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Structural change and employment growth in India: reinterpreting “Manufacturing as an Engine of Growth”

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  • Satya Prasad Padhi

Abstract

Purpose - The present paper aims to highlight how manufacturing expansions under conditions of increasing returns, which involve the growth of intermediate goods specializations, support advanced service employment. In addition, the increasing use of manufacturing products in services highlights additional, new service sector employment opportunities. Design/methodology/approach - This paper investigates (1) the manufacturing and service interactions and (2) the investment behaviour in manufacturing using Auto-Regressive Distributed lags (ARDL) and Vector Autoregressive (VAR) models. The models allow for different specifications to study whether investment behaviour in manufacturing supports dynamic manufacturing and service interactions. Findings - The results underpin how Kaldorian manufacturing as an engine of growth is still relevant in Indian growth and is key to achieving higher advanced employment, export-orientation and services and manufacturing nexus outcomes. What matters, though, is that manufacturing investments are to be guided mainly by intermediate goods specializations. The slowdown of these specializations, explaining the slowdown of manufacturing investment, is therefore, a concern. Originality/value - A reinterpretation of manufacturing as an engine of growth in which primacy is given to investment behaviour in technical progress functions that can support the growth of specializations in manufacturing and such specialized service employment.

Suggested Citation

  • Satya Prasad Padhi, 2024. "Structural change and employment growth in India: reinterpreting “Manufacturing as an Engine of Growth”," EconomiA, Emerald Group Publishing Limited, vol. 26(1), pages 25-46, August.
    • Handle: RePEc:eme:econpp:econ-07-2023-0125
    DOI: 10.1108/ECON-07-2023-0125
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    More about this item

    Keywords

    Structural change; Intermediate goods specialization; Keynesian macro increasing returns; Reinterpretation of Kaldor’s technical progress function; E12; E22; O11; O14; O50;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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