IDEAS home Printed from https://ideas.repec.org/a/sae/iimkoz/v13y2024i1p90-100.html
   My bibliography  Save this article

The Decomposition of Productivity Growth for India: Before and After 1991

Author

Listed:
  • Kausik Gangopadhyay
  • Debasis Mondal
  • Thasni T

Abstract

We analyse how structural shifts affected India’s productivity growth from 1983 to 2017. The analysis is carried out within a broad three-sector level of disaggregation of the aggregate economy. We show that about 29% of the aggregate productivity growth of India during this period comes from structural change. While this contribution has declined since 2007, the remaining 71% of the productivity growth originates within the individual sectors, especially within the tertiary sector, which alone explains about 30% of this productivity growth. About a quarter of the total productivity growth that occurred prior to economic liberalization in 1991 is attributed to the tertiary sector. We found that between 2007 and 2017, the tertiary sector was responsible for almost 38% of India’s total productivity growth. This contribution is much larger than the contribution made by structural change, and, therefore, the significance of the tertiary sector in Indian economic expansion is growing. Our findings also indicate that the most structural change occurred between 1998 and 2007, which may have contributed to productivity increase in the decade.

Suggested Citation

  • Kausik Gangopadhyay & Debasis Mondal & Thasni T, 2024. "The Decomposition of Productivity Growth for India: Before and After 1991," IIM Kozhikode Society & Management Review, , vol. 13(1), pages 90-100, January.
    • Handle: RePEc:sae:iimkoz:v:13:y:2024:i:1:p:90-100
    DOI: 10.1177/22779752221145613
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/22779752221145613
    Download Restriction: no
    File URL: https://libkey.io/10.1177/22779752221145613?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Margarida Duarte & Diego Restuccia, 2010. "The Role of the Structural Transformation in Aggregate Productivity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(1), pages 129-173.
    2. McMillan, Margaret & Rodrik, Dani & Verduzco-Gallo, Íñigo, 2014. "Globalization, Structural Change, and Productivity Growth, with an Update on Africa," World Development, Elsevier, vol. 63(C), pages 11-32.
    3. de Vries, Gaaitzen J. & Erumban, Abdul A. & Timmer, Marcel P. & Voskoboynikov, Ilya & Wu, Harry X., 2012. "Deconstructing the BRICs: Structural transformation and aggregate productivity growth," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 211-227.
    4. Osamu Saito & Tokihiko Settsu, 2010. "Unveiling Historical Occupational Structures and its Implications for Sectoral Labour Productivity Analysis in Japan's Economic Growth," Global COE Hi-Stat Discussion Paper Series gd10-143, Institute of Economic Research, Hitotsubashi University.
    5. Margaret S. McMillan & Dani Rodrik, 2011. "Globalization, Structural Change and Productivity Growth," NBER Working Papers 17143, National Bureau of Economic Research, Inc.
    6. Rath, Badri Narayan, 2018. "Productivity growth and efficiency change: Comparing manufacturing- and service-based firms in India," Economic Modelling, Elsevier, vol. 70(C), pages 447-457.
    7. Barry Eichengreen & Poonam Gupta, 2013. "The two waves of service-sector growth," Oxford Economic Papers, Oxford University Press, vol. 65(1), pages 96-123, January.
    8. Chang-Tai Hsieh & Peter J. Klenow, 2009. "Misallocation and Manufacturing TFP in China and India," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(4), pages 1403-1448.
    9. Cortuk, Orcan & Singh, Nirvikar, 2011. "Structural change and growth in India," Economics Letters, Elsevier, vol. 110(3), pages 178-181, March.
    10. K.V. Ramaswamy & Tushar Agrawal, 2012. "Services-led growth, employment and job quality: A Study of manufacturing and service-sector in urban India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-007, Indira Gandhi Institute of Development Research, Mumbai, India.
    11. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    12. Amartya Lahiri & Kei-Mu Yi, 2009. "A Tale of Two States: Maharashtra and West Bengal," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(3), pages 523-542, July.
    13. Yanrui Wu, 2007. "Service Sector Growth in China and India: A Comparison," Economics Discussion / Working Papers 07-04, The University of Western Australia, Department of Economics.
    14. Kathuria, Vinish & Seethamma Natarajan, Rajesh Raj & Sen, Kunal, 2010. "Organized versus Unorganized Manufacturing Performance in India in the Post-Reform Period," MPRA Paper 20317, University Library of Munich, Germany.
    15. Barry Bosworth & Susan M. Collins, 2008. "Accounting for Growth: Comparing China and India," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 45-66, Winter.
    16. Panagariya, Arvind, 2011. "India: The Emerging Giant," OUP Catalogue, Oxford University Press, number 9780199751563.
    17. Mondal, Debasis, 2019. "Structural transformation and productivity growth in India during 1960–2010," Economic Modelling, Elsevier, vol. 82(C), pages 401-419.
    18. Azenui, Ngwinui Belinda & Rada, Codrina, 2021. "Labor productivity growth in sub-Sahara African LDCs: sectoral contributions and macroeconomic factors," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 10-26.
    19. Gangopadhyay, Kausik & Mondal, Debasis, 2021. "Productivity, relative sectoral prices, and total factor productivity: Theory and evidence," Economic Modelling, Elsevier, vol. 100(C).
    20. Ansari, Mohammed I., 1995. "Explaining the service sector growth: An empirical study of India, Pakistan, and Sri Lanka," Journal of Asian Economics, Elsevier, vol. 6(2), pages 233-246.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Erumban, Abdul Azeez & Das, Deb Kusum & Aggarwal, Suresh & Das, Pilu Chandra, 2019. "Structural change and economic growth in India," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 186-202.
    2. Longfeng Ye & Peter E. Robertson, 2017. "Migration and Growth in China: A Sceptical Assessment of the Evidence," Economics Discussion / Working Papers 17-03, The University of Western Australia, Department of Economics.
    3. K L Krishna & Deb Kusum Das & Abdul A Erumban & Suresh Aggarwal & Pilu Chandra Das, 2016. "Productivity Dynamics In India’S Service Sector: An Industry-Level Perspective," Working papers 261, Centre for Development Economics, Delhi School of Economics.
    4. Mendez-Guerra, Carlos, 2020. "Labor Productivity, Capital Accumulation, and Aggregate Efficiency Across Countries: New Evidence for an Old Debate," MPRA Paper 99268, University Library of Munich, Germany.
    5. Lee, Jong-Wha & McKibbin, Warwick J., 2018. "Service sector productivity and economic growth in Asia," Economic Modelling, Elsevier, vol. 74(C), pages 247-263.
    6. Gunes Asik & Michelle Marshalian & Ulas Karakoc & Mohamed Ali Marouani, 2018. "Productivity, Structural Change and Skills Dynamics in Tunisia and Turkey," Working Papers hal-04000250, HAL.
    7. Mallick, Jagannath, 2017. "Structural Change and Productivity Growth in India and the People’s Republic of China," ADBI Working Papers 656, Asian Development Bank Institute.
    8. Rohit Lamba & Arvind Subramanian, 2020. "Dynamism with Incommensurate Development: The Distinctive Indian Model," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 3-30, Winter.
    9. Mondal, Debasis, 2019. "Structural transformation and productivity growth in India during 1960–2010," Economic Modelling, Elsevier, vol. 82(C), pages 401-419.
    10. Ajit K. Ghose, 2021. "Structural Change and Development in India," Indian Journal of Human Development, , vol. 15(1), pages 7-29, April.
    11. Gangopadhyay, Kausik & Mondal, Debasis, 2021. "Productivity, relative sectoral prices, and total factor productivity: Theory and evidence," Economic Modelling, Elsevier, vol. 100(C).
    12. Mendez-Guerra, Carlos, 2017. "Labor productivity, capital accumulation, and aggregate efficiency across countries: Some stylized facts," MPRA Paper 82461, University Library of Munich, Germany.
    13. Murat Üngör, 2016. "Did the rising importance of services decelerate overall productivity improvement of Turkey during 2002–2007?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 19(3), pages 238-261, July.
    14. Jong-Wha Lee, 2017. "China's economic growth and convergence," The World Economy, Wiley Blackwell, vol. 40(11), pages 2455-2474, November.
    15. Thomas Gries & Rainer Grundmann, 2020. "Modern sector development: The role of exports and institutions in developing countries," Review of Development Economics, Wiley Blackwell, vol. 24(2), pages 644-667, May.
    16. repec:dgr:rugggd:gd-136 is not listed on IDEAS
    17. Hernando Zuleta & Daniel Gamboa, 2019. "Factor reallocation and growth: what if there are labor saving innovations?," Documentos CEDE 17199, Universidad de los Andes, Facultad de Economía, CEDE.
    18. Jonathan Temple & Huikang Ying & Patrick Carter, 2014. "Transfers and Transformations: Remittances, Foreign Aid, and Growth," Bristol Economics Discussion Papers 14/649, School of Economics, University of Bristol, UK, revised 02 Dec 2014.
    19. Lavopa, Alejandro & Szirmai, Adam, 2018. "Structural modernisation and development traps. An empirical approach," World Development, Elsevier, vol. 112(C), pages 59-73.
    20. World Bank Group, "undated". "Africa's Pulse, No. 18, October 2018," World Bank Publications - Reports 30455, The World Bank Group.
    21. Sèna Kimm Gnangnon, 2020. "Comparative Advantage Following (CAF) development strategy, Aid for Trade flows and structural change in production," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 9(1), pages 1-29, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:iimkoz:v:13:y:2024:i:1:p:90-100. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.