![]() First, it employs advanced production estimation techniques to compute TFP of 32 diverse industries of an emerging economy: India. ![]() In this backdrop, this paper offers two novelties. Originality/value – to the authors’ knowledge, this is the first study that compares the contemporary productivity estimation techniques. The robustness test confirms Wooldridge to be the most robust contemporary technique for productivity estimation followed by ACF and LP. Further results suggest that ACF and Wooldridge yield the consistent outcomes as compared to LP and MR. The paper also performs the robustness check to ascertain which estimation technique is more robust.įindings – the result indicates that the TFP growth of Indian industries has differed greatly over this 7-years period but the estimates are sensitive to the techniques used. Next, it selects four contemporary estimation techniques, computes the industrial TFP for Indian states using them and investigates their empirical outcomes. It then categorizes the productivity estimation techniques into three logical generations, namely: traditional, new and advanced. Purpose – the purpose of this paper is to compare and analyze the modern productivity estimation techniques – namely, Levinsohn and Petrin (LP, 2003), Ackerberg Caves and Frazer (ACF, 2006), Wooldridge (2009) and Mollisi & Rovigatti (MR, 2017) on unit-level data of 32 Indian industries for the period 2009- 2015ĭesign/methodology/approach – the paper first analyzes different issues encountered in total factor productivity (TFP) measurement. The results have significant implications for policy in terms of development of resource base and use of inputs, R&D and skill, and infrastructure, which would necessarily promote exports. Firm-level productivity and availability of credit however do not play any significant role for most sectors. Further, firm heterogeneity explained in terms of sunk costs significantly impacts on export intensity. This is true for both the medium and high technology industries. Rather firms have become internationally competitive with the import of raw materials, foreign technical know-how and local R&D. Hausman-Taylor estimation results show that foreign ownership does not have any effect on firm-level export performance across sectors in Indian manufacturing. Heterogeneity across firms is measured in terms of productivity and sunk cost. While estimation, the impact of various firm-specific supply factors including size and age of the firms, import of raw materials, imported capital goods and foreign technical knowhow, expenditure on advertising and marketing, local R&D, labour productivity and availability to credit are controlled for. While determining the factors underlying export performance a firm specific model has been set up for econometric estimation. From the literature it is evident that, ownership, and hence MNE presence, is likely to play an important role in explaining export performance. There is a rich body of literature, which analyses the various dimensions of the effect of FDI on export performance. Apart from ownership, heterogeneity of firms defined in terms of higher productivity gives the foreign firms an edge over domestic firms to self select into export market. MNEs often use the host country as export platform. FDI is often found to promote exports, particularly in emerging market economies like India. Using firm level data from the CMIE Prowess database, this paper investigates whether Foreign Direct Investment (FDI), and hence Multinational Enterprise (MNE) presence, explains India’s firm level export performance.
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