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Factor Employment, Sources and Sustainability of Output Growth: Analysis of Indian Manufacturing


  • Arvind Virmani
  • Danish A. Hashim


The manufacturing sector in India is crucial for two main reasons: It has significant potential to provide modern employment to a growing labour force, especially that of less skilled type and second by its own healthy growth, stimulate and provide a foundation for, organic growth in other sectors of the economy. On both these counts, however, the manufacturing sector has so far not performed to its potential. In an attempt to identify the factors responsible for this phenomenon, the present study examines in detail the main determinants of factor employment, their shares, and output growth. The framework used is a CES production function estimated using ASI time-series data for the organised manufacturing industry spanning a period from 1973/74 to 2001/02. The study also dwells on the subject of sustainability of high growth in output on the back of raising capital labour ratio. [Working Paper No.3 /2009-DEA].

Suggested Citation

  • Arvind Virmani & Danish A. Hashim, 2010. "Factor Employment, Sources and Sustainability of Output Growth: Analysis of Indian Manufacturing," Working Papers id:2415, eSocialSciences.
  • Handle: RePEc:ess:wpaper:id:2415
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    References listed on IDEAS

    1. Bhalotra, Sonia R, 1998. "The Puzzle of Jobless Growth in Indian Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 60(1), pages 5-32, February.
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    3. B.N.Goldar, 2004. "Productivity trends in Indian manufacturing in the pre- and post- reform periods," Indian Council for Research on International Economic Relations, New Delhi Working Papers 137, Indian Council for Research on International Economic Relations, New Delhi, India.
    4. Arvind Virmani, 2011. "The Dynamics of Competition: Phasing of Domestic and External Liberalisation in India," Working Papers id:3556, eSocialSciences.
    5. Roy, S.D., 1998. "Lags in Employment Adjustment and Inter-Industry Differentials: an Analysis Using Dynamic Inter-Related Factor Demand Functions," Papers 149, Indira Gandhi Institute of Development Research-.
    6. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    7. Fallon, Peter R & Lucas, Robert E B, 1991. "The Impact of Changes in Job Security Regulations in India and Zimbabwe," World Bank Economic Review, World Bank Group, vol. 5(3), pages 395-413, September.
    8. Berndt, Ernst R, 1976. "Reconciling Alternative Estimates of the Elasticity of Substitution," The Review of Economics and Statistics, MIT Press, vol. 58(1), pages 59-68, February.
    9. Bulent Unel, 2003. "Productivity Trends in India's Manufacturing Sectors in the Last Two Decades," IMF Working Papers 03/22, International Monetary Fund.
    10. Barry Bosworth & Susan M. Collins, 2008. "Accounting for Growth: Comparing China and India," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 45-66, Winter.
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    Cited by:

    1. Arvind Virmani & Danish A Hashim, 2011. "J-Curve of Productivity and Growth; Indian Manufacturing Post-Liberalization," IMF Working Papers 11/163, International Monetary Fund.
    2. Nanditha Mathew, 2017. "Drivers of firm growth: micro-evidence from Indian manufacturing," Journal of Evolutionary Economics, Springer, vol. 27(3), pages 585-611, July.
    3. Rahul Sen & Sadhana Srivastava, 2011. "Integrating into Asia’s international production networks: Challenges and prospects for India," STUDIES IN TRADE AND INVESTMENT,in: India: A New Player in Asian Production Networks?, Studies in Trade and Investment 75, chapter 4, pages 78-119 United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    4. Rahul Sen & Sadhana Srivastava, 2012. "Asia' s international production networks: Will India be the next assembly centre?," Working Papers 11812, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    5. Banga, Rashmi & Das, Abhijit, 2010. "Role of trade policies in growth of Indian manufacturing sector," MPRA Paper 35198, University Library of Munich, Germany.

    More about this item


    industry; sustainability; labour-surplus; CES; production function; manufcturing sector; India; development policy; Asian countries; total factor productivity (TFP); output growth; employment; India; labour force; economy; capital labour ratio;

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