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Structural transformation and productivity growth in India during 1960–2010

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  • Mondal, Debasis

Abstract

In this paper, we examine the role of structural change and sectoral productivity growth in explaining the aggregate productivity of India relative to the United Sates during 1960–2010. We set up a simple two sector general equilibrium model and calibrate it to fit the structural transformation of United States. Our calibrated model for India highlights the relative importance of agricultural productivity growth in explaining its slow process of catching up in terms of aggregate productivity. We show that India could have progressed at a much faster rate and closed a substantial part of its aggregate productivity gap if its agricultural sector had grown at a rate at par with the United States. It is India's relative productivity growth in the non-agricultural sector that explains all the recent success in its closing the aggregate productivity gap with the United States. We also found that an elimination of relative distortion in agriculture in India could result into a modest improvement in the aggregate labour productivity.

Suggested Citation

  • Mondal, Debasis, 2019. "Structural transformation and productivity growth in India during 1960–2010," Economic Modelling, Elsevier, vol. 82(C), pages 401-419.
    • Handle: RePEc:eee:ecmode:v:82:y:2019:i:c:p:401-419
    DOI: 10.1016/j.econmod.2019.01.019
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    Cited by:

    1. Karayalcin, Cem & Pintea, Mihaela, 2022. "The role of productivity, transportation costs, and barriers to intersectoral mobility in structural transformation," Economic Modelling, Elsevier, vol. 108(C).
    2. Sedithippa J. Balaji & Munisamy Gopinath, 2023. "Spatial growth and convergence in Indian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 54(6), pages 761-777, November.
    3. Gangopadhyay, Kausik & Mondal, Debasis, 2021. "Productivity, relative sectoral prices, and total factor productivity: Theory and evidence," Economic Modelling, Elsevier, vol. 100(C).
    4. Zhou, Xiaoxiao & Pan, Zixuan & Shahbaz, Muhammad & Song, Malin, 2020. "Directed technological progress driven by diversified industrial structural change," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 112-129.
    5. Kausik Gangopadhyay & Debasis Mondal & Thasni T, 2024. "The Decomposition of Productivity Growth for India: Before and After 1991," IIM Kozhikode Society & Management Review, , vol. 13(1), pages 90-100, January.

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    More about this item

    Keywords

    Agricultural productivity; Structural transformation; Sectoral productivity growth; Catching up; Calibration; Role of Institution; Distortions;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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