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Technical Change in India’s Organized Manufacturing Sector

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  • Jesus Felipe
  • Utsav Kumar

Abstract

We use the real wage–profit rate schedule to examine the direction of technical change in India’s organized manufacturing sector during 1980–2007. We find that technical change was Marx biased (i.e., declining capital productivity with increasing labor productivity) through the 1980s and 1990s; and Hicks neutral (increasing both capital and labor productivity) post-2000. The historical experience suggests that Hicks-neutral technical change may only be a passing phase before we see a return to the long-term trend of Marx-biased technical change. We also find that the real profit rate has increased from about 30 percent to a very high 45 percent, that the real wage rate increased marginally, and that the share of capital in value added doubled. Overall, technical change in India’s organized manufacturing sector during 1980–2007 favored capital.

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Bibliographic Info

Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_626.

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Date of creation: Sep 2010
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Handle: RePEc:lev:wrkpap:wp_626

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Keywords: Hicks-neutral Technical Change; India; Marx-biased Technical Change; Real Wage–Profit Rate Schedule;

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