Total Factor Productivity and Energy Intensity in Indian Manufacturing: A Cross-Sectional Study

Year 2011, Volume: 1 Issue: 2, 47 - 58, 01.06.2011

Santosh Kumar Sahu Krishnan Narayanan

Abstract

In recent climate change negotiations and debates, energy use pattern, efficiency and
productivity cannot be overlooked and hence it is necessary to focus on these ascepts for Indian
manufacturing industries. The objective of the paper is to estimate the transcendental logarithmic
production function and analyse the relationship between energy intensity and total factor productivity
(TFP). The estimation of TFP is based on four inputs model; labour, capital, material and energy. The
findings suggest that labour and material inputs play major role as compared to the capital and energy
input. Further, estimates suggest that age of the firm, export intensity and disembodied technology
import are positively related to the TFP, where as ownership, energy intensity, embodied technology
import and R&D intensity are negatively related to TFP of the Indian manufacturing industries. İn
addition, energy efficient firms also found to have high levels of TFP. This implies the need for
fostering energy efficiency at firm level in Indian Manufacturing.

Keywords

Production function, Total Factor Productivity, Energy Intensity, Indian Manufacturing Industries