 Sluggish Growth Or Premature Decline? A Comparative Study Of Indian Industrialization With ChinaWorking Papers from Centre for Advanced Financial Research and Learning (CAFRAL) Abstract: Indian manufacturing has remained stagnant in terms of its share in value-added and employment. While India and China started their growth journeys around the same time, China underwent rapid industrialization, whereas India’s manufacturing sector stagnated, and its services sector boomed. This paper uses a dynamic open economy general equilibrium model with endogenous capital accumulation and income and price effects to compare the structural transformations of India and China. The findings reveal that India’s sluggish manufacturing is largely due to slow productivity growth and low investment rates. However, Indian manufacturing has not prematurely declined but has yet to take off. If India’s TFP had grown at the same rate as China’s, the manufacturing share would have increased by 1.5-fold, and per capita income would have risen by more than double. Export-promoting industrial policies and increased investment could drive further growth in the manufacturing sector. Keywords: Structural Transformation; Industrialization; Productivity Growth; International Trade; Non-homothetic Preferences (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ris:cafral:022257 Access Statistics for this paper More papers in Working Papers from Centre for Advanced Financial Research and Learning (CAFRAL) Contact information at EDIRC. |
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