IDEAS home Printed from https://ideas.repec.org/a/nov/artigo/v30y2020ispep1199-1224.html
   My bibliography  Save this article

Deindustrialization and innovation under globalization: An analysis of India’s catch up in manufacturing [Desindustrialização e inovação na globalização: uma análise do catch up indiano na manufatura]

Author

Listed:
  • K J Joseph

    (Gulati Institute of Finance and Taxation)

  • Kiran Kumar Kakarlapudi

    (Gulati Institute of Finance and Taxation)

  • Akhil Joseph

    (Wealthmaker Financial Services)

Abstract

There is a growing empirical evidence of premature deindustrialization in developing countries wherein the share of manufacturing in GDP and employment declined at a much lower level of per capita income as compared to the trend observed in developed countries. This study examined the manufacturing performance of India, which has been persistent with industrialization as its catch-up strategy. While the study finds no evidence of deindustrialization in the conventional sense, it presents compelling evidence in terms of wage share in value added and wage rate. Therefore, the study argues that a realistic analysis of deindustrialization should consider the quality of employment, wage share and wage rate along with employment share and GDP share. The study attributes deindustrialization in India as an outcome of its strategy to build international competitiveness based on price/wage cost advantage and the failure to build a vibrant learning, innovation and competence building system.

Suggested Citation

  • K J Joseph & Kiran Kumar Kakarlapudi & Akhil Joseph, 2020. "Deindustrialization and innovation under globalization: An analysis of India’s catch up in manufacturing [Desindustrialização e inovação na globalização: uma análise do catch up indiano na manufatura]," Nova Economia, Economics Department, Universidade Federal de Minas Gerais (Brazil), vol. 30(spe), pages 1199-1224, December.
    • Handle: RePEc:nov:artigo:v:30:y:2020:i:spe:p:1199-1224
    as

    Download full text from publisher

    File URL: http://www.scielo.br/pdf/neco/v30nspe/1980-5381-neco-30-spe-1199.pdf
    Download Restriction: no
    File URL: http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0103-63512020000401199&lng=en&nrm=iso&tlng=en
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Marcel P. Timmer & Erik Dietzenbacher & Bart Los & Robert Stehrer & Gaaitzen J. Vries, 2015. "An Illustrated User Guide to the World Input–Output Database: the Case of Global Automotive Production," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 575-605, August.
    2. Robert Rowthorn & Ramana Ramaswamy, 1999. "Growth, Trade, and Deindustrialization," IMF Staff Papers, Palgrave Macmillan, vol. 46(1), pages 1-2.
    3. Arora, Ashish & Arunachalam, V. S. & Asundi, Jai & Fernandes, Ronald, 2001. "The Indian software services industry," Research Policy, Elsevier, vol. 30(8), pages 1267-1287, October.
    4. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    5. Felipe, Jesus & Mehta, Aashish, 2016. "Deindustrialization? A global perspective," Economics Letters, Elsevier, vol. 149(C), pages 148-151.
    6. Sen, Amartya, 1983. "Development: Which Way Now?," Economic Journal, Royal Economic Society, vol. 93(372), pages 742-762, December.
    7. Robert Rowthorn & Ken Coutts, 2004. "De-industrialisation and the balance of payments in advanced economies," Cambridge Journal of Economics, Oxford University Press, vol. 28(5), pages 767-790, September.
    8. Jaya Prakash Pradhan, 2004. "The determinants of outward foreign direct investment: a firm-level analysis of Indian manufacturing," Oxford Development Studies, Taylor & Francis Journals, vol. 32(4), pages 619-639.
    9. Narayan, Paresh Kumar & Phan, Dinh Hoang Bach & Sharma, Susan Sunila & Westerlund, Joakim, 2016. "Are Islamic stock returns predictable? A global perspective," Pacific-Basin Finance Journal, Elsevier, vol. 40(PA), pages 210-223.
    10. Steven N. Durlauf, 2009. "The Rise and Fall of Cross-Country Growth Regressions," History of Political Economy, Duke University Press, vol. 41(5), pages 315-333, Supplemen.
    11. Dani Rodrik, 2016. "Premature deindustrialization," Journal of Economic Growth, Springer, vol. 21(1), pages 1-33, March.
    12. Manoj Atolia & Mr. Prakash Loungani & Milton Marquis & Mr. Chris Papageorgiou, 2018. "Rethinking Development Policy: Deindustrialization, Servicification and Structural Transformation," IMF Working Papers 2018/223, International Monetary Fund.
    13. Amrit Amirapu and Arvind Subramanian, 2015. "Manufacturing or Services? An Indian Illustration of a Development Dilemma - Working Paper 409," Working Papers 409, Center for Global Development.
    14. Jan Fagerberg & Koson Sapprasert, 2011. "National innovation systems: the emergence of a new approach," Science and Public Policy, Oxford University Press, vol. 38(9), pages 669-679, November.
    15. Dani Rodrik, 2009. "Growth after the Crisis," World Bank Publications - Books, The World Bank Group, number 27937, December.
    16. Ajit Singh & Sukti Dasgupta, 2005. "Will services be the new engine of economic growth in India?," Working Papers wp310, Centre for Business Research, University of Cambridge.
    17. Fiona Tregenna, 2009. "Characterising deindustrialisation: An analysis of changes in manufacturing employment and output internationally," Cambridge Journal of Economics, Oxford University Press, vol. 33(3), pages 433-466, May.
    18. Amrit Amirapu & Arvind Subramanian, 2015. "Manufacturing or Services? An Indian Illustration of a Development Dilemma," Working Papers id:7521, eSocialSciences.
    19. Tregenna, Fiona, 2015. "Deindustrialisation, structural change and sustainable economic growth," MERIT Working Papers 2015-032, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    20. Desai, Ashok V., 1980. "The origin and direction of industrial R&D in India," Research Policy, Elsevier, vol. 9(1), pages 74-96, January.
    21. K. J. Joseph, 2002. "Growth of ICT and ICT for Development: Realities of the Myths of the Indian Experience," WIDER Working Paper Series DP2002-78, World Institute for Development Economic Research (UNU-WIDER).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ghulam Yahya Khan & Salik Mehboob & Lydia Bares Lopez, 2018. "Deindustrialization and Economic Growth: Empirical Evidence from Pakistan," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 6(4), pages 462-475, December.
    2. Ajit K. Ghose, 2021. "Structural Change and Development in India," Indian Journal of Human Development, , vol. 15(1), pages 7-29, April.
    3. Gabriel, Luciano Ferreira & de Santana Ribeiro, Luiz Carlos, 2019. "Economic growth and manufacturing: An analysis using Panel VAR and intersectoral linkages," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 43-61.
    4. Castillo, Mario & Martins, Antonio, 2016. "Premature deindustrialization in Latin America," Desarrollo Productivo 40241, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    5. Szirmai, Adam & Verspagen, Bart, 2015. "Manufacturing and economic growth in developing countries, 1950–2005," Structural Change and Economic Dynamics, Elsevier, vol. 34(C), pages 46-59.
    6. van Neuss, Leif, 2018. "Globalization and deindustrialization in advanced countries," Structural Change and Economic Dynamics, Elsevier, vol. 45(C), pages 49-63.
    7. Murat Arsel & Servaas Storm, 2015. "Forum 2015," Development and Change, International Institute of Social Studies, vol. 46(4), pages 666-699, July.
    8. Teimouri, Sheida & Zietz, Joachim, 2018. "The impact of surges in net private capital inflows on manufacturing, investment, and unemployment," Journal of International Money and Finance, Elsevier, vol. 88(C), pages 158-170.
    9. Alessandro Nuvolari & Emanuele Russo, 2019. "Technical progress and structural change: a long-term view," LEM Papers Series 2019/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    10. Çakır, Muhammet Sait & Aydemir, Resul, 2022. "A Dutch disease approach into the premature deindustrialization," Economic Systems, Elsevier, vol. 46(4).
    11. Avdiu,Besart & Bagavathinathan,Karan Singh & Chaurey,Ritam & Nayyar,Gaurav, 2022. "India's Services Sector Growth : The Impact of Services Trade on Non-tradable Services," Policy Research Working Paper Series 10094, The World Bank.
    12. Bruno Ferreira Oliveira & Rodolfo Tomás Fonseca Nicolay, 2022. "Does innovative capacity affect the deindustrialization process? A panel data analysis," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 11(1), pages 1-36, December.
    13. Amat Adarov & Mario Holzner & Luka Sikic, 2016. "Backwardness, Industrialisation and Economic Development in Europe," wiiw Balkan Observatory Working Papers 123, The Vienna Institute for International Economic Studies, wiiw.
    14. Dan Su & Yang Yao, 2017. "Manufacturing as the key engine of economic growth for middle-income economies," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 22(1), pages 47-70, January.
    15. Armando J. Garcia Pires & José Pedro Pontes, 2021. "(De)Industrialization, Technology and Transportation," Open Economies Review, Springer, vol. 32(3), pages 527-538, July.
    16. Chen, Liming & Felipe, Jesus & Kam, Andrew J.Y. & Mehta, Aashish, 2021. "Is employment globalizing?," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 74-92.
    17. Grabowski, Richard & Self, Sharmistha, 2017. "The development of manufacturing: Unintended consequence," Journal of Asian Economics, Elsevier, vol. 52(C), pages 1-11.
    18. Maria Savona, 2021. "Revisiting High Development Theory to Explain Upgrading Prospects in Business Services Global Value Chains," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(2), pages 206-226, April.
    19. Yazgan, Sekip & Marangoz, Cumali & Bulut, Emre, 2022. "The turning point of regional deindustrialization in the U.S.: Evidence from panel and time-series data," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 294-304.
    20. Martin Labaj & Stracova Erika, 2019. "Drivers of Deindustrialisation: Sub-system Analysis of Internationally Fragmented Production Structures," Department of Economic Policy Working Paper Series 018, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.

    More about this item

    Keywords

    India; deindustrialization; quality of employment; innovation;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nov:artigo:v:30:y:2020:i:spe:p:1199-1224. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lucas Resende de Carvalho (email available below). General contact details of provider: https://edirc.repec.org/data/fufmgbr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.