Total Factor Productivity Growth of Indian Fabrics Sector: A Firm level Analysis

Abstract

The present paper examined the extent of Total Factor Productivity Growth (TFPG) of Indian Fabrics Sector using firm level panel data over the period 1991-92 to 2015-16 in a single-output, multi-input model, inputs used are capital, labour, raw material and power & fuel, employing Data Envelopment approach. The paper also attempted to find out the determinants of TFPG of Indian Fabrics Sector, the possible determinants considered are Firm age, Market share, Employees’ contribution and Export Intensity. The result suggests that TFPG of all the sample firms taken together varies across the years. Firm Age negatively and significantly affects TFPG whereas Market share affects TFPG positively. A U-shaped relationship is found between TFPG and Employees’ contribution in Indian Fabrics Sector. The relationship between TFPG and Export Intensity is found to be of inverted U-shaped. An interesting result found is that there is positive and significant effect on TFPG due to dismantling of Multi-Fiber-Agreement.