Prelims

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Productivity Growth in the Manufacturing Sector

Title Page

Productivity Growth in the Manufacturing Sector: Mitigating Global Recession

Edited by

Mihir Kumar Pal

Vidyasagar University, West Bengal, India

United Kingdom – North America – Japan – India – Malaysia – China

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Emerald Publishing Limited

Howard House, Wagon Lane, Bingley BD16 1WA, UK

First edition 2021

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Dedication

Dedicated to my parents and family

List of Figures

List of Tables

About the Contributors

Abhijeet Bag is Assistant Professor of Commerce, Cooch Behar Panchanan Barma University, India. He formerly worked at Adamas University and Serampore College as Assistant Professor. Presently, he is pursuing PhD from the University of Calcutta, and he was awarded MPhil and MCom from the University of Calcutta.

Subhasis Bhattacharya, PhD, is Professor of Economics, Sidho-Kanho-Birsha University, India. He has Teaching and Research Experience of more than 22 years. His fields of interest are Development Economics, Health Economics, Resource Economics, Financial Economics, and he has special interest on Epidemic Modeling and has edited books, publications in reputed international and national journals.

Antara Bhattacharyya, MPhil, is a State-Aided College Teacher of Commerce at Bijoy Krishna Girls' college, West Bengal, India. She worked as a Data Analyst in ISEC, Bangalore, and is currently a PhD scholar in Economics at Jadavpur University, India.

Bappaditya Biswas, PhD, is Assistant Professor of Commerce, University of Calcutta, India. He has published several articles in different reputed journals and edited volumes. He has successfully completed 1 UGC Minor Research Project and presently is Coinvestigator in 2 Major Research Projects under UGC-UPE Program. Dr Biswas has coauthored four books from McGraw Hill, India, for undergraduate students of commerce.

Chandrima Chakraborty, PhD, is Assistant Professor of Economics, Vidyasagar University, India. She was awarded PhD degree in Economics from Jadavpur University, India. She has published research articles in many books and journals. Her interest areas include Economics of Industry, Agriculture, etc.

Prabal Chakraborty is Assistant Professor of Management Studies, ICFAI University, Tripura, India. His areas of interest are Marketing, Healthcare Management, and he did PG in Marketing. His papers were published in Sage, Emerald, and IGI Global. He has submitted PhD thesis in Management.

Nilendu Chatterjee, PhD, is Assistant Professor of Economics, Bankim Sardar College, West Bengal, India. He has research interest in Resource Economics, General Equilibrium, and Development Economics. He has published a number of research articles in several international journals of economics including International Journal of Sustainable Economies Management, Economic Affairs, and Foreign Trade Review.

Tonmoy Chatterjee, PhD, is Assistant Professor of Economics, Ananda Chandra College, West Bengal, India. He has research interest in International Trade Theory, General Equilibrium, Health Economics, and Development Economics. He has published a number of research articles in several international journals of economics including Review of Economics, International Journal of Sustainable Economies Management, Economic Affairs, Foreign Trade Review, and The Pakistan Development Review.

Sudhanshu Daharwal is a Research Scholar under sponsored category in the Department of Humanities and Social Sciences, IIT Kharagpur, India. His research is centered on Industrial Economics especially on Human Resources Aspects. He has professional experience in human resource management in Mining Industry and e-Procurement.

Akash Dandapat, MPhil, is pursuing PhD at Vidyasagar University, West Bengal, India. He has deep research interest in Unorganized Sector and Informal Labor Market. He completed BSc (University Gold Medalist), MSc (University Gold Medalist), and MPhil. from Vidyasagar University.

Pinaki Das, PhD, is Associate Professor and Head, Department of Economics, Vidyasagar University, India. He has guided 11 Research Scholars and published four books and 40 research papers. He has research interest in Labor Economics, Social Protection, Food Security, Multidimensional Poverty, and Women Empowerment.

Purnendu Sekhar Das, PhD, was Professor (Retd.) of Economics, Vidyasagar University, India, and VGSOM, IIT, Kharagpur, India. He published more than 35 articles in various national and international journals of repute and supervised more than 30 PhD thesis. Recently, he is acting as a visiting professor, member of Academic Council and Board of Studies of various institutions.

Sankar Das, MPhil, is Assistant Professor of Commerce, Dinabandhu Mahavidyalaya, West Bengal, India. Now, he is pursuing PhD from the University of Calcutta, India.

Sanchita De, Research Scholar of Department of Economics, Jadavpur University, India. She worked as a Research Assistant in different projects of Jadavpur University, Indian Statistical Institute (ISI), Indian Institute of Management, Calcutta, and published articles in different books and journals.

Hasan Dinçer, PhD, is Professor of Finance at Istanbul Medipol University, Faculty of Economics and Administrative Sciences, Istanbul-Turkey. Dr Dincer has BAs in Financial Markets and Investment Management from Marmara University. He received his PhD in Finance and Banking by evaluating the new product development process in the banking industry.

Abhijit Dutta, PhD, DLitt, is Professor of Commerce and Dean of Professional Studies at Sikkim (Central) University, India. He published a good number of papers in various reputed national and international journals. His areas of research interest include Globalization, Capital Market, Infrastructure Finance, and Behavioral Finance.

Arpita Ghose, PhD, is Professor of Economics, Jadavpur University, India, Chair-Professor (Honorary), Planning and Development Unit, JU (NITI Aayog), Government of India. She authored/edited books/published many journal papers from renowned international publishers, completed renowned national and international institution's funded projects, supervised PhDs, with research interest in Econometrics, Macroeconomics, Productivity, Efficiency, Empirical studies on International Trade, Applied Development Economics, and Social Sector.

Dipti Ghosh, MPhil, is currently pursuing PhD in Economics at Jadavpur University, India, and has been associated with Bijoy Krishna Girls' College, West Bengal, India, as a College Contractual Temporary Teacher in Economics along with being Visiting Faculty in the Netaji Subhas Open University, Kolkata, India. Her research interests lie in Macroeconomics and Indian Economy.

Md Rakibul Hasan, MPhil, is a Research Scholar in the Department of Economics, Vidyasagar University, India. He has completed BSc (Hons) in Economics from the University of Calcutta, and MSc and MPhil in Economics from Vidyasagar University, India. He has published several articles in reputed journal and books like Emerald, P.A.I.O.L.C.K. His areas of research interest are in the field of Industrial Productivity, Health Economics etc.

Enrico Ivaldi, Research Fellow in social statistic and PhD in Applied Economics and Quantitative Methods at the University of Genoa, he has participated in several national research projects – Ministry of Health, Ministry of Education, and the National Agency for Regional Health Services. He is in the editorial board of Revista de Estudios Andaluces (REA), and is a member of the Scientific Committee of the National Nautical Observatory, CIELI – Italian Centre of Excellence in logistics, transport and infrastructure, Centro de Investigaciones en Econometría – CIE, University of Buenos Aires and member of the Royal Statistic Society.

Hakan Kalkavan, PhD, is Assistant Professor of Economics at Istanbul Medipol University, Faculty of Economics and Administrative Sciences, Istanbul-Turkey. His research interests include Macroeconomics, Ethics, Corporate Governance, Economic Equality, and Islamic Banking.

Suchitra Kumari is Assistant Professor of Commerce, J.D. Birla Institute, Kolkata, India. Her areas of interest are Behavioral Finance, International Finance, Portfolio Management, Mathematical Modeling of Decision-Making Problems, and Contemporary issues in social science to name a few. She can be engrossed in detailed financial theories as well as literary works.

Arindam Laha, PhD, is Associate Professor and Head, at the Department of Commerce, The University of Burdwan, India. He was awarded Gold Medal in PG from The University of Burdwan and was a State Funded Research Fellow. His areas of research interest include Agrarian Institutions, Financial Inclusion, Financial Literacy, Human Development, and Social and Solidarity Economy.

Shrabanti Maity, PhD, is Associate Professor of Economics, Vidyasagar University, India, gained her MSc from the University of Calcutta in Economics. Her research interest is diversified. She has supervised four PhDs, three MPhil dissertations, and several publications in different international and national journals and edited books. A book entitled A Study of Measurement of Efficiency written by her is published by Verlag Dr Muller (VDM).

Sumit Kumar Maji, PhD, is Assistant Professor of Commerce, The University of Burdwan, India. He received his MCom (Double Gold Medalist) and Doctorate degree from The University of Burdwan. He was awarded Tarunendra Bose Gold Medal for his academic excellence in the year 2010. Dr Maji has also been awarded the South-South and Triangular Fellowship by ILO for attending the academy on Social and Solidarity Economy, 2017 held in Seoul, South Korea. His areas of research interest include Corporate Reporting and Finance, Financial and Digital Literacy, Corporate Social Responsibility etc.

Amit Majumder, PhD, is presently working as an Associate Professor of Commerce and Head of the Dept. (UG and PG) at Bijoy Krishna Girls' college, WB, India, since last 15 years. He has also obtained MPhil, MBA (Finance). He is also a Visiting Faculty, Department of Commerce, University of Calcutta, India.

Pulak Mishra, PhD, is Professor in the Department of Humanities and Social Sciences, IIT Kharagpur, India. His research interests include problems in the fields of Industrial Economics, Public Economics, and Policy and Economics of Rural Development. He has undertaken many consultancy projects related to public policy, rural development, and corporate sector.

Sovik Mukherjee is Assistant Professor of Economics, Faculty of Commerce and Management at St. Xavier's University, Kolkata, India. He is a Visiting Research Fellow at NISPAcee, Slovakia, from 2019 to 2020. His research interests are in the areas of Applied Game Theory, Applied Econometrics, Public Policy, and International Economics.

Partha Mukhopadhyay is a Research Scholar at Department of Humanities and Social Sciences, National Institute of Technology, Durgapur, India, and works at Business Excellence Department of Duragpur Steel Plant, Steel Authority of India Limited. His research interests include Business Management, Agricultural Management, and Applied Econometrics etc. He has a numbers of publications in reputed journal and books.

Dipyaman Pal, PhD, is Assistant Professor of Economics, Bethune College, India. He was awarded PhD degree in Economics from Jadavpur University. He has published research articles in many books and journals. His research areas include Economics of Agriculture, Industry, etc.

Mihir Kumar Pal, PhD, is Professor and Former Head, Department of Economics, Vidyasagar University, India, with more than 20 years of research and teaching experience. He was awarded Gold Medal at both UG and PG level in Economics from the University of Kalyani. After obtaining MPhil from the University of Calcutta, he got his PhD Degree from the University of Kalyani in 1997. He has completed a number of research projects under UGC and published several books, articles in reputed national and international journals and supervised more than 8 PhD thesis. His areas of research interest are Industrial Productivity, Capacity Utilization, Environmental Economics, and Applied Econometrics.

Soma Pal, MPhil, is a Research Scholar in the Department of Economics, Vidyasagar University, India. She did her MPhil in Economics from Vidyasagar University, published research articles in different journals. Her area of interest is Industrial Economics.

Sarbapriya Ray, PhD, is Associate Professor of Commerce, Vivekananda College, and a visiting professor in the Department of Commerce, University of Calcutta, India. He has obtained MCom, MBA, MPhil, and PhD, and published seven books, several articles in reputed national and international journals.

Prasanta Kumar Roy, PhD, is an Assistant Professor of Economics, Midnapore College (Autonomous), India. He has published almost 20 articles in various national and international journals of repute. Recently, he is appointed as an editorial member of the Science Publishing Group, US.

Anirban Sarkar, PhD, is Assistant Professor of Commerce and Management, West Bengal State University, WB, India. He is an erudite scholar and completed MPhil and PhD from the University of Calcutta. He is also guiding research scholars for PhD Degree. His area of interest is Marketing and Finance particularly Market Research, Consumer Behavior, Behavioral Marketing, International Finance, and Behavioral Finance. He has completed several projects sponsored by UGC and ICSSR and has publications in Rout ledge and UGC Care Listed Journals.

Sibsankar Satpathi is a Research Scholar in the Department of Economics, Vidyasagar University, India. He has completed BSc (Honors) and MSc in Economics from the University of Calcutta. His area of research is Productivity Growth in the Indian Manufacturing Industry.

Begum Sertyesilisik, is Professor at Izmir Democracy University. She has been awarded her BSc, MSc, and MBA degrees from the Istanbul Technical University and her PhD from the Middle East Technical University. She has been specialized in the field of construction project management.

Egemen Sertyesilisik, PhD, has been awarded his BSc degree in Political Science and Public Administration from the Ihsan Dogramacı Bilkent University, his MA degree from the University of Liverpool, his MBA degree from the Yıldız Technical University, and his PhD from the Marmara University.

Anup Sinha, MPhil, did his MA in Economics with Econometrics as special paper. Presently, he is a Research Scholar in Economics, Assam University, India. His area of interest is Population Aging, Economics of Crime, and Development Economics. He has a number of papers in different international and national journals and edited book.

Madhabendra Sinha, PhD, is an Assistant Professor at the Department of Business Administration, Raiganj University, India. He obtained the degree of PhD in Economics from NIT Durgapur, India and prior to that he earned MSc and MPhil in Economics from the University of Calcutta, India. He has several SCOPUS/ABDC listed publications from Elsevier, Springer, Wiley, Taylor & Francis, Sage, Emerald, Inderscience, IGI Global etc. in international economics, development economics and macroeconomics areas.

Ashu Tiwari, PhD, is Assistant Professor, University of Petroleum and Energy Studies, Uttarakhand, India, with experience in Research Insurance, Product Analysis, Report Writing, and Statistics Analysis. She has developed Research Cases on Black Money Generation under supervision of Center for Economic Studies and Planning at the School of Social Science (JNU).

Serhat Yüksel, PhD, is Associate Professor of Finance in İstanbul Medipol University. Dr Yüksel has a BS in Business Administration (in English) from Yeditepe University with full scholarship. He got his master degree in Economics in Boğaziçi University (2008). He was awarded PhD in Banking from Marmara University.

List of Contributors

Foreword

As a consequence of the Covid-19 emergency and the lockdown, the manufacturing industry suffered problems such as a drop in turnover, liquidity shortages, and interruption of production chains. The industry is, thus, struggling with a crisis that has few precedents in history. The global economy led by the highly developed countries has been facing a recession in output and employment growth which has been causing a decrease in the world demand. The effects of this crisis are multiple, as well as the attempts to respond to it, which depended not only on the resilience of the companies but also on the measures put in place by the various national governments.

The manufacturing sector provides approximately 16% of the global gross domestic product (GDP), and it employs 14% of the workforce. This sector's relative size in an economy varies with its stage of development. When economies industrialize, employment and output in manufacturing both rise rapidly, but once this sector's share of the GDP peaks at 20 to 35%, it falls in an inverted U pattern, along with its share of employment. The reason for this is that, as wages rise, consumers have more money to spend on services, and the latter's growth accelerates. It follows that the growth of the manufacturing sector is essential to accelerate the growth of the service sector.

Despite the deindustrialization and the differences between the most important Western economies, their manufacturing sector plays a key role in the evaluation of the economic cycle. In particular, all these economies show a close link between the expansionary and negative phases of GDP and the production cycles. Therefore, the manufacturing sector remains a significant factor of oscillation. Furthermore, this correlation increases during recessions, showing that the production cycle is a powerful transmission channel in difficult times. The leading indicators of the industry offer timely and quality information on the state of an economic cycle. Therefore, the modest recovery observed following the global financial crisis can be partially explained by the weak recovery in the manufacturing sector, which resulted in a lack of investment.

A new global consuming class has been emerging in recent times, and most of the consumption is taking place in developing economies. This will create rich new market opportunities. It is, thus, essential for companies to develop a highly detailed understanding of the specific emerging markets, as well as the needs of their existing customers.

The manufacturing sector may flourish by increasing its productivity. Productivity growth is essential not only to increase output but also to improve the competitiveness of an industry both in the domestic and international markets. Two distinct sources govern the growth of an economy, so that growth can be input-driven and productivity-driven. Input-driven growth is achieved through the increase in factors of production, which is inevitably subjected to diminishing returns and is not sustainable in the long term. Productivity-driven growth is due to a growth in output that cannot be explained by the growth in total inputs. It is normally credited to the improvement in knowledge, organizational structure, human resources management, skills attainment, information technology, and efficient use of factors of production.

A very delicate open issue concerns the question of the origin of the different performances of companies. The ability of production systems to react to changes and to new technologies depends on it. And on it depends the keeping and relaunching of the productive system and, consequently, the social fabric which forms its basis and which receives the benefits of employment and income.

Against this background, the present book focuses on the empirical verifications of the productivity and efficiency of the manufacturing sector of the world economy, with special emphasis upon the emerging economies during the pre- and postglobal financial crisis.

Dr Enrico Ivaldi

Professor, University of Genova, Italy, and Centro de Investigaciones en Econometría – CIE, University of Buenos Aires

Acknowledgment

It is a matter of great pleasure for me to complete the proposed book titled, Productivity Growth in the Manufacturing Sector: Mitigating Global Recession, after giving over a long time on the stages from proposal writing to final submission. I have run into large debts to a number of persons in the course of this huge task. It would be blameworthy if I do not recognize the contributions of the concerned academicians and the other members of the society directly or indirectly attached to the project.

At first, I must acknowledge the Emerald Publishing Ltd. Team for approving the proposal and continuously guiding me at all stages of developments of the book. Secondly, I should be grateful to my colleague Dr Ramesh Chandra Das, Associate Professor of Economics, Vidyasagar University, India, who left no stone unturned in his constant help and support at every stage of this volume, and my PhD supervisor Dr Madhusudan Datta, Professor of Economics, Kalyani University, India, from whom I got the basic conceptual ideas in respect of this field of research. Thirdly, I am grateful to Dr Purnendu Sekhar Das, Professor (Retd.) of Economics, Vidyasagar University and VGSOM, IIT, Kharagpur, India, with whom I discussed various issues connected with this project and got valuable suggestions. Fourthly, I must express gratitude to Professor Enrico Ivaldi, University of Genova, Italy, and Centro de Investigacionesen Econometría – CIE, University of Buenos Aires, who took lot of pains in writing the foreword of this book inspite of his busy schedule, Dr Hasan Dinçer, Professor of Finance at Istanbul Medipol University, Faculty of Economics and Administrative Sciences, Istanbul-Turkey, Professor Begum Sertyesilisik, Izmir Democracy University, Turkey, Dr Pulak Mishra, Professor, Department of Humanities and Social Sciences, IIT Kharagpur, India, Dr Arpita Ghose, Professor of Economics, Jadavpur University, India, and all my colleagues in the Department of Economics, Vidyasagar University, India, for their constant help and support. Fifthly, I am highly indebted to my Doctoral Research Scholar Md Rakibul Hasan, who was constantly by my side during the whole project and helped me to go through the rough terrain of this work. Fifthly, I should pay gratitude to all the contributing authors for their valuable chapter contributions and showing their patience for such a long length project. I must acknowledge the values they added to the existing literature through this volume.

Last but not the least, I must be grateful to my parents, wife and son, brothers, and other members of the family for their continuous influence, supports, and sacrifice in carrying out the extensive project. Of course, no one other than me, as the editor, discloses to remain entirely responsible for any errors still stay behind the book.

Mihir Kumar Pal

Editor

Introduction

The global economy headed by the highly developed and partly upcoming developing nations has been facing prolonged downturn in its output and employment growth which has been pulling down the magnitudes of world demand and thereby provoking the economies into disgruntlement trade and political relations. The recent US–China trade retaliation is one of such jeopardized situations in world trade. Not only the impact of this retaliation is confined to these two economies, its ramifications are worldwide. Overemphasizing upon service-led growth, the manufacturing sectors have been given less importance, although, nurturing the sector in proper channel might be helpful in strengthening the base of the economies. Focusing on increasing the productivity and efficiency of this sector may lead to absorbing economic shocks that the so-called developed economies have been witnessing so far.

The feeling that a substantial part of output growth in the rapidly growing economies is attributable to technological progress has given rise to intensive research on the analysis of productivity growth over the last four decades. These studies have proposed and chiseled toward perfection of new concepts and have opened up an entirely new area of research.

Productivity growth is essential to increase output as well as to improve the competitiveness of any industry for both domestic and international markets. In economic theory, technological progress and total factor productivity (TFP) are often used synonymously, though there is a conceptual distinction between them. Technological progress is the advances in knowledge and its application to the art of production (invention, innovation, and diffusion), and on the other hand, TFP is defined as the ratio of output to a weighted combination of inputs. The latter is a boarder concept which includes technological progress, change of technical efficiency, and change of scale. Technical efficiency includes inputs productivity, capacity utilization etc. TFP can be improved through smart technologies, smart workforce, and innovations. Productivity-driven development can be enabled by the enhanced TFP covering technological progress, technological efficiency, and change of scale.

Economies need to be resilient as countries having resilient economy that can enhance welfare of their people and achieve sustainable development. Resilience of the economy is related to its ability to cope with the challenges (e.g. economic shocks and environmental crises). It requires holistic and systematic, as well as strategic approach as it is directly related with the sustainable development of the countries. Enhancing resilience of each country's economy can enhance resilience of the global economy as countries economic status can influence each other. In other words, there is a need for resilient global economy. Manufacturing industries is one of the pillars of the production, sustainable development, and global economy. Intellectual capital is also regarded as one of the significant determinants of efficiency, profitability, and ultimately value of a manufacturing firm. Exploration of the changing dynamics in the relationship between intellectual capital and firm-level efficiency in the face of global economic crisis is becoming a special matter of interest. During postglobalization period, tariff imposition on manufacturing trade has a significant effect on their economy of developed and developing nations. Along with the volume and balance of trade, both export and import has separately observed a significant change under tariff regime and made contrasts between the developing and developed countries.

The next era of global growth and innovation may be considered as the era of manufacturing sector. It is also observed that globally, manufacturing sector significantly continues to grow. Manufacturing sector serves as one of the major shares in global economy. Its relative size varies with the stage of development of the economy. Employment and output increase rapidly in well-industrialized economy which can further accelerate the growth of the service sector as consumers have more money to spend on services.

Under the milieu, the present book has covered different issues related to the productivity growth of manufacturing sector and its implications to mitigate recessionary situations in the economies. It has been structured into two sections. Section I covers the discussion on the related aspects of manufacturing sector for the global level, and Section II covers the same issue on Indian perspectives. Section I contains 9 chapters, and Section II contains 10 chapters. The brief outlines of all the chapters are presented below.