IDEAS home Printed from https://ideas.repec.org/a/pal/eurjdr/v32y2020i3d10.1057_s41287-019-00228-0.html
   My bibliography  Save this article

Dualism and Structural Transformation: The Informal Manufacturing Sector in India

Author

Listed:
  • Surbhi Kesar

    (South Asian University)

  • Snehashish Bhattacharya

    (South Asian University)

Abstract

We identify a basic dualism within the informal manufacturing sector (IMS) in India between a ‘traditional’/non-capitalist segment, comprising family-based household enterprises that constitute the vast majority of the IMS, and a segment of ‘modern’/capitalist enterprises employing wage labour. We focus on the high-growth decade of 2000–2001 to 2010–2011 to analyse whether there has been a marked tendency of this ‘traditional’ segment to transform into a ‘modern’ segment. We construct a variable, the net accumulation fund, which indicates the ability of an enterprise to accumulate and grow, and explore its evolution, over time and across industries, for enterprises with different production structures and firm-level characteristics. We show that while, on one hand, the average ‘traditional’ enterprise has been able to economically reproduce itself rather than withering away, the dualism between the ‘traditional’/non-capitalist and the ‘modern’/capitalist segments has been reproduced and further reinforced during this period of high economic growth, raising questions about the process of economic transformation as envisaged in much of development literature.

Suggested Citation

  • Surbhi Kesar & Snehashish Bhattacharya, 2020. "Dualism and Structural Transformation: The Informal Manufacturing Sector in India," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(3), pages 560-586, July.
    • Handle: RePEc:pal:eurjdr:v:32:y:2020:i:3:d:10.1057_s41287-019-00228-0
    DOI: 10.1057/s41287-019-00228-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41287-019-00228-0
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41287-019-00228-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rafael La Porta & Andrei Shleifer, 2014. "Informality and Development," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 109-126, Summer.
    2. David N Margolis, 2014. "By Choice and by Necessity: Entrepreneurship and Self-Employment in the Developing World," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 26(4), pages 419-436, September.
    3. Huu Chi Nguyen & Christophe J. Nordman & Fran�ois Roubaud, 2013. "Who Suffers the Penalty?: A Panel Data Analysis of Earnings Gaps in Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 49(12), pages 1694-1710, December.
    4. Raj S.N., Rajesh, 2016. "Out of the Shadows?: The Informal Sector in Post-reform India," OUP Catalogue, Oxford University Press, number 9780199460847.
    5. de Vries, Gaaitzen J. & Erumban, Abdul A. & Timmer, Marcel P. & Voskoboynikov, Ilya & Wu, Harry X., 2012. "Deconstructing the BRICs: Structural transformation and aggregate productivity growth," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 211-227.
    6. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
    7. Nataraj, Shanthi, 2011. "The impact of trade liberalization on productivity: Evidence from India's formal and informal manufacturing sectors," Journal of International Economics, Elsevier, vol. 85(2), pages 292-301.
    8. Günther, Isabel & Launov, Andrey, 2012. "Informal employment in developing countries," Journal of Development Economics, Elsevier, vol. 97(1), pages 88-98.
    9. Chakrabarti, Saumya, 2016. "Inclusive Growth and Social Change: Formal-Informal-Agrarian Relations in India," OUP Catalogue, Oxford University Press, number 9780199466061.
    10. Snehashish Bhattacharya & Surbhi Kesar, 2018. "Possibilities of Transformation: The Informal Sector in India," Review of Radical Political Economics, Union for Radical Political Economics, vol. 50(4), pages 727-735, December.
    11. repec:dau:papers:123456789/12321 is not listed on IDEAS
    12. Falco, Paolo & Haywood, Luke, 2016. "Entrepreneurship versus joblessness: Explaining the rise in self-employment," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 118, pages 245-265.
    13. Ranis, Gustav & Stewart, Frances, 1999. "V-Goods and the Role of the Urban Informal Sector in Development," Economic Development and Cultural Change, University of Chicago Press, vol. 47(2), pages 259-288, January.
    14. Martha Chen, 2014. "Informal Employment and Development: Patterns of Inclusion and Exclusion," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 26(4), pages 397-418, September.
    15. Ghose, Ajit Kumar,, 2015. "Employment in a time of high growth in India," ILO Working Papers 994885873402676, International Labour Organization.
    16. Peter Timmer & Selvin Akkus, 2008. "The Structural Transformation as a Pathway out of Poverty: Analytics, Empirics and Politics," Working Papers 150, Center for Global Development.
    17. Amit Basole & Deepankar Basu & Rajesh Bhattacharya, 2015. "Determinants and impacts of subcontracting: evidence from India's unorganized manufacturing sector," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(3), pages 374-402, May.
    18. Mandelman, Federico S. & Montes-Rojas, Gabriel V., 2009. "Is Self-employment and Micro-entrepreneurship a Desired Outcome?," World Development, Elsevier, vol. 37(12), pages 1914-1925, December.
    19. Pablo Fajnzylber & William F. Maloney & Gabriel V. Montes-Rojas, 2009. "Releasing Constraints to Growth or Pushing on a String? Policies and Performance of Mexican Micro-Firms," Journal of Development Studies, Taylor & Francis Journals, vol. 45(7), pages 1027-1047, August.
    20. Guillermo E. Perry & William F. Maloney & Omar S. Arias & Pablo Fajnzylber & Andrew D. Mason & Jaime Saavedra-Chanduvi, 2007. "Informality : Exit and Exclusion," World Bank Publications - Books, The World Bank Group, number 6730, December.
    21. Radchenko, Natalia, 2014. "Heterogeneity in Informal Salaried Employment: Evidence from the Egyptian Labor Market Survey," World Development, Elsevier, vol. 62(C), pages 169-188.
    22. Ana Moreno-Monroy & Janneke Pieters & Abdul Erumban, 2014. "Formal sector subcontracting and informal sector employment in Indian manufacturing," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-17, December.
    23. repec:ilo:ilowps:488587 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bassier, Ihsaan, 2022. "Firms and inequality when unemployment is high," LSE Research Online Documents on Economics 117999, London School of Economics and Political Science, LSE Library.
    2. Surbhi Kesar & Snehashish Bhattacharya & Lopamudra Banerjee, 2020. "Contradictions and crisis in the world of work in the present conjuncture: Informality, precarity and the pandemic," Working Papers 253, Department of Economics, SOAS University of London, UK, revised Oct 2022.
    3. Nataraj, Manikantha & Bhattacharya, Soham, 2020. "Bitter Convergence: Contemporary Crisis of Labour in Rural West Bengal," MPRA Paper 103363, University Library of Munich, Germany.
    4. Manikantha Nataraj & Soham Bhattacharya, 2023. "Bitter Convergence: Contemporary Crisis of Labour in Rural West Bengal," BASE University Working Papers 17/2023, BASE University, Bengaluru, India.
    5. Ihsaan Bassier, 2022. "Firms and inequality when unemployment is high," CEP Discussion Papers dp1872, Centre for Economic Performance, LSE.
    6. Bassier, Ihsaan, 2023. "Firms and inequality when unemployment is high," Journal of Development Economics, Elsevier, vol. 161(C).
    7. Surbhi Kesar & Snehashish Bhattacharya & Lopamudra Banerjee, 2022. "Contradictions and Crisis in the World of Work: Informality, Precarity and the Pandemic," Development and Change, International Institute of Social Studies, vol. 53(6), pages 1254-1282, November.
    8. Surbhi Kesar, 2022. "Nature and Pattern of Subcontracting Linkages in the Informal Economy in India: Implications for Possibilities of Economic Transformation," Working Papers 254, Department of Economics, SOAS University of London, UK, revised Dec 2022.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Snehashish Bhattacharya & Surbhi Kesar, 2018. "Possibilities of Transformation: The Informal Sector in India," Review of Radical Political Economics, Union for Radical Political Economics, vol. 50(4), pages 727-735, December.
    2. Kasturi Sadhu & Saumya Chakrabarti, 2021. "Neo-Dualism: Accumulation, Distress, and Proliferation of a Fissured Informality," Review of Radical Political Economics, Union for Radical Political Economics, vol. 53(4), pages 694-724, December.
    3. Rodriguez Torres, Omar, 2021. "How different are necessity and opportunity firms? Evidence from a quantile analysis of the Colombian microenterprise sector," MERIT Working Papers 2021-019, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. Prodyumna Goutam & Italo A. Gutierrez & Krishna B. Kumar & Shanthi Nataraj, 2017. "Does Informal Employment Respond to Growth Opportunities? Trade-Based Evidence from Bangladesh," Working Papers 1198, RAND Corporation.
    5. Djidonou, Gbenoukpo Robert & Foster-McGregor, Neil, 2022. "Stagnant manufacturing growth in India: The role of the informal economy," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 528-543.
    6. Gindling,T. H. & Mossaad,Nadwa & Newhouse,David Locke, 2016. "Earnings premiums and penalties for self-employment and informal employees around the world," Policy Research Working Paper Series 7530, The World Bank.
    7. Prodyumna Goutam & Italo A. Gutierrez & Krishna B. Kumar & Shanthi Nataraj, 2017. "Does Informal Employment Respond to Growth Opportunities? Trade-Based Evidence from Bangladesh," Working Papers WR-1198, RAND Corporation.
    8. Surbhi Kesar, 2022. "Nature and Pattern of Subcontracting Linkages in the Informal Economy in India: Implications for Possibilities of Economic Transformation," Working Papers 254, Department of Economics, SOAS University of London, UK, revised Dec 2022.
    9. Salinas, Aldo & Ortiz, Cristian & Changoluisa, Javier & Muffatto, Moreno, 2023. "Testing three views about the determinants of informal economy: New evidence at global level and by country groups using the CS-ARDL approach," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 438-455.
    10. Snehashish Bhattacharya & Surbhi Kesar, 2020. "Precarity and Development: Production and Labor Processes in the Informal Economy in India," Review of Radical Political Economics, Union for Radical Political Economics, vol. 52(3), pages 387-408, September.
    11. Jagannadha Pawan Tamvada & Mili Shrivastava & Tapas Kumar Mishra, 2022. "Education, social identity and self-employment over time: evidence from a developing country," Small Business Economics, Springer, vol. 59(4), pages 1449-1468, December.
    12. Rayees Ahmad Sheikh & Sarthak Gaurav, 2020. "Informal Work in India: A Tale of Two Definitions," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 32(4), pages 1105-1127, September.
    13. Aysit Tansel & Elif Oznur Acar, 2016. "The Formal/Informal Employment Earnings Gap: Evidence from Turkey," Research on Economic Inequality, in: Inequality after the 20th Century: Papers from the Sixth ECINEQ Meeting, volume 24, pages 121-154, Emerald Group Publishing Limited.
    14. Karaivanov, Alexander & Yindok, Tenzin, 2022. "Involuntary entrepreneurship – Evidence from Thai urban data," World Development, Elsevier, vol. 149(C).
    15. Norman V. Loayza, 2016. "Informality in the Process of Development and Growth," The World Economy, Wiley Blackwell, vol. 39(12), pages 1856-1916, December.
    16. Ann-Sofie Kolm & Birthe Larsen, 2019. "Underground activities and labour market performance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(1), pages 41-70, February.
    17. Ceyhun Elgin & M. ayhan Köse & Franziska Ohnsorge & Shu Yu, 2021. "Understanding Informality Abstract:," Working Papers 2021/03, Bogazici University, Department of Economics.
    18. Thi Tran & Hai La, 2018. "Why do household businesses in Vietnam stay informal?," WIDER Working Paper Series 64, World Institute for Development Economic Research (UNU-WIDER).
    19. Ceyhun Elgin & M. Ayhan Kose & Franziska Ohnsorge & Shu Yu, 2021. "Understanding Informality," Koç University-TUSIAD Economic Research Forum Working Papers 2114, Koc University-TUSIAD Economic Research Forum.
    20. Ajit K. Ghose, 2017. "Informality and Development," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 60(1), pages 1-16, March.

    More about this item

    Keywords

    Informal sector; Dualism; Structural transformation; Manufacturing; India;
    All these keywords.

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:eurjdr:v:32:y:2020:i:3:d:10.1057_s41287-019-00228-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.