DECOMPOSITION OF TECHNOLOGICAL-CHANGE AND FACTOR BIAS IN INDIAN POWERSECTOR - AN UNBALANCED PANEL-DATA APPROACH

Technological change and factor bias in the Indian power sector are an alyzed using a translog cost function. Various components of technolog ical progress and factor bias are identified and estimated, using a 21 year unbalanced panel data of Indian states and union territories. He terogeneity across states is incorporated in the model using a varianc e component model. Appropriate corrections are made for unbalanced pan el data. Empirical results show that the annual average rate of techno logical progress has been 2.4% for the country as a whole. Accumulatio n of knowledge and increasing scale are found to be the major factors contributing to technological progress. In contrast, the effects of fa ctor price changes and fixed capital accumulation on technological pro gress have been unfavorable. Pure factor bias measure indicate saving in the use of fuel and labor, and increased use of materials, Tests ar e performed to check the curvature properties of the underlying techno logy.