Deciphering The Hindu Growth Epic
India’s investment rate has increased fourfold since 1950 and is now nearly 40% of GDP. Many studies have suggested that this rising investment rate is the most significant component of India’s growth acceleration. I assess these hypotheses using the neoclassical growth model decomposition method. Unlike other methods based on this model, such as Hall and Jones (QJE 1999), the method used in this paper does not rely on the assumption of steady state. I find that the rise in investment rates since the 1970s explains only 30% of India’s growth over that period. I conclude that, notwithstanding the high investment rates, the main source of India’s growth acceleration is the modest upward trend in productivity growth since the 1970s.
|Date of creation:||2010|
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- Kaushik Basu & Annemie Maertens, 2007.
"The pattern and causes of economic growth in India,"
Oxford Review of Economic Policy,
Oxford University Press, vol. 23(2), pages 143-167, Summer.
- Basu, Kaushik & Maertens, Annemie, 2007. "The Pattern and Causes of Economic Growth in India," Working Papers 07-08, Cornell University, Center for Analytic Economics.
- Athukorala, Prema-chandra & Sen, Kunal, 2004. "The Determinants of Private Saving in India," World Development, Elsevier, vol. 32(3), pages 491-503, March.
- Prema-chandra Athukorala & Kunal Sen, 2001. "The Determinants Of Private Saving In India," ASARC Working Papers 2001-13, The Australian National University, Australia South Asia Research Centre.
- Athukorala, Prema-chandra & Sen, Kunal, 2001. "The Determinants of Private Saving in India," Departmental Working Papers 2001-12, The Australian National University, Arndt-Corden Department of Economics.
- Barry Bosworth & Susan M. Collins & Arvind Virmani, 2006. "Sources of Growth in the Indian Economy," India Policy Forum, Global Economy and Development Program, The Brookings Institution, vol. 3(1), pages 1-69.
- Barry Bosworth & Susan M. Collins & Arvind Virmani, 2007. "Sources of Growth in the Indian Economy," NBER Working Papers 12901, National Bureau of Economic Research, Inc.
- Peter E. Robertson, 2010. "Investment Led Growth In India: Hindu Fact or Mythology?," Economics Discussion / Working Papers 10-08, The University of Western Australia, Department of Economics.
- Peter Klenow & Andrés Rodríguez-Clare, 1997. "The Neoclassical Revival in Growth Economics: Has It Gone Too Far?," NBER Chapters,in: NBER Macroeconomics Annual 1997, Volume 12, pages 73-114 National Bureau of Economic Research, Inc.
- Robertson, Peter E, 2000. "Diminished Returns? Growth and Investment in East Asia," The Economic Record, The Economic Society of Australia, vol. 76(235), pages 343-353, December. Full references (including those not matched with items on IDEAS)
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