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A cross-industry Efficiency Analysis and Contribution of the Information and Technology Sector to Indian Economic Growth. By Dukhabandhu Sahoo IITBBS, Bhubaneswar, Odisha , India. Scheme of Presentation. ICT & Indian Economy: An Overview Review of Literature Analytical Framework
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A cross-industry Efficiency Analysis and Contribution of the Information and Technology Sector to Indian Economic Growth By Dukhabandhu Sahoo IITBBS, Bhubaneswar, Odisha, India
Scheme of Presentation • ICT & Indian Economy: An Overview • Review of Literature • Analytical Framework • Data Sources and Variable Construct • Results & Discussion
ICT & Indian Economy: An Overview • The degree of contribution of the ICT to economies and societies vary according to their stage of development (developed, developing or underdeveloped), nature of political economy, availability of appropriate complementary infrastructure, etc. • Estimated GDP (at 2-digit level of NIC) for total ICT has increased from Rs. 656 billion in 2000-01 to Rs. 2530 billion in 2007-08 with CAGR of 21.3%. • Estimated share of ICT services to total GDP has increased from 3% in 2000-01 to 6% in 2007-08.
Review of Literature • O´Mahony and van Ark (2003) • O´Mahony and Timmer (2009) • Kegels et al (2008) • Castaldi (2008) • Kox and Rubalcaba (2007) • Narayan (2009)
Analytical Framework • The pure technical efficiency change (PC) compare the closeness of DMU in each time period to that periods PPF corresponding to variable returns to scale (VRS). • The scale efficiency change (SC) reflects the impact of any change in scale size of DMU’s on its productivity.
Data Sources and Variable Construct • The main data source of the study is PROWESS reported by Centre for Monitoring Indian Economy (CMIE). • For computing TFP, total sales are taken as output variables, and employment, expenditure on computers and electronics equipments, Operating expenditure (Includes expenditure on software, Repairs and maintenance of machinery and building, and Training Expenses etc.), and Power, fuel (including wheeling charges paid by electricity companies) & water charges as the input variables.
Result & Discussion Table 1: Elasticity of employment with respect to total assets
Result & Discussion: continues…. Figure 1: Average OTE, PTE, and SE across Year (1999-00 to 2007-08) Figure 2: Percentage of Efficient Companies (1999-00 to 2007-08)
Result & Discussion: continues…. Table 2: Mean Efficiency Score according to Returns to Scale
Findings • Pure technical inefficiency in the Indian software industry may be attributed to the poor infrastructure, mainly power supply • Indian software companies are becoming more scale inefficient over the years. • Average Scale Efficiency score of the companies operating in Increasing Returns to Scale is highest, except for the year 2006-07. • With respect to set of companies operating in the domain of Decreasing Returns to Scale, it is observed that mean SE is highest except for the year 2003-04 when it reached at its minimum • In case of private foreign companies, Scale Efficiency seems to be exercising relatively higher impact on Overall Technical Efficiency as they move in the same direction and follows same pattern • The current education infrastructure in the country is woefully inadequate to meet this kind of demand (Jalote, 1998 and Arora, 2004)
