Trends in regional industrial growth in India
07 Jun 2011-Journal of Indian Business Research (Emerald Group Publishing Limited)-Vol. 3, Iss: 2, pp 132-143
TL;DR: In this paper, a profile of regional industrial growth in wake of the competition among Indian states to accelerate the pace of industrialization is provided, which indicates a tendency towards concentration of manufacturing activities even in the reform era.
Abstract: Purpose – The purpose of this paper is to provide a profile of regional industrial growth in wake of the competition among Indian states to accelerate the pace of industrialization. The results indicate tendency towards concentration of manufacturing activities even in the reform era.Design/methodology/approach – The attempt is to compare trends since 1991 to the earlier decade and decipher the extent of the effectiveness of policy changes in disbursing industrial activity regionally.Findings – The paper finds that organized manufacturing activity is concentrated in few states. The early movers continue to dominate cornering substantial share of the national industrial investments and production. Even in an era of market reforms the trend continues. This indicates a degree of “path dependence” in industrialization in the economy. There seems to be slight dispersal of activities in the unorganized segment. New forms of organization of production have fostered industrial growth in the unorganized segment. H...
TL;DR: In this paper, the authors have empirically established the relationship between financial sector developments and economic growth and highlighted the importance of a healthy and stable banking system in deciding the pace of development of an economy as it boosts mobilization of funds and acts as a catalyst in the country's growth process.
Abstract: Within the broad realm of financial system, the banking system is one of the pivotal integrants as banks form the major part of financial institutions in India as well as worldwide (Gerschenkron, 1962; Jadhav & Ajit, 1996). Through its intermediary activities, it facilitates the exchange of goods and services, stimulates savings and channelizes these to productive investment. A healthy and stable banking system plays a crucial role in deciding the pace of development of an economy as it boosts the mobilization of funds and acts as a catalyst in the country’s growth process. Various researchers have empirically established the relationship between financial sector developments and economic growth (Bhattacharya & Sivasubramanian, 2003; King & Levine, 1993; Levine, 2004; Rajan & Zingales, 1998; C. Singh, 2005). Strengthening of banking system and its regulation has always been one of the central issues for the policymakers in an economy on account of its direct link with the overall economic performance. India is not an exception to it. Financial soundness of banking depends upon its asset quality and in the process of providing financial assistance to the investment projects, banking institutions face inherent risk known as default risk which creates non-performing assets (NPAs). Asset quality revealed in the form of NPAs of a bank is the actual expression of its credit risk management system. The timely information relating to NPAs works as a useful tool in examining the asset quality of banks (Meeker & Gray, 1987). NPAs affect the operative capability of the banks and successively affect the profitability, liquidity and solvency of those banks (Michael, Vasanthi, & Selvaraju, 2006). No doubt, to some extent, deterioration of assets is inevitable, but it is always appreciable if these distressed assets remain at its minimum with the vital contribution of the credit risk management system. Rising NPAs generally lead Management and Labour Studies 44(3) 263–284, 2019 © 2019 XLRI Jamshedpur, School of Business Management & Human Resources Reprints and permissions: in.sagepub.com/journals-permissions-india DOI: 10.1177/0258042X19848238 journals.sagepub.com/home/mls
Cites methods from "Trends in regional industrial growt..."
TL;DR: In this paper, the authors investigated the relationship between structural change and regional economic growth in Indonesia and showed that structural change is a significant determinant of economic growth, but only if there is an increase in productivity, not only a movement of labor across sectors.
Abstract: This paper investigates the relationship between structural change and regional economic growth in Indonesia. We utilize several measures of structural change, i.e. structural change index, norm absolute value index, shift-share method, and effective structural change index, for 30 provinces over the period 2005-2018. We show that the structural change has occurred across provinces, even though it is slowing, towards an agricultural-services transition. By employing dynamic panel data models, this study shows that structural change is a significant determinant of growth. However, structural change matters for growth only if there is an increase in productivity, not only a movement of labor across sectors. An improvement in productivity within sectors and a movement of labors to other sectors with better productivity lead to a better economic development.
TL;DR: In this paper, various measures of labor disputes and investigates whether these have detrimental effects on the location choice of new domestic investment across the various states of India, find significant evidence that this is indeed the case in India.
Abstract: Acrimonious relations between employers and employees in developing countries have often been cited as impediments to progress. This article considers various measures of labor disputes and investigates whether these have detrimental effects on the location choice of new domestic investment across the various states of India. Conventional wisdom holds that an increase in measures such as the number of strikes, the number of man‐days lost in work stoppages, and the percentage of unionized workers would hinder the location of new projects. Using panel data and a fixed‐effects methodology that controls for the effect of state‐specific unobservables, we find significant evidence that this is indeed the case in India. Furthermore, disaggregation by industrial classifications shows that, although labor disputes continue to exert negative effects, location choices are also conditioned on factors such as proximity to raw materials and minerals.
TL;DR: The authors examines recent micro-evidence on the productivity of Indian firms, helping to explain why India's manufacturing sector has not performed as well as many observers expected, and suggests that much remains to be done to improve the strength and sustainability of India's development path.
Abstract: This article examines recent micro-evidence on the productivity of Indian firms, helping to explain why India’s manufacturing sector has not performed as well as many observers expected. A series of structural distortions are documented, all of which may depress the performance of manufacturing, and thus the economy as a whole. These distortions exist at multiple levels, and reflect long-standing problems with the reallocation of labour across sectors, the excessively small scale of firms, low firm turnover, poor product market integration, high industry concentration and persistent state ownership. Combined, these phenomena represent severe restraints on the level and growth of productivity in manufacturing, and suggest that much remains to be done to improve the strength and sustainability of India’s development path.
TL;DR: In this article, Kaldor's Four Stages of Industrialization as an Evolutionary Model is presented. But the model does not consider the relationship between the four stages of industrialization.
Abstract: (1996). Cumulative Causation and Industrial Evolution: Kaldor’s Four Stages of Industrialization as an Evolutionary Model. Journal of Economic Issues: Vol. 30, No. 1, pp. 97-119.
TL;DR: In this article, the authors introduce two specifications of the concept of level playing field: a rules-based level-playing-field, which means that all firms in a market are treated the same in equal circumstances with regard to legislation, taxes, subsidies etcetera.
Abstract: Pleas for a level playing field, for instance in international trade, are often not well-founded. This is because it is not exactly clear what a 'level playing field' means. But even if it would be clear what the plea would imply, a level playing field is not always desirable from an economic perspective. To clarify the meaning of 'a level playing field' we introduce two specifications of the concept. First, a rules-based level playing field, which means that all firms in a market are treated the same in equal circumstances with regard to legislation, taxes, subsidies etcetera. Second, an outcome-based level playing field, which means that all firms in a market have the same expected profit. This means that, in case firms are heterogeneous, the government compensates the disadvantaged firms (for instance with subsidies). The first conclusion in the report is that a rules-based level playing field is desirable, although there are reasons to deviate from this assumption. The second conclusion is that it is never desirable to pursue a fully outcome-based level playing field, but that it may be desirable to level the playing field to a certain extent in the case of market failure. In case of market failure it is preferable to use symmetric rules (equal for all firms), in stead of asymmetric rules (favouring some firms). The report introduces a framework with questions that can help policymakers analyse level playing field issues. The framework makes clear that in general one cannot tell whether a plea for a 'level playing field' is justified or not. It is necessary to focus on the policy issues hidden behind the plea, i.e. policy issues concerning market failure, dynamic efficiency, redistribution of income and differences in preferences between countries.