India's Mysterious Manufacturing Miracle

Albert Bollard, Pete Klenow and Gunjam Sharma
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Gunjam Sharma: University of Missouri

Review of Economic Dynamics, 2013, vol. 16, issue 1, 59-85

Abstract: Using data on formal manufacturing plants in India, we report a large but imprecise speedup in productivity growth starting in the early 1990s (e.g., 1993-2007 compared to 1980-1992). We trace it to productivity growth within large plants (200 workers or more), as opposed to reallocation across such plants. As many economists believe Indian reforms during this era improved resource allocation, the absence of a growth pickup from reallocation is surprising. Moreover, when we look across industries we fail to robustly relate productivity growth to prominent reforms such as industrial de-licensing, tariff reductions, FDI liberalization, or lifting of small-scale industry reservations. Even under a generous reading of their effects, these reforms (at least as we measure them) account for less than one-third of the rapid productivity growth in Indian manufacturing from 1980-2007. (Copyright: Elsevier)

Keywords: Misallocation; productivity; economic growth; India; manufacturing (search for similar items in EconPapers)
JEL-codes: O11 O47 O53 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (30)

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DOI: 10.1010/j.red.2012.10.007

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