研究報告書

Technical Efficiency of Small Scale Industry in India : Application of Stochastic Production Frontier Model

eng

105

1

23

2002-02-07

Version of Record

アジア諸国における金融システムの変容と再生;1

ln India, the government has carried out various preferential policies for Small Scale lndustry (SSI) since the 1950s. However, the main objective of the past policies was to protect SSI rather than to make it independent under competitive environment. After the economic liberalization of 1991, however, SSI has increasingly been recognized as a growth engine of the national economy. In other words, by making use of its flexible and innovative nature, this sector is expected to work as a linkage/subcontracting industry or as an export-oriented industry. Thus, the government is urged to change the policies in accordance with such needs and situations. In this paper, firstly, I measure technical efficiency of SSI by using a stochastic production frontier model. Secondly, I analyze the impact of firm size and industrial agglomeration effects on the measured technical efficiency. I got a result that industrial agglomeration has a positive effect on the technical efficiency. It implies that the government had better promote industrial agglomeration, keeping infrastructure in good conditions and supporting technological upgrading of SSI.

Working Paper