Microeconomic and Macroeconomic Determinants of Efficiency: Evidence from Indian Manufacturing Sub-Sectors

Sumit Kumar Maji
Arindam Laha
Debasish Sur

Abstract

In this paper an effort was made to evaluate the level of efficiency of the firms that belong to the selected manufacturing sub-sectors in India for the period 1999-2000 to 2013-2014 using Stochastic Frontier Analysis. Subsequently, the microeconomic and macroeconomic determinants of efficiency were analysed applying Panel Censored Tobit Regression Model. The study revealed that Electrical Equipment sub-sector was found to be the most efficient sector followed by the sub-sectors Auto Parts and Equipment, Pharmaceutical and Biotechnology, Chemicals, Textile, Food products and Steel respectively. The study also showed that leverage, size of the firm, age of the firm, openness of the firm (microeconomic) and inflation (macroeconomic) made notable contribution towards changing the level of efficiency of manufacturing firms during the study period. However, their contributions were not the same in all sub-sectors under study.

Keywords:  Efficiency, Manufacturing Sub-sectors, Stochastic Frontier Analysis

Volume 11, Issue 1
June 30, 2020
Pages: 47-82

DOI: http://doi.org/10.4038/cbj.v11i1.57

Suggested citation:

Maji, S. K., Laha, A., & Sur, D. (2020). Microeconomic and macroeconomic determinants of efficiency: Evidence from Indian manufacturing sub-sectors. Colombo Business Journal. 11(1), 47-82. http://doi.org/10.4038/cbj.v11i1.57

Sumit Kumar Maji
Department of Commerce, The University of Burdwan, India
2009sumitbu@gmail.com

Arindam Laha
Department of Commerce, The University of Burdwan, India

Debasish Sur
Department of Commerce, The University of Burdwan, India