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

  • Gopinath Pradhan

    (Indira Gandhi National Open University)

  • Kaustuva Barik

    (Indira Gandhi National Open University)

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.

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Paper provided by EconWPA in its series Microeconomics with number 0405003.

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Length: 14 pages
Date of creation: 14 May 2004
Date of revision:
Handle: RePEc:wpa:wuwpmi:0405003
Note: Type of Document - pdf; pages: 14
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  1. 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.
  2. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455.
  3. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 3-22, Winter.
  4. 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.
  5. 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 332-51, May.
  6. 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.
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