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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].

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Paper provided by eSocialSciences in its series Working Papers with number id:2415.

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Date of creation: Feb 2010
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Handle: RePEc:ess:wpaper:id:2415
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  1. 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.
  2. 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.
  3. 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.
  4. Bulent Unel, 2003. "Productivity Trends in India's Manufacturing Sectors in the Last Two Decades," IMF Working Papers 03/22, International Monetary Fund.
  5. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
  6. 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.
  7. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
  8. Arvind Virmani, 2011. "The Dynamics of Competition: Phasing of Domestic and External Liberalisation in India," Working Papers id:3556, eSocialSciences.
  9. 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.
  10. 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-.
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