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The Role of Technological Conditions of Production in Explaining India's Manufacturing Growth: Some Policy Perspectives

The Role of Technological Conditions of Production in Explaining India's Manufacturing Growth: Some Policy Perspectives

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Event Title
The Role of Technological Conditions of Production in Explaining India's Manufacturing Growth: Some Policy Perspectives
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<strong>Centre for International Trade and Development (CITD) School of International Studies</strong> Speaker:<strong> Professor BN Goldar</strong> Institute of Economic Growth Title: <strong>The Role of Technological Conditions of Production in Explaining India's Manufacturing Growth: Some Policy Perspectives</strong> <strong>Abstract: </strong>The paper tries to relate manufacturing sector growth in India to technological conditions of production, represented by two key parameters of production technology, viz. returns to scale and the elasticity of substitution between capital and labour. Using unit (plant)-level data of the Annual Survey of Industries, these two parameters have been estimated for various two-digit manufacturing industries of India for the years 1998-99 to 2007-08. Most of the previous research on returns to scale and substitution elasticity undertaken for Indian manufacturing industries have either used aggregate level time series data or state-wise aggregates. The use of unit-level data, as in this study, provides much more acceptable estimates of returns to scale and elasticity of substitution. The estimation of these parameters has been done by using three alternate specifications of the production function (Cobb-Douglas, CES and Translog) to check for robustness of the estimates. The results indicate presence of significant scale economies in Indian manufacturing which can be exploited to improve productivity and competitiveness. The estimated elasticity of substitution shows significant variation across industries; it is mostly in the range of 0.8 to 1.5. The results indicate that the elasticity of substitution is relatively high in the labour-intensive industries such as textiles, tobacco products and leather and leather products, whereas it is relatively low in machinery and equipment, including telecommunication equipment. In the case of the former, it may be inferred that if the true cost of hiring labour is lowered by labor market reforms, employment can grow substantially. In the case of the latter, it may be inferred that new investments in these industries accompanied by marked increases in capital per worker, which has been happening in the past, would encounter the problem of diminishing returns to capital, lead to a fall in the rate of return to investment, and thus pose a constraint to growth. A multiple regression analysis that has been undertaken using industry-level panel data for the years 1998 to 2007 aimed at explaining variations in the growth rate in real value added across industries and over time reveals a positive effect of returns to scale on output growth. High elasticity of substitution has a positive effect on growth, but only for capital intensive industries. Date: <strong>Wednesday, 25th March 2015</strong>

A warm welcome to the modified and updated website of the Centre for East Asian Studies. The East Asian region has been at the forefront of several path-breaking changes since 1970s beginning with the redefining the development architecture with its State-led development model besides emerging as a major region in the global politics and a key hub of the sophisticated technologies. The Centre is one of the thirteen Centres of the School of International Studies, Jawaharlal Nehru University, New Delhi that provides a holistic understanding of the region.

Initially, established as a Centre for Chinese and Japanese Studies, it subsequently grew to include Korean Studies as well. At present there are eight faculty members in the Centre. Several distinguished faculty who have now retired include the late Prof. Gargi Dutt, Prof. P.A.N. Murthy, Prof. G.P. Deshpande, Dr. Nranarayan Das, Prof. R.R. Krishnan and Prof. K.V. Kesavan. Besides, Dr. Madhu Bhalla served at the Centre in Chinese Studies Programme during 1994-2006. In addition, Ms. Kamlesh Jain and Dr. M. M. Kunju served the Centre as the Documentation Officers in Chinese and Japanese Studies respectively.

The academic curriculum covers both modern and contemporary facets of East Asia as each scholar specializes in an area of his/her interest in the region. The integrated course involves two semesters of classes at the M. Phil programme and a dissertation for the M. Phil and a thesis for Ph. D programme respectively. The central objective is to impart an interdisciplinary knowledge and understanding of history, foreign policy, government and politics, society and culture and political economy of the respective areas. Students can explore new and emerging themes such as East Asian regionalism, the evolving East Asian Community, the rise of China, resurgence of Japan and the prospects for reunification of the Korean peninsula. Additionally, the Centre lays great emphasis on the building of language skills. The background of scholars includes mostly from the social science disciplines; History, Political Science, Economics, Sociology, International Relations and language.

Several students of the centre have been recipients of prestigious research fellowships awarded by Japan Foundation, Mombusho (Ministry of Education, Government of Japan), Saburo Okita Memorial Fellowship, Nippon Foundation, Korea Foundation, Nehru Memorial Fellowship, and Fellowship from the Chinese and Taiwanese Governments. Besides, students from Japan receive fellowship from the Indian Council of Cultural Relations.