The 2001 Australasian Meeting of the ECONOMETRIC SOCIETY Economic Liberalization and Productivity Growth: A Disaggregated Analysis of Indian Manufacturing Industries

The paper studies the impact of Economic Liberalization of the Indian government in the 1990s on the manufacturing productivity. In particular, the paper examines in detail the variations of TFP across manufacturing sector at a more disaggregated level from 1980-97. Further, manufacture productivity growth is decomposed by the framework introduced by Arnold C. Harberger (1991 and 1998). The TFP sunrise/sunset analysis is used to study the structural changes that are occurring in the manufacturing sector due to the economic liberalization policies introduced by the Indian government since 1991. The empirical results show that productivity gains are not evenly distributed across sectors. Some sectors experience very high rates of productivity as they are in the process of adopting new technology and new methods of production particularly after the liberalization