ABSTRACT
Traditionally, the USA, Germany and Japan have been the largest suppliers of machinery. Of late, Asian countries such as China, South Korea and Taiwan have also emerged as the important players in the production and export of machineries. Consumption of IMI has also increased substantially in the developing Asian countries due to their thrust on the value-added manufacturing and sustained higher growth in their gross domestic product (GDP). The shifting base of machinery and equipment production from the developed to developing countries is also providing major opportunities of production and exports from technologically advanced countries of the developing economies like China, India, South Korea, etc. In the year 2005, countries like China and South Korea, respectively, shared 7% and 4% in the world’s total production of IMI, while India’s share was insignificant 1.4%, indicating ample scope for expansion in its market share (EXIM Bank 2008). Despite IMI’s lack of global competitiveness as reflected in its low level of market share in the world production and exports, we do not find any econometric study exclusively focusing on the technological or other determinants of firm-specific efficiency in IMI. Identifying the determinants of firm-level efficiency is important as an industry achieves international competitiveness only by technical progress and sustained increases in efficiency and export shares of its constituent firms.
