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Structure, Employment And Productivity Growth In The Indian Unorganized Manufacturing Sector: An Industry Level Analysis

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  • S. N. RAJESH RAJ

    () (Centre for Multi-Disciplinary Development Research, Dharwad, Karnataka, India)

Abstract

The paper analyzes the size, growth and productivity performance of the unorganized manufacturing sector in India during the 1978–1979 to 2000–2001 period. The study shows evidence of an increase in the size of the sector with a slowdown in the reforms period. Evidence indicates that the rate of growth varies widely across the two-digit industries but the variation in growth rate is smaller during the 1990s. Textiles and machinery goods were the fastest growing segments of India's unorganized manufacturing sector in the reforms period. The partial factor productivity approach shows that labor productivity has improved in 2000–2001 over 1978–1979 while capital productivity reported a decline in the same period. The sector, on the other hand, registered a fall in total factor productivity (TFP) during the reforms period. It is found that technological progress has been the main contributor to the growth in TFP in the prereforms period while technical regress contributed to the decline in TFP in the reforms period. A completely different picture is noticed since the mid-1990s when the sector made significant progress in TFP primarily attributed to technological progress which outweighed the decline in technical efficiency. It is also found that capital intensity is an essential factor augmenting labor productivity levels in the sector, which is important for improving the wages paid to the workers in the sector.

Suggested Citation

  • S. N. Rajesh Raj, 2011. "Structure, Employment And Productivity Growth In The Indian Unorganized Manufacturing Sector: An Industry Level Analysis," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 56(03), pages 349-376.
  • Handle: RePEc:wsi:serxxx:v:56:y:2011:i:03:n:s0217590811004316
    DOI: 10.1142/S0217590811004316
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    References listed on IDEAS

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    1. Kaliappa Kalirajan & Shashanka Bhide, 2004. "The Post-reform Performance of the Manufacturing Sector in India," Asian Economic Papers, MIT Press, vol. 3(2), pages 126-157.
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    More about this item

    Keywords

    Unorganized manufacturing; reforms; productivity growth; D24; O47; R11;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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