Assessing Factor Proportions in Tradable Sectors of the Indian Economy

Anjali Tandon

MPRA Paper from University Library of Munich, Germany

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.

Keywords: factor proportions; tradables; capital-to-labour ratio; semi-input-output; linkages; India (search for similar items in EconPapers)
JEL-codes: C67 D24 D57 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-hme
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