Firm-Level Productivity and Exports: The Case of Manufacturing Sector in India

  • K. NarayananEmail author
  • Santosh Kumar Sahu
Part of the India Studies in Business and Economics book series (ISBE)


This study differentiates total factor productivity (TFP) between the exporting and non-exporting firms in manufacturing sector of India. We use data from the Centre for Monitoring Indian Economy (CMIE) from 2003 to 2015. For a better understanding of the productivity distribution, we create two subgroups of sample based on firm age and size. Moving away from parametric tests this study adopts non-parametric statistics in testing the hypothesis. Productivity levels are found to be higher for the exporting firms as compared to the non-exporting firm. Further, within the exporting firms, those with larger firm size have higher productivity compared to the smaller firms.


TFP Exports Non-parametric tests Manufacturing sector India 

JEL Classification

D24 F10 M20 L10 


  1. Aw, B. Y., Chen, X., & Roberts, M. J. (1997). Firm level evidence on productivity differentials, turnover, and exports in Taiwanese manufacturing. NBER Working Paper 6235.Google Scholar
  2. Aw, B. Y., Chung, S., & Roberts, M. J. (2000). Productivity and turnover in the export market: Micro evidence from Taiwan and South Korea. The World Bank Economic Review, 14(1), 65–90.CrossRefGoogle Scholar
  3. Aw, B. Y., & Hwang, A. (1995). Productivity and the export market: A firm-level analysis. Journal of Development Economics, 47, 313–332.CrossRefGoogle Scholar
  4. Bai, J. (1996). Testing for parameter constancy in linear regressions: An empirical distribution function approach. Econometrica, 64(3), 597–622.CrossRefGoogle Scholar
  5. Baldwin, J., Jarmin, R., & Tang, J. (2002). The trend to smaller producers in manufacturing: A Canada/US comparison. Economic Analysis Research Paper Series, No. 3, Statistics Canada.Google Scholar
  6. Banga, R., & Goldar, B. (2007). Contribution of services to output growth and productivity in Indian manufacturing. Economic and Political Weekly, 42(26).Google Scholar
  7. Bernard, A., & Jensen, J. B. (1999). Exceptional exporter performance: Cause, effect or both? Journal of International Economics, 47, 1–25.CrossRefGoogle Scholar
  8. Bernard, A. B., & Jensen, J. B. (1995). Exporters, jobs and wages in U.S. manufacturing, 1976–1987. The Brooking Papers on Economic Activity. Microeconomics, 67–112.Google Scholar
  9. Cavusgil, S. T. (1976). Organizational determinants of firms’ export behavior: An empirical analysis. Ph.D. Thesis, Wisconsin: University of Wisconsin, Madison (unpublished).Google Scholar
  10. Clerides, S. K., Lach, S., & Tybout, J. R. (1998). Is learning-by-exporting important? Micro-dynamic evidence from Colombia, Mexico and Morocco. Quarterly Journal of Economics, CXIII, 903–947.Google Scholar
  11. Darling, D. A. (1957). The Kolmogorov-Smirnov, Cramer-Von Mises tests. Annals of Mathematical Statistics, 28, 823–838.CrossRefGoogle Scholar
  12. Delgado, M. A., & Mora, J. (2000). A non-parametric test for serial independence of regression errors. Biometrika, 87, 228–234.CrossRefGoogle Scholar
  13. Delgadoa, M. A., Jose, C. F., & Ruano, S. (2002). Firm productivity and export markets: A non-parametric approach. Journal of International Economics, 57(2002), 397–422.CrossRefGoogle Scholar
  14. Doyle, R. W., & Schommer, N. A. (1976). The decision to export: Some implications. A Motivation Study Commissioned by the Minnesota District Export Council.Google Scholar
  15. Ericson, R., & Pakes, A. (1995). Markov-perfect industry dynamics: A framework for empirical work. Review of Economic Studies, 62, 53–82.CrossRefGoogle Scholar
  16. Gine, E., & Zinn, J. (1990). Bootstrapping general empirical measures. Annals of Probability, 18, 851–869.CrossRefGoogle Scholar
  17. Griliches, Z., & Regev, H. (1995). Firm productivity in Israeli industry 1979–1988. Journal of Econometrics, 65, 75–203.CrossRefGoogle Scholar
  18. Jensen, J. B., & Wagner, J. (1997). Exports and success in German manufacturing. Weltwirtschaftliches Archiv, 133(1), 134–157.CrossRefGoogle Scholar
  19. Jovanovic, B. (1982). Selection and the evolution of industry. Econometrica, 50, 649–670.CrossRefGoogle Scholar
  20. Levinsohn, J., & Petrin, A. (2003). Estimating production functions using inputs to control for unobservables. The Review of Economic Studies, 70(2), 317–341.CrossRefGoogle Scholar
  21. Narayanan, K. (1998). Technology acquisition, de-regulation and competitiveness: A study of Indian automobile industry. Research Policy, 27(2).Google Scholar
  22. Perkett, W. (1963). An analysis of the obstacles to increased foreign trade which confront British Columbia industrial machinery manufacturers. Ph.D. Thesis, Washington: University of Washington Seattle (unpublished).Google Scholar
  23. Prowess IQ, Centre for Monitoring Indian Economy, Annual Financial Balance Statements. Accessed as on 11-10-2018.Google Scholar
  24. Roberts, M. J., & Tybout, J. R. (1997). The decision to export in Colombia: An empirical model of entry with sunk costs. American Economic Review, 87(4), 545–564.Google Scholar
  25. Sahu, S. K., & Narayanan, K. (2015). Technology import, R and D spillover and export: a study of automobile sector in India. Review of Development and Change, XX(2), 257–276. Special Issue on ‘Promises and Challenges in India’s Manufacturing Sector’, Madras Institute of Development Studies, Chennai.Google Scholar
  26. Tybout, J. R. (1997). Heterogeneity and productivity growth: assessing the evidence. In M. J. Roberts, & J. R. Tybout (Eds.), Industrial evolution in developing countries. Oxford University Press.Google Scholar
  27. Van Biesebroeck, J. (2005). Firm size matters: Growth and productivity growth in African manufacturing. Economic Development and Cultural Change, 53, 545–583.CrossRefGoogle Scholar

Copyright information

© Springer Nature Singapore Pte Ltd. 2020

Authors and Affiliations

  1. 1.Department of Humanities and Social SciencesIndian Institute of Technology BombayMumbaiIndia
  2. 2.Department of Humanities and Social SciencesIndian Institute of Technology MadrasChennaiIndia

Personalised recommendations