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The historical roots of India's service-led development: A sectoral analysis of Anglo-Indian productivity differences, 1870-2000

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  • Broadberry, Stephen
  • Gupta, Bishnupriya

Abstract

India fell further behind the UK in terms of GDP per capita and overall labour productivity between the 1870s and the 1970s, but has been catching-up since. This paper offers a sectoral analysis of these trends. Comparative India/UK labour productivity in agriculture has declined continuously, and agriculture still accounts for around two-thirds of employment in India. Agriculture thus played a key role in India's falling behind and has subsequently slowed down the process of catching up. Although there have been substantial fluctuations in comparative India/UK labour productivity in industry, this sector has exhibited no long run trend. The only sector to exhibit an upward trend in comparative India/UK labour productivity is services. India's recent emergence as a dynamic service-led economy thus appears to have long historical roots. Although India has been characterised by relatively low levels of physical and human capital formation overall, its education provision has historically been unusually skewed towards secondary and tertiary levels. This has provided a limited supply of high productivity workers who have been employed predominantly in services.

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Bibliographic Info

Article provided by Elsevier in its journal Explorations in Economic History.

Volume (Year): 47 (2010)
Issue (Month): 3 (July)
Pages: 264-278

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Handle: RePEc:eee:exehis:v:47:y:2010:i:3:p:264-278

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Web page: http://www.elsevier.com/locate/inca/622830

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Keywords: Labour productivity Sectoral disaggregation International comparison Services Education;

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  1. Bergin, Paul R & Glick, Reuven & Taylor, Alan M, 2004. "Productivity, Tradability and the Long-Run Price Puzzle," CEPR Discussion Papers 4494, C.E.P.R. Discussion Papers.
  2. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment Updates and Implications," NBER Working Papers 7911, National Bureau of Economic Research, Inc.
  3. Broadberry, Stephen, 2003. "Relative Per Capita Income Levels in the United Kingdom and the United States since 1870: Reconciling Time-Series Projections and Direct-Benchmark Estimates," The Journal of Economic History, Cambridge University Press, vol. 63(03), pages 852-863, September.
  4. Barry Bosworth & Susan M. Collins, 2008. "Accounting for Growth: Comparing China and India," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 45-66, Winter.
  5. Barry Bosworth & Susan M. Collins & Arvind Virmani, 2006. "Sources of Growth in the Indian Economy," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 3(1), pages 1-69.
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  7. Timberg, Thomas A & Aiyar, C V, 1984. "Informal Credit Markets in India," Economic Development and Cultural Change, University of Chicago Press, vol. 33(1), pages 43-59, October.
  8. Pilat, Dirk, 1993. "The Sectoral Productivity Performance of Japan and the U.S., 1885-1990," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 357-75, December.
  9. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584.
  10. Broadberry, Stephen N., 1993. "Manufacturing and the Convergence Hypothesis: What the Long-Run Data Show," The Journal of Economic History, Cambridge University Press, vol. 53(04), pages 772-795, December.
  11. Stephen Broadberry & Bishnupriya Gupta, 2006. "The early modern great divergence: wages, prices and economic development in Europe and Asia, 1500-1800 -super-1," Economic History Review, Economic History Society, vol. 59(1), pages 2-31, 02.
  12. Ward, Marianne & Devereux, John, 2004. "Relative U.K./U.S. Output Reconsidered: A Reply to Professor Broadberry," The Journal of Economic History, Cambridge University Press, vol. 64(03), pages 879-891, September.
  13. Ward, Marianne & Devereux, John, 2003. "Measuring British Decline: Direct Versus Long-Span Income Measures," The Journal of Economic History, Cambridge University Press, vol. 63(03), pages 826-851, September.
  14. Stephen Broadberry & Douglas A. Irwin, 2007. "Lost Exceptionalism? Comparative Income and Productivity in Australia and the UK, 1861-1948," The Economic Record, The Economic Society of Australia, vol. 83(262), pages 262-274, 09.
  15. Chaudhary, Latika, 2009. "Determinants of Primary Schooling in British India," The Journal of Economic History, Cambridge University Press, vol. 69(01), pages 269-302, March.
  16. N. F. R. Crafts & C. K. Harley, 1992. "Output growth and the British industrial revolution: a restatement of the Crafts-Harley view," Economic History Review, Economic History Society, vol. 45(4), pages 703-730, November.
  17. Stephen N. Broadberry & Douglas A. Irwin, 2004. "Labor Productivity in Britain and America During the Nineteenth Century," NBER Working Papers 10364, National Bureau of Economic Research, Inc.
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Cited by:
  1. repec:cge:warwcg:80 is not listed on IDEAS
  2. Chaudhary, Latika, 2010. "Taxation and educational development: Evidence from British India," Explorations in Economic History, Elsevier, vol. 47(3), pages 279-293, July.
  3. Broadberry, Stephen N & Gupta, Bishnupriya, 2010. "Indian GDP Before 1870: Some Preliminary Estimates and a Comparison with Britain," CEPR Discussion Papers 8007, C.E.P.R. Discussion Papers.

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