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The Link between Manufacturing Growth and Accelerated Services Growth in India

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  • Rajeev Dehejia
  • Arvind Panagariya

Abstract

The impact of trade liberalization on manufacturing growth has been widely studied in the literature. What has gone unappreciated is that accelerated manufacturing growth has also been accompanied by accelerated services growth. Using firm-level data from India, we find a positive spillover from manufacturing growth to gross value added, wages, employment, and worker productivity in services, especially in large urban firms and in service sectors whose output is used as a manufacturing input.

Suggested Citation

  • Rajeev Dehejia & Arvind Panagariya, 2016. "The Link between Manufacturing Growth and Accelerated Services Growth in India," Economic Development and Cultural Change, University of Chicago Press, vol. 64(2), pages 221-264.
    • Handle: RePEc:ucp:ecdecc:doi:10.1086/683842
    DOI: 10.1086/683842
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    Cited by:

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    2. Reto Foellmi & Stefan Legge & Alexa Tiemann, 2021. "Innovation and trade in the presence of credit constraints," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(3), pages 1168-1205, November.
    3. Manisha Goel & Paulina Restrepo-Echavarria, 2015. "India’s Atypical Structural Transformation," Economic Synopses, Federal Reserve Bank of St. Louis, issue 23.
    4. Saon Ray & Sabyasachi Kar, 2020. "Kuznets' tension in India: Two episodes," WIDER Working Paper Series wp-2020-24, World Institute for Development Economic Research (UNU-WIDER).
    5. Gozgor, Giray, 2018. "Does the structure of employment affect the external imbalances? Theory and evidence," Structural Change and Economic Dynamics, Elsevier, vol. 45(C), pages 77-83.
    6. Avdiu,Besart & Bagavathinathan,Karan Singh & Chaurey,Ritam & Nayyar,Gaurav, 2022. "India's Services Sector Growth : The Impact of Services Trade on Non-tradable Services," Policy Research Working Paper Series 10094, The World Bank.
    7. Tianyu Fan & Michael Peters & Fabrizio Zilibotti, 2023. "Growing Like India—the Unequal Effects of Service‐Led Growth," Econometrica, Econometric Society, vol. 91(4), pages 1457-1494, July.
    8. 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.
    9. Lin, Yi-Chen & Deng, Wen-Shuenn, 2018. "Are per capita international tourist arrivals converging?," International Review of Economics & Finance, Elsevier, vol. 57(C), pages 274-290.

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    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform

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