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Did Productivity Converge in Manufacturing Sector across Indian States?

Author

Listed:
  • Badri Narayan RATH
  • S.MADHESWARAN

Abstract

This paper aims to explore the labour productivity convergence in manufacturing sector across fifteen major Indian states during 1979-80 to 2000-01, using cross-section analysis. The analysis examines the convergence hypothesis taking both absolute and conditional convergence into consideration. The results indicate that though absolute ? convergence in labour productivity does not exist during overall period of analysis, labour productivity does converge in pre-reform period. Analyzing conditional convergence using dynamic panel model, we find that labour productivity in rich states grew faster with reasonably high initial productivity levels, indicating a divergence across the states. In light of the above-affirmed empirical results, the study suggests that better endeavors for productivity growth of manufacturing sector in backward states are quite essential. The government should give more emphasize to the labour intensive manufacturing industries which can absorb the mass un-skilled labour force in eastern and northern states of India.

Suggested Citation

  • Badri Narayan RATH & S.MADHESWARAN, 2010. "Did Productivity Converge in Manufacturing Sector across Indian States?," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 10(2), pages 185-200.
    • Handle: RePEc:eaa:eerese:v:10:y2010:i:2_7
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    File URL: http://www.usc.es/economet/reviews/eers1027.pdf
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    Citations

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    Cited by:

    1. Dharmabrata Mohapatra & Dukhabandhu Sahoo & Mrinali Mahanti, 2019. "Crecimiento y desigualdad a nivel subregional y subsectorial: caso de sector de servicios de Odisha, India," Revista de Estudios Regionales, Universidades Públicas de Andalucía, vol. 2, pages 63-94.
    2. Rath, Badri Narayan, 2018. "Productivity growth and efficiency change: Comparing manufacturing- and service-based firms in India," Economic Modelling, Elsevier, vol. 70(C), pages 447-457.

    More about this item

    Keywords

    Labour productivity; Convergence; Indian manufacturing; Dynamic Panel Model;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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