From “Hindu Growth” to Productivity Surge: The Mystery of the Indian Growth Transition

May 1, 2004

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Dani Rodrik, and Arvind Subramanian. From “Hindu Growth” to Productivity Surge: The Mystery of the Indian Growth Transition, (USA: International Monetary Fund, 2004) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper explores the causes of India's productivity surge around 1980, more than a decade before serious economic reforms were initiated. Trade liberalization, expansionary demand, a favorable external environment, and improved agricultural performance did not play a role. We find evidence that the trigger may have been an attitudinal shift by the government in the early 1980s that unlike the reforms of the 1990s, was probusiness rather than promarket in character, favoring the interests of existing businesses rather than new entrants or consumers. A relatively small shift elicited a large productivity response, because India was far away from its income-possibility frontier. Registered manufacturing, which had been built up in previous decades, played an important role in determining which states took advantage of the changed environment.

Subject: Manufacturing, Productivity, Public investment and public-private partnerships (PPP), Public investment spending, Total factor productivity

Keywords: Growth transition, India dummy, Productivity growth, State party, Terms of trade, WP

Publication Details

Pages:

42
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/077
Stock No:

WPIEA0772004
ISBN:

9781451850024
ISSN:

1018-5941

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