An Economic Analysis of Micro and Small Manufacturing Enterprises in Nagaland

Abstract

Micro and Small manufacturing enterprises not only plays a critical role in providing employment opportunities at comparatively lower capital cost than large enterprises but also helps in rural industralisation and reduce regional disparities. This paper attempts to bring out an economic analysis of the manufacturing enterprises by studying the relationship between operating costs and the gross monthly income (GMI) and the mode of production. All the items of costs show a positive effect on GMI. The coefficient of determination or R2 is 0.87 and that an increase by one unit will have a positive impact on GMI by 304649 times. Using the Cobb-Douglas production function the study also finds that manufacturing units are operating under decreasing returns to scale, labour (ß1) and capital (ß2 ) equals to 0.93 and that given the two inputs, the additional capital input will be preferred to labour input because output elasticity of capital is higher than the output elasticity of labour.