IDEAS home Printed from https://ideas.repec.org/p/uwa/wpaper/10-08.html
   My bibliography  Save this paper

Investment Led Growth In India: Hindu Fact or Mythology?

Author

Listed:
  • Peter E. Robertson

    (UWA Business School, The University of Western Australia)

Abstract

India’s investment rate has increased fourfold since 1950 and has risen sharply this decade to 36% of GDP. But contradictory views have been expressed regarding the importance of this investment pattern for India’s economic growth. This paper evaluates the impact of the rise in India’s investment rate on its economic growth, using the neoclassical growth model. It finds that, although rises in the investment rate and capital accumulation have been strong, the increases in the investment rate have added no more than 1.2 percentage points, and perhaps as little as 0.7 percentage points, to India’s overall growth rate of GDP per worker of 2.7%. It also shows that the current investment boom will have a very small effect on future growth rates and that the benefits from further increases in the investment rate are also likely to be small.

Suggested Citation

  • Peter E. Robertson, 2010. "Investment Led Growth In India: Hindu Fact or Mythology?," Economics Discussion / Working Papers 10-08, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:10-08
    as

    Download full text from publisher

    File URL: https://www.business.uwa.edu.au/__data/assets/pdf_file/0005/888341/10-08_Investment_Led_Growth_in_India_-_Hindu_Fact_or_Mythology.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kaushik Basu & Annemie Maertens, 2007. "The pattern and causes of economic growth in India," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 23(2), pages 143-167, Summer.
    2. Rod Tyers & Feng Lu, 2008. "Competition Policy, Corporate Saving And China'S Current Account Surplus," CAMA Working Papers 2008-21, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Prasad, Eswar S., 2009. "Is the Chinese growth miracle built to last?," China Economic Review, Elsevier, vol. 20(1), pages 103-123, March.
    4. Kochhar, Kalpana & Kumar, Utsav & Rajan, Raghuram & Subramanian, Arvind & Tokatlidis, Ioannis, 2006. "India's pattern of development: What happened, what follows?," Journal of Monetary Economics, Elsevier, vol. 53(5), pages 981-1019, July.
    5. Dani Rodrik & Arvind Subramanian, 2005. "From "Hindu Growth" to Productivity Surge: The Mystery of the Indian Growth Transition," IMF Staff Papers, Palgrave Macmillan, vol. 52(2), pages 193-228, September.
    6. Bosworth, Barry & Collins, Susan M. & Virmani, Arvind, 2007. "Sources of Growth in the Indian Economy," India Policy Forum, National Council of Applied Economic Research, vol. 3(1), pages 1-69.
    7. J. Bradford De Long & Lawrence H. Summers, 1991. "Equipment Investment and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 445-502.
    8. Ashok Kotwal & Bharat Ramaswami & Wilima Wadhwa, 2011. "Economic Liberalization and Indian Economic Growth: What's the Evidence?," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1152-1199, December.
    9. 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.
    10. repec:bla:ecorec:v:76:y:2000:i:235:p:343-53 is not listed on IDEAS
    11. Kaushik Basu, 2008. "The Enigma of India," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 396-406, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Peter E. Robertson, 2012. "Deciphering the Hindu growth epic," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 5(1), pages 51-69, April.
    2. Nomoto, Takaaki, 2016. "Rainfall Variability and Macroeconomic Performance:A Case Study of India, 1952–2013," MPRA Paper 71976, University Library of Munich, Germany.
    3. Bibhuti Ranjan Mishra, 2020. "Role of External and Domestic Demand in Economic Growth: A Study of BRICS Countries," Global Business Review, International Management Institute, vol. 21(2), pages 547-566, April.
    4. Cristian Dragos Turcan & Viorel - Costin Banta & Sabin – Alexandru Babeanu, 2021. "Initiation And Planning Of An Information System. A Case Study," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(49), pages 43-48, August.

    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. Castelló-Climent, Amparo & Mukhopadhyay, Abhiroop, 2013. "Mass education or a minority well educated elite in the process of growth: The case of India," Journal of Development Economics, Elsevier, vol. 105(C), pages 303-320.
    2. Amparo Castello-Climent & Abhiroop Mukhopadhyay, 2010. "Mass education or a minority well educated elite in the process of development: The case of India," Discussion Papers 10-08, Indian Statistical Institute, Delhi.
    3. Peter E. Robertson, 2012. "Deciphering the Hindu growth epic," Indian Growth and Development Review, Emerald Group Publishing Limited, vol. 5(1), pages 51-69, April.
    4. Banerjee, Rajabrata & Roy, Saikat Sinha, 2014. "Human capital, technological progress and trade: What explains India's long run growth?," Journal of Asian Economics, Elsevier, vol. 30(C), pages 15-31.
    5. Balakrishnan, Pulapre & Das, Mausumi & Parameswaran, M., 2017. "The internal dynamic of Indian economic growth," Journal of Asian Economics, Elsevier, vol. 50(C), pages 46-61.
    6. Eswar S. Prasad, 2011. "Rebalancing Growth in Asia," International Finance, Wiley Blackwell, vol. 14(1), pages 27-66, April.
    7. Ashok Kotwal & Bharat Ramaswami & Wilima Wadhwa, 2011. "Economic Liberalization and Indian Economic Growth: What's the Evidence?," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1152-1199, December.
    8. repec:kqi:journl:2018-2-1-2 is not listed on IDEAS
    9. Bishnupriya Gupta, 2019. "Falling behind and catching up: India's transition from a colonial economy," Economic History Review, Economic History Society, vol. 72(3), pages 803-827, August.
    10. Mishra, Saurabh & Lundstrom, Susanna & Anand, Rahul, 2011. "Service export sophistication and economic growth," Policy Research Working Paper Series 5606, The World Bank.
    11. Gupta, Bishnupriya, 2018. "Falling Behind and Catching up: India’s Transition from a Colonial Economy," CEPR Discussion Papers 12581, C.E.P.R. Discussion Papers.
    12. Albert Berry, 2018. "India’s 1970s-1990s Step-wise Growth Acceleration: Causes and Impacts," Journal of Development Innovations, KarmaQuest International, vol. 2(1), pages 14-38, May.
    13. 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.
    14. Singh, Nirvikar, 2008. "India’s Development Strategy: Accidents, Design and Replicability," MPRA Paper 12453, University Library of Munich, Germany.
    15. Nupur Bang & Sougata Ray & Kavil Ramachandran, 2018. "Family Businesses: The Emerging Landscape 1990 - 2015," Working Papers id:12750, eSocialSciences.
    16. Emran, M. Shahe & Shilpi, Forhad, 2015. "Gender, Geography, and Generations: Intergenerational Educational Mobility in Post-Reform India," World Development, Elsevier, vol. 72(C), pages 362-380.
    17. Laura Alfaro & Anusha Chari, 2009. "India Transformed? Insights from the Firm Level 1988-2005," Harvard Business School Working Papers 10-030, Harvard Business School.
    18. repec:dgr:rugggd:gd-121 is not listed on IDEAS
    19. Ojha, Vijay P. & Pradhan, Basanta K. & Ghosh, Joydeep, 2013. "Growth, inequality and innovation: A CGE analysis of India," Journal of Policy Modeling, Elsevier, vol. 35(6), pages 909-927.
    20. Joydeep Mukherji, 2007. "India: Asia’s Next Productivity Success Story," International Productivity Monitor, Centre for the Study of Living Standards, vol. 14, pages 38-52, Spring.
    21. Deb Kusum Das & Abdul Azeez Erumban & Jagannath Mallick, 2021. "Economic Growth In India During 1950–2015: Nehruvian Socialism To Market Capitalism," Journal of Economic Surveys, Wiley Blackwell, vol. 35(3), pages 926-951, July.
    22. 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.

    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:uwa:wpaper:10-08. 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: Sam Tang (email available below). General contact details of provider: https://edirc.repec.org/data/deuwaau.html .

    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.