Elements of Output and Productivity Growth: A Study of the 2-Digit Manufacturing Industries in Andhra Pradesh, India

Abstract

The study estimates sources of output and productivity growth of the 2-digit manufacturing industries as well as total manufacturing industry in Andhra Pradesh during the period from 1981-82 to 2010-11. A stochastic frontier model with a translog production function is used to estimate the sources of output and total factor productivity growth (TFPG) of the 2-digit manufacturing industries of the state. The sources of output growth become input growth effect and TFPG whereas TFPG consists of adjusted scale effect (ASC), technological progress (TP) and technical efficiency effect (TEC). The empirical results show that input growth effect is the major contributor to output growth in Andhra Pradesh manufacturing, and TFPG too incorporates a positive and significant effect on output growth in the majority of the 2-digit industries of the state during the study periods.