KLEMS approach," Indian Economic Review, Springer, vol. 52(1), pages 37-71, December.
    5. Erumban, Abdul Azeez & Das, Deb Kusum & Aggarwal, Suresh & Das, Pilu Chandra, 2019. "Structural change and economic growth in India," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 186-202.
    6. Arnab K. Deb, 2014. "Economic Reforms, Capacity Utilization and Productivity Growth in Indian Manufacturing," Global Business Review, International Management Institute, vol. 15(4), pages 719-746, December.
    7. 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.
    8. Subhash C. Ray & Arnab K. Deb & Kankana Mukherjee, 2021. "Unrestricted geometric distance functions and the Geometric Young productivity index: an analysis of Indian manufacturing," Empirical Economics, Springer, vol. 60(6), pages 3103-3134, June.

    More about this item

    Keywords

    Productivity growth; Domar aggregation; aggregate value added; Indian manufacturing;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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