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Article
Publication date: 31 March 2020

Awadhesh Pratap Singh and Chandan Sharma

The goal of this study is to investigate the nexus among TFP (total factor productivity), IT (information technology) capital accumulation, skills and key plant variables…

Abstract

Purpose

The goal of this study is to investigate the nexus among TFP (total factor productivity), IT (information technology) capital accumulation, skills and key plant variables of 34 Indian industries for the period of 2009–2015.

Design/methodology/approach

Annual Survey of Industries (ASI) data series are extracted and formulated using Microsoft SQL server. The authors employ Wooldridge (2009) technique to estimate productivity. To investigate the linkages among productivity, IT, skills and key plant variables, the authors estimate specifications using system generalized method of moments (sys-GMM). Advanced estimation techniques such as Heckman two-step process, probit equations, inverse Mills ratio and panel cointegration are applied to overcome problems of nonstationarity, omitted variables, endogeneity and reverse causality.

Findings

The results indicate that the level of IT capital influences the TFP of Indian industries, so does the level of skilled workers. The outcome suggests that intermediate capital goods, location and ownership type enable the strength of IT capital and that in turn boosts productivity. The authors fail to find any impact of regional factors and contractual labor on IT capital and productivity. While medium-level gender diversity is statistically significant to influence productivity, however, no complementarities exist between gender diversity and IT capital accumulation. The results also indicate that IT demand of Indian industries is sensitive to availability of skilled workforce, fuel and electricity and access to short-term funding.

Originality/value

To the authors' knowledge, this is the first study to investigate the nexus among TFP, IT capital accumulation, skills and organizational factors using ASI unit level data. Besides this, the paper offers two more novelties. First, it uses Wooldridge (2009) technique to estimate productivity, which is used by a handful of studies in the context of India. Second, the study identifies factors that impact productivity growth, IT demand and its adoption in Indian industries and thus contributes to growth and development literature.

Details

Journal of Economic Studies, vol. 47 no. 3
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 4 April 2016

Akshita Arora and Chandan Sharma

This study aims to examine the impact of corporate governance on firm performance for a large representative sample.

Abstract

Purpose

This study aims to examine the impact of corporate governance on firm performance for a large representative sample.

Design/methodology/approach

This empirical analysis focuses on a large number of companies covering 20 important industries of the Indian manufacturing sector for the period 2001-2010. Several alternative specifications and estimation techniques are used for analysis purposes, including system generalized methods of moments, which effectively overcomes the problem of endogeneity and simultaneity bias.

Findings

On one side, the findings indicate that larger boards are associated with a greater depth of intellectual knowledge, which in turn helps in improving decision-making and enhancing the performance. On the other side, the results indicate that return on equity and profitability is not related to corporate governance indicators. The results also suggest that CEO duality is not related to any firm performance measures for the sample firms.

Practical implications

The outcomes of the analyses advocated that companies that comply with good corporate governance practices can expect to achieve higher accounting and market performance. It implies that good corporate governance practices lead to reduced agency costs. Hence, it is concluded that firms of the developing world can possibly enhance their performance by implementing good corporate governance practices.

Originality/value

Departing from the conventional system of the prior studies and instead of focusing on a single measure framework, a range of measures of corporate governance and firm's performance variables are used. Also, several alternative specifications and estimation techniques are used for analysis purposes. Furthermore, the sample also covers a large sample of manufacturing firms.

Details

Corporate Governance, vol. 16 no. 2
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 27 August 2019

Awadhesh Pratap Singh and Chandan Sharma

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…

Abstract

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 and Rovigatti (MR, 2017) on unit-level data of 32 Indian industries for the period 2009-2015.

Design/methodology/approach

The paper first analyzes different issues encountered in total factor productivity (TFP) measurement. It then categorizes the productivity estimation techniques into three logical generations, namely, traditional, new and advanced. Next, it selects four contemporary estimation techniques, computes the industrial TFP for Indian states by using them and investigates their empirical outcomes. The paper also performs the robustness check to ascertain, which estimation technique is more robust.

Findings

The result indicates that the TFP growth of Indian industries have differed greatly over this seven-years of period, but the estimates are sensitive to the techniques used. Further results suggest that ACF and Wooldridge yield the consistent outcomes as compared to LP and MR. The robustness test confirms Wooldridge to be the most robust contemporary technique for productivity estimation followed by ACF and LP.

Originality/value

To the authors’ knowledge, this is the first study that compares the contemporary productivity estimation techniques. In this backdrop, this paper offers two novelties. First, it uses advanced production estimation techniques to compute TFP of 32 diverse industries of an emerging economy: India. Second, it addresses the fitment of estimation techniques by drawing a comparison and by conducting a robustness test, hence, contributing to the limited literature on comparing contemporary productivity estimation techniques.

Details

Indian Growth and Development Review, vol. 13 no. 1
Type: Research Article
ISSN: 1753-8254

Keywords

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Article
Publication date: 10 September 2018

Rupika Khanna and Chandan Sharma

The purpose of this paper is to study the impact of infrastructure and governance quality on the state-level productivity of Indian manufacturing for the period 2008–2011.

Abstract

Purpose

The purpose of this paper is to study the impact of infrastructure and governance quality on the state-level productivity of Indian manufacturing for the period 2008–2011.

Design/methodology/approach

The authors first rank Indian states on their quality of governance using benefit-of-the-doubt approach. Next, to explain state-level differences in total factor productivity (TFP), the authors assess the impact of a composite index of governance on industrial TFP of Indian states using alternate techniques and controlling for endogeneity. The authors also decompose the composite effect of governance in terms of economic, social and financial infrastructure and other key governance dimensions, which serves as another robustness check for the findings.

Findings

The authors find that TFP varies significantly across states, so does governance quality. Further, results suggest that TFP of Indian industries is sensitive toward public service deliveries of economic, social and financial infrastructure. However, the authors fail to find any impact of law and order indicators, for instance, rate of violent crimes, police strength and judicial service quality on the manufacturing productivity. The estimated coefficient of governance index is robust across alternate methodologies.

Originality/value

To the authors’ knowledge, this is the first study to assess the impact of regional governance factors on the manufacturing sector of India. The study has identified governance factors that impact manufacturing productivity in the Indian states. Findings suggest that an effective way to eliminate regional growth inequality in India is to ensure that the lagging states initiate reforms to improve the quality of institutions, regulation and governance. Findings of the study contribute to the limited literature on governance at the regional/sub-national level.

Details

Journal of Economic Studies, vol. 45 no. 4
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 10 December 2018

Chandan Sharma

The issue of black economy has long been debated in India and it has been one of the key targets of policy action from last four decades. The debate is further fueled by…

Abstract

Purpose

The issue of black economy has long been debated in India and it has been one of the key targets of policy action from last four decades. The debate is further fueled by demonetization of higher currency notes in the country. In this context, the purpose of this paper is to estimate the size of black economy in India for the period 1970–2017.

Design/methodology/approach

A currency demand approach is adopted for this purpose. The test of structure break indicates for a break in the system; therefore, the authors employ Johansen et al. (2000) cointegration test. For estimating the empirical model, the authors utilize fully modified ordinary least squares in a cointegration framework for taking care the endogeneity problem.

Findings

The estimates indicate that the Indian economy has a sizable black economy. In early 1970s, when the tax rate in India was significantly higher, the estimated black economy was above 30 percent of the official GDP. A variety of economic reforms including taxation, regulation and industrial licensing have drastically reduced the size to below 15 percent of official GDP in the last two decades. In the last estimated year (2017), the black economy was 23,849bn Indian rupees at current market price (around $400bn), which was 14 percent of the official GDP.

Practical implications

On the basis of the findings, the authors suggest some important fiscal, administrative and regulatory reforms to curb the generation of black economy in India.

Originality/value

The structural breaks can induce stochastic behavior similar to an integrated process, which makes it difficult to differentiate between the lack of cointegration and a structural shift. Thus, in the present study, the authors attempt to address this issue by incorporating the issue of structural break in the analysis. Furthermore, India is a cash-based economy; therefore, it is likely that currency-based models are more suitable. The application of advanced time-series techniques is likely to yield better and robust results.

Details

International Journal of Emerging Markets, vol. 14 no. 2
Type: Research Article
ISSN: 1746-8809

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Article
Publication date: 12 June 2019

Chandan Sharma

This study aims to examine the relationship between exchange rate risk and export at commodity level for the Indian case.

Abstract

Purpose

This study aims to examine the relationship between exchange rate risk and export at commodity level for the Indian case.

Design/methodology/approach

The monthly panel data used for analysis are at a disaggregated level, which cover around 100 products, encompassing all merchandize sectors for the period spanning from 2012:12 to 2017:11. To measure the exchange rate volatility, the authors use real as well as nominal exchange rate concepts and predict the volatility of exchange rate using the autoregressive conditional heteroscedastic-based model. They use pooled mean group, mean group and common correlated effects mean group estimator that is suitable for the objectives and data frequency.

Findings

The empirical analysis indicates both short- and long-term negative effects of exchange rate variations on exporting. Specifically, in the long run, real exchange rate as well as nominal exchange rate volatility has significant effects on export performance, yet, the effects of uncertainty of nominal exchange rate is much severe and intense. In the short run, it is the nominal exchange rate uncertainty that hurts exports from India. Nevertheless, the short-run effect is much lesser than the long-run, supporting the argument that the short-term exchange rate risk can be hedged, at least partially, through financial instruments; however, uncertainty of the long-term horizon cannot be hedged easily and cost-effectively.

Practical implications

Reducing uncertainty and attaining stability in exchange rate and price level should be an important policy objective in developing countries such as India to achieve higher export growth, both in the short and long run.

Originality/value

Unlike previous studies, this paper tests the relationship using micro-level data and uses advanced econometric techniques that are likely to provide more precise information regarding the association between exchange rate volatility and trade flows.

Details

Journal of Financial Economic Policy, vol. 12 no. 1
Type: Research Article
ISSN: 1757-6385

Keywords

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Article
Publication date: 25 May 2012

Chandan Sharma

The purpose of this paper is to analyze the factors that determine Public Private Partnership (PPP) in infrastructure by using a unique data set on Private Participation…

Abstract

Purpose

The purpose of this paper is to analyze the factors that determine Public Private Partnership (PPP) in infrastructure by using a unique data set on Private Participation in Infrastructure (PPI) for the period 1990‐2008. The study mainly focuses on developing countries, because these countries need PPP arrangement more urgently than any other group of countries.

Design/methodology/approach

For the analysis, a range of advanced panel estimators, namely random‐Poisson, negative binomial, random‐generalized least square (GLS), random‐tobit, zero‐inflated Poisson (ZIP), are utilized to overcome the potential data‐related problems and for the robustness check of the estimated results.

Findings

The results of the analysis suggest that large size and relatively higher income markets attract more PPP projects. The empirical evidence also suggests that macroeconomic stability, quality of regulation and governance are important factors in determining PPP in the infrastructure. Surprisingly, however, the evidence fails to provide any strong support for the role of political factors and budget constraint in the process.

Practical implications

The findings of this study will help the policymakers of developing countries in framing up such policies, so as to encourage more private firms to engage in infrastructure building through PPP.

Originality/value

The paper describes the first attempt of its kind to investigate the determinants of PPP in the context of developing countries.

Details

Transforming Government: People, Process and Policy, vol. 6 no. 2
Type: Research Article
ISSN: 1750-6166

Keywords

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Article
Publication date: 9 March 2012

Chandan Sharma and Ritesh Kumar Mishra

The purpose of this paper is to investigate the nexus between export participation and productivity performance of transport manufacturing firms in India, for the period 1994‐2006.

Abstract

Purpose

The purpose of this paper is to investigate the nexus between export participation and productivity performance of transport manufacturing firms in India, for the period 1994‐2006.

Design/methodology/approach

The relative performance of exporting vis‐à‐vis non‐exporting firms in the industry is examined by utilizing a semi‐parametric test based on the principle of first order stochastic dominance. Subsequently, the causal relation between export and productivity is tested by mainly focusing on learning‐by‐exporting and self‐selection hypotheses.

Findings

The authors' results suggest that productivity performance of firms does not directly affect the probability of exporting. However, the results do provide some evidence which indicates that good firms self‐select into the export market. Furthermore, it was also found that sunk costs of exporting are the key determinants of probability of exporting in the industry. Finally, the authors tested the effect of exporting on productivity and found that past exporting experience or history has a significant and positive impact on firms' productivity.

Practical implications

In the light of the findings of this study, it can be suggested that the trade policy in India should focus on encouraging firms to increase export participation. At the same time, the authors' evidence also advocates that the economic policies should also aim on technology enhancement (i.e. more incentive for R&D activities and training) of firms, to help them achieve higher levels of productivity and efficiency, which in turn will increase the probability of their survival in the highly‐competitive international export market.

Originality/value

The paper provides new evidence on the export‐productivity nexus from the Indian manufacturing industry by testing the empirical validity of the learning‐by‐exporting and self‐selection hypotheses, along with the role of sunk costs in export decisions of firms.

Details

Journal of Manufacturing Technology Management, vol. 23 no. 3
Type: Research Article
ISSN: 1741-038X

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Article
Publication date: 2 November 2015

Chandan Sharma and Rajat Setia

– This paper aims to examine the relationship between Indian rupee-US dollar exchange rate and the macroeconomic fundamentals for the post-economic reform period.

Abstract

Purpose

This paper aims to examine the relationship between Indian rupee-US dollar exchange rate and the macroeconomic fundamentals for the post-economic reform period.

Design/methodology/approach

The authors have used an empirical model which includes a range of important macroeconomic variables based on the basic monetary theories of exchange rate determination. At the first stage of the analysis, they have tested structural break in the data. Subsequently, they have employed the fully modified ordinary least square, Wald’s coefficient restriction and impulse response functions (IRF) to estimate the monetary model in the long- and short-run horizons.

Findings

Results of analyses indicate that the macroeconomic fundamentals determine exchange rate in a significant way, but their effect varies sizably across the periods. The IRF illustrate the importance of interest rate in controlling exchange rate volatility.

Practical implications

The analysis of the behavior of inter-relationship among macroeconomic variables will help policymakers in a deep-rooted understanding of this complex and time-varying relationship.

Originality/value

Most of the existing studies have tested the impact of a single or a few macroeconomic fundamentals on exchange rate. But in the present study, we have tested the impact of a range of important variables, i.e. money supply, real income or output, price level and trade balance. Further, considering the importance of structural breaks in data, they authors have employed standard tests of structural break and incorporated the issue in the cointegration analysis.

Details

Journal of Financial Economic Policy, vol. 7 no. 4
Type: Research Article
ISSN: 1757-6385

Keywords

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Article
Publication date: 28 September 2010

Chandan Sharma and Sanjay Sehgal

The purpose of this paper is to provide an empirical evaluation of the impact of infrastructure development on industry‐level productivity, output and efficiency in India…

Abstract

Purpose

The purpose of this paper is to provide an empirical evaluation of the impact of infrastructure development on industry‐level productivity, output and efficiency in India over the period 1994‐2006.

Design/methodology/approach

The first stage, estimated total factor productivity (TFP) and technical efficiency of eight important industries. In the next stage, the effects of infrastructure were estimated on TFP, output, labor productivity and technical efficiency. Fully modified ordinary least squares procedure was utilized to generate consistent estimates of the relevant panel variables in the cointegrated frameworks.

Findings

The results of this study are mixed. On the one hand, TFP, output and technical efficiency appear to be positively and largely affected by infrastructure. On the other hand, the effect of infrastructure on the labor productivity is somewhat negligible. In addition, the effects of information and communication technology on the industrial performance are found to be very weak.

Originality/value

This is the first study of its kind in the related literature which attempts to investigate the role of infrastructure in industrial performance, using alternative frameworks, namely, growth accounting and production function approach. The paper uses appropriate techniques to account for the potential endogeneity of regressors as well as for multicollinearity among infrastructure variables.

Details

Indian Growth and Development Review, vol. 3 no. 2
Type: Research Article
ISSN: 1753-8254

Keywords

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