An empirical investigation of productivity dynamics and determinants of total factor productivity in selected manufacturing sectors: a panel data analysis

The present research is an effort to determine which factors influence total factor productivity (TFP) in selected sectors, viz. motor vehicles, trailers and semi-trailers#29; chemicals & chemical products#20; food products#10; tobacco and tobacco products#12. Using Translog index for TFP, it gives a complete picture better than atrial productivities. Panel data analysis was applied to determine the relation between TFP and its determinants. The determinants include capital intensity; credit; rate of growth of output, technology status, total emoluments and concentration ratio. Total factor productivity was low during the period 2006-2017. Results of 4-firm concentration ratio, highlighted moderate concentration for high-technology sector, viz. in automobile and chemicals & chemical products. Food Product sector had lowest concentration ratio, while Tobacco & Tobacco products was the most concentrated industry. Capital intensity; technology status, total emoluments and market concentration emerged as significant factors influencing TFP. The fixed model explained 68.18 percent of variation in TFP. These results highlight that TFP is influenced by capital intensity and technology status & market concentration. Earlier studies highlight the importance of total emoluments also. As we can say the fourth industrial revolution focuses on technology factors and market concentration.