Title: An empirical evidence of structural change in production parameters of MSMEs under economic reforms in India

Authors: Akhilesh K. Sharma; Sushil K. Rai

Addresses: Institute for Studies in Industrial Development, 4, Institutional Area, P.B. No. 7513, Vasant Kunj, New Delhi – 110070, India ' School of Business, University of Petroleum and Energy Studies, Dehradun, Uttarakhand-248007, India

Abstract: The purpose of this paper is to analyse the impact of economic reforms on structural change in production function of micro, small and medium enterprises (MSMEs) in India. The paper examines the effect of economic reforms on parameters of production of MSMEs located in the eastern region of Uttar Pradesh, a province in India. This study is based on the analysis of primary data collected from small firms located in the region. It has used neutral and non-neutral technical change constant elasticity of substitution production function for the analysis. The results indicate that the efficiency of the production process has increased and MSMEs have become more independent and capital intensive during economic reforms. Further, the result shows that the value of the elasticity of substitution between factors of production decreases in non-neutral technical change while it has increased in neutral technical change under reform process. Finally, the study reveals that the production function is reflecting a negative return to scale and downsizing is the natural repercussion of the reform process.

Keywords: economic reforms; micro, small and medium enterprises; MSMEs; structural change; CES production function; cross-section data; India.

DOI: 10.1504/IJESB.2023.134689

International Journal of Entrepreneurship and Small Business, 2023 Vol.50 No.4, pp.498 - 516

Received: 26 Jun 2020
Accepted: 16 Nov 2020
Published online: 06 Nov 2023 *

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