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What is holding back productivity growth in India ?: Recent microevidence

Author

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  • Sean Dougherty
  • Richard Herd
  • Thomas Chalaux

Abstract

This article examines recent micro-evidence on the productivity of Indian firms, helping to explain why India’s manufacturing sector has not performed as well as many observers expected. A series of structural distortions are documented, all of which may depress the performance of manufacturing, and thus the economy as a whole. These distortions exist at multiple levels, and reflect long-standing problems with the reallocation of labour across sectors, the excessively small scale of firms, low firm turnover, poor product market integration, high industry concentration and persistent state ownership. Combined, these phenomena represent severe restraints on the level and growth of productivity in manufacturing, and suggest that much remains to be done to improve the strength and sustainability of India’s development path.

Suggested Citation

  • Sean Dougherty & Richard Herd & Thomas Chalaux, 2009. "What is holding back productivity growth in India ?: Recent microevidence," OECD Journal: Economic Studies, OECD Publishing, vol. 2009(1), pages 1-22.
    • Handle: RePEc:oec:ecokac:5ksnswkcq236
    DOI: 10.1787/eco_studies-v2009-art3-en
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    Citations

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    Cited by:

    1. Sneha Sharad Pawar, 2018. "Trajectory of Manufacturing Industry in India since Post Reform Period," International Journal of Social Science Studies, Redfame publishing, vol. 6(8), pages 54-66, August.
    2. Rajneesh Narula, 2014. "This paper considers the longer-term viability of the internationalization and success of Indian MNEs. We apply the 'dual economy' concept (Lewis 1954), to reconcile the contradictions of the typical ," John H Dunning Centre for International Business Discussion Papers jhd-dp2014-04, Henley Business School, University of Reading.
    3. Sean Dougherty & Verónica C. Frisancho Robles & Kala Krishna, 2011. "Employment Protection Legislation and Plant-Level Productivity in India," NBER Working Papers 17693, National Bureau of Economic Research, Inc.
    4. Rajneesh Narula, 2015. "The Viability of Sustained Growth by India’s MNEs: India’s Dual Economy and Constraints from Location Assets," Management International Review, Springer, vol. 55(2), pages 191-205, April.
    5. Sean M. Dougherty, 2009. "Labour Regulation and Employment Dynamics at the State Level in India," Review of Market Integration, India Development Foundation, vol. 1(3), pages 295-337, December.
    6. Bart van Ark & Dirk Pilat & Klaas de Vries, 2023. "Are Pro-Productivity Policies Fit for Purpose? Productivity Drivers and Policies in G-20 Economies," Working Papers 038, The Productivity Institute.
    7. Shweta Jain, 2019. "What Really Affects Plant-level Productivity?," Review of Market Integration, India Development Foundation, vol. 11(3), pages 138-150, December.
    8. R. Rijesh, 2015. "Technology Import and Manufacturing Productivity in India: Firm Level Analysis," Journal of Industry, Competition and Trade, Springer, vol. 15(4), pages 411-434, December.
    9. Narula R. & Prasad T., 2013. "The growth of outward FDI and the competitiveness : the case of India," MERIT Working Papers 2013-042, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. Mandal, Abir & Regmi, Narendra & Tamura, Robert, 2021. "Education, Fertility and Incomes in the States of India: Demographic Transition," MPRA Paper 110378, University Library of Munich, Germany.
    11. Rajneesh Narula & Tiju Prasad Kodiyat, 2014. "How Home Country Weaknesses Can Constrain Further EMNE Growth: Extrapolating from the Example of India," John H Dunning Centre for International Business Discussion Papers jhd-dp2014-01, Henley Business School, University of Reading.
    12. Pradip Kumar Biswas & Saurabh Bandyopadhyay, 2021. "Labour Market Institutions, Industry Structure and Productivity in Indian Manufacturing Sector," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(4), pages 999-1021, December.
    13. Prasanta K. Sahu & Agnivesh Pani, 2020. "Freight generation and geographical effects: modelling freight needs of establishments in developing economies and analyzing their geographical disparities," Transportation, Springer, vol. 47(6), pages 2873-2902, December.

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