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Sustainability of Output Growth in Indian Manufacturing: A Decomposition Analysis of Selected Industries

Author

Listed:
  • Gopinath Pradhan

    (Indira Gandhi National Open University)

  • Kaustuva Barik

    (Indira Gandhi National Open University)

Abstract

The present paper undertakes a decomposition analysis of the output growth of Indian manufacturing sector. Such an exercise becomes important in view of the non-sustainability of growth proposed by Krugman for the East Asian countries. As the law of diminishing returns to factor inputs is invoked in drawing the above inference, an attempt is made to estimate the contribution of four inputs, viz., capital, labour, energy and material, to the growth of output by estimating a translog production function for aggregate manufacturing sector and eight selected industries of India. A major finding of the empirical exercise relates to minimal or negative contribution of technology to output growth. Therefore, inputs, mainly, raw material has been contributing significantly to growth of output in Indian industries. Such a pattern of raw material-driven growth indicates the possibility of non-sustainability thesis advanced by Krugman.

Suggested Citation

  • Gopinath Pradhan & Kaustuva Barik, 2004. "Sustainability of Output Growth in Indian Manufacturing: A Decomposition Analysis of Selected Industries," Microeconomics 0405003, EconWPA.
  • Handle: RePEc:wpa:wuwpmi:0405003
    Note: Type of Document - pdf; pages: 14
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    File URL: http://econwpa.repec.org/eps/mic/papers/0405/0405003.pdf
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    References listed on IDEAS

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    1. Michael J. Boskin & Lawrence J. Lau, 1990. "Post-War Economic Growth in the Group-of-Five Countries: A New Analysis," NBER Working Papers 3521, National Bureau of Economic Research, Inc.
    2. Park, Seung-Rok & Kwon, Jene K, 1995. "Rapid Economic Growth with Increasing Returns to Scale and Little or No Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 332-351, May.
    3. Jesus Felipe, 1999. "Total factor productivity growth in East Asia: A critical survey," Journal of Development Studies, Taylor & Francis Journals, vol. 35(4), pages 1-41.
    4. Reghubendra, J. & Murty, M.N. & Paul, S. & Rao, B.B., 1992. "An Analysis of Technological Change, Factor Substitution and Economies of Scale in Manufacturing Industries in India," Papers e9214, Western Sydney - School of Business And Technology.
    5. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455, March.
    6. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
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    Cited by:

    1. Kumar, Surender, 2004. "Decomposition of total factor productivity growth: A regional analysis of Indian industrial manufacturing growth," Working Papers 04/22, National Institute of Public Finance and Policy.

    More about this item

    Keywords

    Krugman’s Thesis; Sources of Growth; Total Factor Productivity; Translog Production Function;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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