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Assessing Factor Proportions in Tradable Sectors of the Indian Economy

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  • Tandon, Anjali

Abstract

The basic motivation of this work is to find how the sector-wise factor proportions are placed in an open and market driven economy. Literature emphasises a greater relevance of factor proportions in resource allocations for economic activity as compared to intersectoral linkages. However, the measurement of factor requirements is, prima facie, based on direct factor proportions, and can be misleading due to the its partial nature of assessment. Working with the Semi-Input-Output Model provides an advantage to distinguish between tradable and non-tradable sectors while also including the indirect factor use. The analysis confirms an underestimation of factor proportions, if only the direct factor usage is taken into consideration. It also provides a benchmark for comparison of the sector-wise factor proportions. It is insightful to note that most tradable sectors have higher capital coefficients than the corresponding labour coefficients, underscoring stronger than expected capital requirements.

Suggested Citation

  • Tandon, Anjali, 2019. "Assessing Factor Proportions in Tradable Sectors of the Indian Economy," MPRA Paper 99135, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:99135
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    References listed on IDEAS

    as
    1. Riedel, James, 1975. "Factor Proportions, Linkages and the Open Developing Economy," The Review of Economics and Statistics, MIT Press, vol. 57(4), pages 487-494, November.
    2. Rui Mano & Marola Castillo, 2015. "The Level of Productivity in Traded and Non-Traded Sectors for a Large Panel of Countries," IMF Working Papers 2015/048, International Monetary Fund.
    3. Alauddin, Mohammad & Tisdell, Clem A, 1988. "The Use of Input-Output Analysis to Determine the Appropriateness of Technology and Industries: Evidence from Bangladesh," Economic Development and Cultural Change, University of Chicago Press, vol. 36(2), pages 369-391, January.
    4. Stewart, Frances & Streeten, Paul, 1971. "Conflicts between Output and Employment Objectives in Developing Countries," Oxford Economic Papers, Oxford University Press, vol. 23(2), pages 145-168, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    factor proportions; tradables; capital-to-labour ratio; semi-input-output; linkages; India;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis

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