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Is Manufacturing an Engine of Growth in India in the Post-Nineties?

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  • Vinish Kathuria
  • Rajesh Raj Natarajan

Abstract

This article tests whether manufacturing has acted as an ‘engine of growth’ for the Indian states in the post-1990s.Our methodology involves regressing the state domestic product (SDP) growth rates on growth rates of manufacturing. If the coefficient of manufacturing growth is higher than the share of manufacturing in SDP, this is interpreted as supporting the engine of growth hypothesis. The results indicate that manufacturing has acted as an engine of growth in the post-nineties despite its declining share over the period. However, our study rules out the role of scale economies propelling productivity growth in the sector. Our analysis also suggests that it is primarily factor accumulation and not productivity growth that is driving output. Our characterisation of states based on output growth, TFP growth and employment growth suggests that for some states the current trend of growing without creating employment and improving TFP will not be sustainable.

Suggested Citation

  • Vinish Kathuria & Rajesh Raj Natarajan, 2013. "Is Manufacturing an Engine of Growth in India in the Post-Nineties?," Journal of South Asian Development, , vol. 8(3), pages 385-408, December.
    • Handle: RePEc:sae:soudev:v:8:y:2013:i:3:p:385-408
    DOI: 10.1177/0973174113504849
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    2. Vinish Kathuria & Rajesh Raj Natarajan, 2022. "What Role Has Structural Change Played in Growth Accelerations for the Indian States? An Analysis for Pre- and Post-liberalization Periods," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 23(1), pages 61-85, March.
    3. Djidonou, Gbenoukpo Robert & Foster-McGregor, Neil, 2022. "Stagnant manufacturing growth in India: The role of the informal economy," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 528-543.
    4. Emilia Landa Shikomba & Elizabeth Elias & Sirorat Ruttanawijit, 2021. "Industry Policy Effects On Namibia'S Economic Growth," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 19(1), pages 13-22, May.
    5. V. Pradeep & Mita Bhattacharya & Jong-Rong Chen, 2017. "Spillover Effects of Research and Development, Exports and Foreign Investment on Productivity," Journal of South Asian Development, , vol. 12(1), pages 18-41, April.
    6. Guillaume Marois & Ekaterina Zhelenkova & Balhasan Ali, 2022. "Labour Force Projections in India Until 2060 and Implications for the Demographic Dividend," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(1), pages 477-497, November.
    7. Chris Obisi & Remi Samuel & Ayodeji Ilesanmi, 2020. "Influence of Workforce Planning on Organizational Performance in the Manufacturing Industry of Lagos, Nigeria," Global Business Review, International Management Institute, vol. 21(2), pages 404-417, April.
    8. Bokosi, Fanwell Kenala, 2022. "The Effects of Industrialisation on Economic Growth: Panel data evidence for SADC countries," African Journal of Economic Review, African Journal of Economic Review, vol. 10(3), June.
    9. Haraguchi, Nobuya & Cheng, Charles Fang Chin & Smeets, Eveline, 2017. "The Importance of Manufacturing in Economic Development: Has This Changed?," World Development, Elsevier, vol. 93(C), pages 293-315.

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