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The Missing Middle

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  • Anne O. Krueger

    (Indian Council for Research on International Economic Rela)

Abstract

Though recent economic growth in India has increased productivity and living standards significantly, the need for more growth and more reform remains. Rapid growth of unskilled labor-intensive manufacturing combined with growth of productivity in agriculture is necessary to enable a more inclusive growth that raises living standards in rural areas and in non-agricultural employment of relatively unskilled labor. India's comparative advantage in services does not preclude the need for a rapid-manufacturing growth phase of development due to the service sector's low contribution to output and its demand for educated and skilled, as opposed to unskilled, workers. The failure of manufacturing output and employment to grow more rapidly can be attributed to (1) regulations governing enterprises in the private sector and (2) regulations covering conditions of employment of labor. Reducing the barriers to entry of unskilled labor into manufacturing and relaxing some of the most restrictive labor laws would increase prospects for even faster growth than current high rates.

Suggested Citation

  • Anne O. Krueger, "undated". "The Missing Middle," Indian Council for Research on International Economic Relations, New Delhi Working Papers 230, Indian Council for Research on International Economic Relations, New Delhi, India.
    • Handle: RePEc:ind:icrier:230
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    File URL: http://www.icrier.org/publication/Workingpaper230.pdf
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    Cited by:

    1. Bah, El-hadj & Cooper, Geo, 2012. "Constraints to the growth of small firms in Northern Myanmar," CIS Discussion paper series 577, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    2. Bah, El-hadj M. & Cooper, Geoff, 2015. "Constraints to the growth of small firms in Northwest Myanmar," Journal of Asian Economics, Elsevier, vol. 39(C), pages 108-125.
    3. Rana Hasan & Nidhi Kapoor & Aashish Mehta & Asha Sundaram, 2017. "Labor Regulations, Employment and Wages: Evidence from India's Apparel Sector," Asian Economic Policy Review, Japan Center for Economic Research, vol. 12(1), pages 70-90, January.
    4. Aram Grigoryan & Mattias Polborn, 2018. "Insecure Property Rights and the Missing Middle," CESifo Working Paper Series 7203, CESifo.
    5. Swati Agrawal & Poonam Singh & Mainak Mazumdar, 2021. "Innovation, Firm Size and Ownership: A Study of Firm Transition in India," International Journal of Global Business and Competitiveness, Springer, vol. 16(1), pages 15-27, June.
    6. Narendar Pani, 2015. "Towards a location-sensitive policy for manufacturing in Karnataka," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 17(1), pages 50-65, April.
    7. Felipe, Jesus & Kumar, Utsav & Abdon, Arnelyn, 2013. "Exports, capabilities, and industrial policy in India," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 939-956.
    8. Sunandan Ghosh & Vinoj Abraham, 2021. "The Case of the ‘Missing Middle’ in the Indian Manufacturing Sector: A Firm Level Analysis," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(1), pages 161-179, March.
    9. Susan Athey & Raj Chetty & Guido Imbens, 2020. "Combining Experimental and Observational Data to Estimate Treatment Effects on Long Term Outcomes," Papers 2006.09676, arXiv.org.
    10. Ghani,Syed Ejaz & Kerr,William Robert & Segura,Alex, 2015. "Informal tradables and the employment growth of Indian manufacturing," Policy Research Working Paper Series 7206, The World Bank.
    11. Semih Tumen, 2017. "Entrepreneurship in the shadows," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 25(2), pages 239-269, April.
    12. Grabowski, Richard, 2009. "An alternative Indian model?," Journal of Asian Economics, Elsevier, vol. 20(1), pages 50-61, January.
    13. Inderjit Kaur & Nirvikar Singh, 2013. "China, India, And Industrial Policy For Inclusive Growth," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 2(01), pages 1-27.
    14. Pieters, Janneke, 2010. "Growth and Inequality in India: Analysis of an Extended Social Accounting Matrix," World Development, Elsevier, vol. 38(3), pages 270-281, March.
    15. Chang-Tai Hsieh & Benjamin A. Olken, 2014. "The Missing "Missing Middle"," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 89-108, Summer.
    16. Pieters, Janneke & Klasen, Stephan, 2011. "Drivers of female labour force participation in urban India during India's Economic Boom," Proceedings of the German Development Economics Conference, Berlin 2011 65, Verein für Socialpolitik, Research Committee Development Economics.
    17. Jean-Philippe Berrou & Damien Girollet, 2019. "A la recherche des « gazelles » du secteur informel urbain africain. Entreprises et entrepreneurs à fort potentiel dans leur environnement socioéconomique et numérique," Working Papers hal-02507441, HAL.
    18. Antonio Angelino, 2017. "Human capital shortages in the Vietnamese industry. A firm-level analysis," Working Papers 1701, c.MET-05 - Centro Interuniversitario di Economia Applicata alle Politiche per L'industria, lo Sviluppo locale e l'Internazionalizzazione.
    19. Klasen, Stephan & Pieters, Janneke, 2012. "Push or Pull? Drivers of Female Labor Force Participation during India's Economic Boom," IZA Discussion Papers 6395, Institute of Labor Economics (IZA).
    20. Luis Medrano-Adán & Vicente Salas-Fumás & J. Javier Sanchez-Asin, 2019. "Firm size and productivity from occupational choices," Small Business Economics, Springer, vol. 53(1), pages 243-267, June.

    More about this item

    Keywords

    purchasing power; China; India; economic growth; tertiary sector; capital stock;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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