AN ANALYSIS OF TECHNOLOGICAL-CHANGE, FACTOR SUBSTITUTION AND ECONOMIES OF SCALE IN MANUFACTURING-INDUSTRIES IN INDIA

The biases of technological change, factor substitution and economies of scale in four major manufacturing industries (viz. cement, electric ity and gas, cotton textiles and iron and steel) in India are examined . The translog cost functions are estimated using annual time series d ata covering the period 1960-61 to 1982-83. The study reveals that tec hnical change has been biased towards the use of labour and materials and against the use of capital and energy in electricity and gas indus tries. In cotton textiles, the technological change has shown the oppo site biases. Significant economies of scale exist in the production of electricity and gas. Enough evidence of substitution possibilities am ong factors of production in all the four industries was also found.