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What Lies Beneath: A Case For Disaggregated Analysis In Evaluating Stuctural Policy Shifts

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  • Suranjana Nabar-Bhaduri
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    Abstract

    Much of the theoretical and empirical research regarding the impact of policy shifts on the economies of developing countries has tended to focus on macro-level aggregates, without adequate attention to sectoral-level dynamics. In the literature where such dynamics are emphasized, the focus has primarily been on the Latin American experience, where macro-economic instability can be attributed to the impact of structural reforms on the sectoral-level dynamics of these economies. What appears to be missing from the present literature is an adequate consideration of scenarios in which seemingly positive trends in macro-level aggregates could sometimes mask problems of concentrated productivity and employment growth that exist at the sectoral level. It is this aspect that this paper seeks to address more closely. By focusing on the Indian manufacturing sector in the pre-and the post-liberalization periods, this paper shows that positive trends in aggregate productivity may sometimes hide problems of structural heterogeneity and concentrated employment growth. This in turn suggests that in developing countries with high open and disguised unemployment, sustainable growth and development requires that liberalization policies be complemented by active industrial and employment generation policies on the part of the State.

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    Bibliographic Info

    Paper provided by University of Utah, Department of Economics in its series Working Paper Series, Department of Economics, University of Utah with number 2009_12.

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    Length: 27 pages
    Date of creation: 2009
    Date of revision:
    Handle: RePEc:uta:papers:2009_12

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    Keywords: Sectoral-level dynamics; structural heterogeneity; structural policy shifts; technology frontier; technology gaps; technology catch-up;

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    1. Mario Cimoli & Nelson Correa, 2002. "Trade Openess and Technological Gaps in Latin America: a Low Growth Trap," LEM Papers Series 2002/14, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. Mario Cimoli & Jorge Katz, 2003. "Structural reforms, technological gaps and economic development: a Latin American perspective," Industrial and Corporate Change, Oxford University Press, vol. 12(2), pages 387-411, April.
    3. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
    4. José Antonio Ocampo & Lance Taylor, 1998. "Trade Liberalization in Developing Economies: Modest Benefits but Problems with Productivity Growth, Macro Prices, and Income Distribution," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 1998-05, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
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