Productivity Dynamics in the Indian Pharmaceutical Industry: Evidences from Plant-level Panel Data

This paper investigates the effects of plants' dynamics on productivity growth in the Indian pharmaceutical industry across five regions: north, north-west, west, south and the rest of India, during the period from 2000-01 to 2005-06, using the unit-level panel database drawn from the Annual Survey of Industries. The selected regions differ in the degree and age of agglomeration of the pharmaceutical industry. The empirical analysis is based on the decomposition methodology of aggregate productivity growth. This methodology decomposes productivity growth between two points in time into the contribution from four broad factors: improvement in incumbents? productivity (within effect), reallocation of resources from less productive to more productive producers (reallocation effect), entry of more productive firms (entry effects), and exit of less productive firms (exit effect). URL:[http://fgks.in/IndexServer/tifac/article/142.pdf].