This paper analyses the performance of the manufacturing firms
in some selected industries in terms of their technical efficiency against
the background of the industrial and trade policy reforms introduced in
India since 1991. A stochastic frontier production function and an
associated inefficiency model are used to measure time varying firm
specific technical efficiency. We define technical change as the shift of
the best practice production frontier and technical inefficiency change
as the movement within the best practice technology. The results show
that all the industries considered registered a higher rate of technical
progress in the post reform period along with a decline in the level of
technical efficiency. The effect of change in the policy environment on
technical efficiency varies among industries. The study also found that
firms’ involvement in the international trade through export and import
of raw materials and technology has a positive effect on technical
efficiency.
Key words: India, Manufacturing, Technical Efficiency, Economic
Reforms.
JEL Classifications: D24, F13, L60, O3
