INTERTEMPORAL EFFICIENCY VARIATIONS IN INDIAN MANUFACTURING-INDUSTRIES

One of the important sources of growth of an economy is the efficient and productive use of existing resources. The Indian industries after three decades of protected industrial culture has produced an ineffici ent regime. This is supposed to be corrected by the on-going economic liberalization. An application of Time-Varying Frontier Production Fun ction approach with both fixed and variable ranking models in Indian i ndustries helps in testing the hypothesis of intertemporal movement of technical efficiencies (TE) on which the current globalization progra m is based. The results are significantly conclusive: TEs have been fa lling over time. This along with TFP changes helps us to understand th e nature of industrial development in recent past. An inquiry into the sources of inter-industry efficiency variations shows that skill, lab or productivity and profit play significantly positive role, while cap ital intensity works against general beliefs.