Technical Efficiency Analysis of Indian IT Industry: A Panel Data Stochastic Frontier Approach

Abstract

Globalization and the development of modern technologies have led to the emergence of service trade. The success of Indian information technology (IT) has changed perception of globe about India and has captured the attention of the globe as it seems a paradox that a developing economy is emerging as a global hub for software exports. In the past three decades, the contribution of the Indian IT industry to national income, employment generation and offsetting the current account deficit is remarkable. In this consideration, the present study is an attempt to analyse the technical efficiency of the IT industry of India during the period 2000–2016 by applying panel data stochastic frontier analysis approach. The study reveals that foreign capital, age and profit ratio have a significant impact on mitigating the technical inefficiency of the IT industry while the research and development (R&D) expenditure has turned out statistically insignificant in determining efficiency. Indian IT industry is mostly driven by service exports which are not survivable in the long run. The study suggests that the Indian IT industry has to transform itself from low value-added to high value-added, from service-driven to product-driven.

Impacts of Elderly Population on the Technical Efficiency of Asean

“…Besides, many studies also tend to focus on the impacts of youth (Ng'Atigwa et al, 2022;Song & Wang, 2015;Omorczyk et al, 2014;Hoc & Каракулова, 2010;Muhammad-Lawal, 2009) Bhat and Kaur (2022) showed that ageing of labor has a significant impact on mitigating the technical inefficiency of the Information Technology (IT) industry in India. Recently, the studies carried out by Ova (2023) proved that aging has a negative impact on inefficiency in textile industry of Czech Republic and Hungary.…”

The effectiveness of public health spending in Sub-Saharan Africa.

“…The stochastic frontier approach was introduced to address the issue of random error in the deterministic approach (Bhat & Kaur, 2022). Contrary to the prevalent view that deviations from the production frontier are the result of inefficient production units, this approach considers that stochastic estimates of technical efficiency include a measure of random error, which is one of the components of the compound error term of a stochastic production frontier (Bhat & Kaur, 2022). Thus, determining whether production deviations from the production frontier are due to country-specific factors or random factors from the outside world is feasible.…”