Lifting the Veil: The Face of TFP in an Indian Rail Mill

Abstract

We use a proprietary data set on the floor-level operations at the Bhilai Rail and Structural Mill (RSM) in India to understand how output rose sharply in response to competitive pressures. Output increases came predominantly from reductions in production delays of various kinds. We model interruptions to the production process as a function of worker characteristics and training and find that a large part of the avoidable delay reductions are attributable to a particular form of training, suggesting that such investments can have very high returns. Our work suggests very high returns to knowledge-enhancing investments in emerging economies.

Keywords: total factor productivity (TFP), plant level data, competitiveness and trade

JEL Classification: D240, J240, L230, L610, M530