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India’s Services Sector Growth: The Impact of Services Trade on Non-tradable Services

Author

Listed:
  • Besart Avdiu

    (World Bank)

  • Karan Singh Bagavathinathan

    (The University of Göttingen)

  • Ritam Chaurey

    (Johns Hopkins University)

  • Gaurav Nayyar

    (World Bank)

Abstract

This paper examines the effect of tradable services growth on non-tradable services acrossIndian districts. We use a shift-share “Bartik-type†instrumental variable, that relies on changes in foreign demand shocks for tradable services, weighted by the initial district employment shares in tradable services. Using multiple rounds of the Indian Economic Censuses, we find that an increase in tradable services employment leads to an increase in non-tradable services employment and increases the number of firms in non-tradable services. Our evidence suggests that this positive impact is due to an increase in consumer demand for local non-tradable services that results from the growth in tradable services employment, and not due to sectoral linkages between tradable and non-tradable services sectors. The employment impact is much larger for female workers compared to male workers, and for the number of female-owned firms relative to male-owned firms. Further, the employment impact is only significant for small non-tradable service firms.

Suggested Citation

  • Besart Avdiu & Karan Singh Bagavathinathan & Ritam Chaurey & Gaurav Nayyar, 2022. "India’s Services Sector Growth: The Impact of Services Trade on Non-tradable Services," NCAER Working Papers 142, National Council of Applied Economic Research.
    • Handle: RePEc:nca:ncaerw:142
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    File URL: https://www.ncaer.org/publication/indiarsquos-services-sector-growth-the-impact-of-services-trade-on-non-tradable-services
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    More about this item

    Keywords

    : Service sector; Employment; Female Employment;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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