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India's Mysterious Manufacturing Miracle

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  • Pete Klenow

    (Stanford University)

  • Gunjan Sharma

    (University of Missouri)

  • Albert Bollard

    (Stanford University)

Abstract

Using data on formal manufacturing plants in India, we report a large but imprecise acceleration in productivity growth starting around the mid-1990s (e.g., 1993-2004 compared to 1980-1992). We trace the acceleration to productivity growth within large plants (200 workers or more), as opposed to reallocation across such plants. As many economists believe Indian reforms during this era improved resource allocation, the absence of a growth pickup from reallocation is surprising. Moreover, when we look across industries we fail to robustly relate productivity growth to prominent reforms such as industrial de-licensing, tariff reductions, FDI liberalization, or lifting of small-scale industry reservations. Even under a generous reading of their effects, these reforms (at least as we measure them) seem to account for less than one-quarter of overall productivity growth.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2011 Meeting Papers with number 1176.

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Date of creation: 2011
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Handle: RePEc:red:sed011:1176

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References

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Citations

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Cited by:
  1. Javad Sadeghzadeh, 2014. "Innovation Subsidies: Misallocation and Technology Upgrade," 2014 Papers, Job Market Papers psa1207, Job Market Papers.
  2. Ghani, Ejaz & O'Connell, Stephen D. & Sharma, Gunjan, 2013. "Friend or foe or family ? a tale of formal and informal plants in India," Policy Research Working Paper Series 6588, The World Bank.
  3. Dutz, Mark A. & Kessides, Ioannis & O'Connell, Stephen & Willig, Robert D., 2011. "Competition and innovation-driven inclusive growth," Policy Research Working Paper Series 5852, The World Bank.
  4. Manuel García-Santana, 2013. "Foreign Firms, Distribution of Income, and the Welfare of Developing Countries," 2013 Meeting Papers, Society for Economic Dynamics 1044, Society for Economic Dynamics.
  5. Didier, Tatiana & Schmukler, Sergio L., 2013. "The financing and growth of firms in China and India : evidence from capital markets," Policy Research Working Paper Series 6401, The World Bank.
  6. Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2013. "The exceptional persistence of India's unorganized sector," Policy Research Working Paper Series 6454, The World Bank.
  7. Suparna Chakraborty & Keisuke Otsu, 2012. "Deconstructing Growth - A Business Cycle Accounting Approach with application to BRICs," Studies in Economics, Department of Economics, University of Kent 1212, Department of Economics, University of Kent.
  8. Fernandes, Ana M. & Sharma, Gunjan, 2012. "Together we stand ? agglomeration in Indian manufacturing," Policy Research Working Paper Series 6062, The World Bank.
  9. Arnold, Jens Matthias & Javorcik, Beata & Lipscomb, Molly & Mattoo, Aaditya, 2012. "Services reform and manufacturing performance : evidence from India," Policy Research Working Paper Series 5948, The World Bank.
  10. Nitin Gupta, 2012. "The Evolution of Manufacturing Efficiency: Evidence from Indian States," ASARC Working Papers, The Australian National University, Australia South Asia Research Centre 2012-13, The Australian National University, Australia South Asia Research Centre.
  11. Benjamin Bridgman & Michael Maio & James A. Schmitz, Jr., 2012. "What ever happened to the Puerto Rican sugar manufacturing industry?," Staff Report, Federal Reserve Bank of Minneapolis 477, Federal Reserve Bank of Minneapolis.
  12. Felipe Meza & Sangeeta Pratap & Carlos Urrutia, 2014. "Credit, Sectoral Misallocation and TFP: The Case of Mexico 2003-2010," Working Papers, Centro de Investigacion Economica, ITAM 1402, Centro de Investigacion Economica, ITAM.
  13. Dutz, Mark A., 2013. "Resource reallocation and innovation : converting enterprise risks into opportunities," Policy Research Working Paper Series 6534, The World Bank.
  14. Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2013. "Input usage and productivity in Indian manufacturing plants," Policy Research Working Paper Series 6656, The World Bank.

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