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Can Service be a Catalyst for Industrial Output? Insights from Indian Manufacturing Industries

Author

Listed:
  • Sanghita Mondal

    (PGDAV College (M), Delhi University)

  • Sugandha Huria

    (Indian Institute of Foreign Trade)

  • Sk Md Azharuddin

    (National Institute of Public Finance and Policy)

Abstract

The motivation of the current work is derived from the Paper by Marjit, Sasmal and Sasmal (2020) where they show the importance of services in generating growth and development of Indian organised and unorganised sectors. Following the paper, the current paper focuses on the relevance of increased use of service inputs on manufacturing output, for the 6 major manufacturing industries of India. The Levinsohn- Petrin estimation of the production function shows no dynamism between Service input and Labour employment/quality in Indian context compared to studies done on other countries. However, our regression analysis using Fixed effect panel data model shows a positive impact of increased service input use on manufacturing output at both the average industry level as well as industry-specific level. In the end, we segregate the services into traditional and complex services to capture the nature of the services used in different industries and interestingly find that most of the services used for production are traditional in nature.

Suggested Citation

  • Sanghita Mondal & Sugandha Huria & Sk Md Azharuddin, 2025. "Can Service be a Catalyst for Industrial Output? Insights from Indian Manufacturing Industries," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 23(2), pages 389-408, June.
    • Handle: RePEc:spr:jqecon:v:23:y:2025:i:2:d:10.1007_s40953-024-00426-6
    DOI: 10.1007/s40953-024-00426-6
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    References listed on IDEAS

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    1. Dirk Pilat & Anita Wölfl, 2005. "Measuring the Interaction Between Manufacturing and Services," OECD Science, Technology and Industry Working Papers 2005/5, OECD Publishing.
    2. Jens Matthias Arnold & Beata Javorcik & Molly Lipscomb & Aaditya Mattoo, 2016. "Services Reform and Manufacturing Performance: Evidence from India," Economic Journal, Royal Economic Society, vol. 126(590), pages 1-39, February.
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    Keywords

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    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • 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
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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