Purpose : The paper identifies the structural determinant s of total factor productivity (TFP) growth in India between 1990 to 2019. Design/Methodolo gy/ Approach : To examine the drivers of TFP growth at the aggregate level, ARDL models are used, whereas for identifying the sectoral level determinants, panel pooled group mean estimation methods suggested by Peseran et al. (1999) and 2SLS-IV approaches are used. Findings : The empirical analysis suggest s at the econom ic level , a significant portion of the variation of aggregate TF P growth is explained by idiosyncratic shocks like deviations in rainfall, and exogenous global factors like global GDP growth rates. Public investment in infrastructure, an increase in the share of ICT capital in aggregate fixed capital, and improved global exposure through higher exports and inflows of foreign direct investment (FDI) are also associated with increased TFP growth. At the sectoral level, we find that productivity growth in the in put - producing sec tors and improvements in labour qualities are associated with higher TFP growth in all the sectors in India. Capital deepening is associated with improved TFP growth in manufacturing and market services. Originality/Value : To the best of our knowledge , this is the first attempt to empirically estimate structural deter minants of TFP growth in India using India KLEMS and other nationally representative official data sources.
KeywordsIndia KLEMSTFPARDL Model2SLS IVPanel Data
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