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Is Manufacturing an Engine of Growth in India in the Post-Nineties?

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  • Vinish Kathuria
  • Rajesh Raj Natarajan

Abstract

This article tests whether manufacturing has acted as an ‘engine of growth’ for the Indian states in the post-1990s.Our methodology involves regressing the state domestic product (SDP) growth rates on growth rates of manufacturing. If the coefficient of manufacturing growth is higher than the share of manufacturing in SDP, this is interpreted as supporting the engine of growth hypothesis. The results indicate that manufacturing has acted as an engine of growth in the post-nineties despite its declining share over the period. However, our study rules out the role of scale economies propelling productivity growth in the sector. Our analysis also suggests that it is primarily factor accumulation and not productivity growth that is driving output. Our characterisation of states based on output growth, TFP growth and employment growth suggests that for some states the current trend of growing without creating employment and improving TFP will not be sustainable.

Suggested Citation

  • Vinish Kathuria & Rajesh Raj Natarajan, 2013. "Is Manufacturing an Engine of Growth in India in the Post-Nineties?," Journal of South Asian Development, , vol. 8(3), pages 385-408, December.
  • Handle: RePEc:sae:soudev:v:8:y:2013:i:3:p:385-408
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    Cited by:

    1. Chris Obisi & Remi Samuel & Ayodeji Ilesanmi, 2020. "Influence of Workforce Planning on Organizational Performance in the Manufacturing Industry of Lagos, Nigeria," Global Business Review, International Management Institute, vol. 21(2), pages 404-417, April.
    2. Haraguchi, Nobuya & Cheng, Charles Fang Chin & Smeets, Eveline, 2017. "The Importance of Manufacturing in Economic Development: Has This Changed?," World Development, Elsevier, vol. 93(C), pages 293-315.

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