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India's Services Sector Growth : The Impact of Services Trade on Non-tradable Services

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  • Avdiu,Besart
  • Bagavathinathan,Karan Singh
  • Chaurey,Ritam
  • Nayyar,Gaurav

Abstract

This paper examines the effect of tradable services growth on non-tradable services acrossIndian districts. The analysis uses a shift-share “Bartik-type” instrumental variable, which relies on changesin foreign demand shocks for tradable services, weighted by the initial district employment shares in tradable services.Using multiple rounds of the Indian Economic Censuses, the findings show that an increase in tradable servicesemployment leads to an increase in non-tradable services employment and increases the number of firms in non-tradableservices. The evidence suggests that this positive impact is due to an increase in consumer demand for local non-tradableservices that results from the growth in tradable services employment, and not due to sectoral linkages betweentradable and non-tradable services sectors. The employment impact is much larger for female workers compared to maleworkers, and for the number of female-owned firms relative to male-owned firms. Further, the employment impact is onlysignificant for small non-tradable service firms.

Suggested Citation

  • Avdiu,Besart & Bagavathinathan,Karan Singh & Chaurey,Ritam & Nayyar,Gaurav, 2022. "India's Services Sector Growth : The Impact of Services Trade on Non-tradable Services," Policy Research Working Paper Series 10094, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10094
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