Growth and productivity in the pharmaceutical industry of Himachal Pradesh a unit level analysis

Abstract

In the last two decade, pharmaceutical industry of Himachal Pradesh has grown manifolds. Therefore, it becomes significant to analyse growth and productivity performance of the same. To fill this void, present study aims to study performance of pharmaceutical firms of H.P. in light of increasing industrial agglomeration and firm dynamics. The data is garnered through secondary sources for the period 2001-2015. The study evaluates CAGR of inputs and output of pharmaceutical industry of the State. Levinsohn Petrin methodology has been used to assess TFP performance of the firms and determinants of TFP have been gauged with FMOLS method. Panel regression has been used to assess impact of agglomeration factors on TFP of pharma firms of H.P. To find out impact of firm dynamics on TFP, methodologies proposed by Griliches and Regev, Foster et al. and Melitz and Polanec have been used. The newlinefindings reveal that as a result of special industrial package, growth and newlineproductivity of pharma firms of H.P. has increased but after global newlinerecession of 2008 the performance of these firms has been erratic. Also, newlinealong with firm level variables like size, age, wage rate and export newlineshare, external variables like market access, urbanisation and industrial newlinediversity have contributed to enhancing productivity of these firms. newlineThus, laying thrust on enhancing scale, diversifying export destinations newlineand ensuring considerable wages are the need of hour to ensure newlinecontinued growth momentum of pharma firms of H.P. Streamlined newlineefforts towards increasing carrying capacity of State can help reap newlinebenefits of agglomeration economies and help eschew diseconomies from increasing urbanisation and industrial localisation. newline