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Deciphering The Hindu Growth Epic

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  • Peter E Robertson

    (UWA Business School, The University of Western Australia)

Abstract

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.

Suggested Citation

  • Peter E Robertson, 2010. "Deciphering The Hindu Growth Epic," Economics Discussion / Working Papers 10-19, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:10-19
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    Cited by:

    1. Kevin S. Nell, 2015. "The Complementary Nature Between Technological Progress and Capital Accumulation in India's Long-Run Growth Transitions," Metroeconomica, Wiley Blackwell, vol. 66(4), pages 565-605, November.
    2. Nomoto, Takaaki, 2016. "Rainfall Variability and Macroeconomic Performance:A Case Study of India, 1952–2013," MPRA Paper 71976, University Library of Munich, Germany.

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    Keywords

    Economic Growth; India; Growth Accounting; Investment; Productivity;
    All these keywords.

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