Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/cde/cdewps/261.html
   My bibliography  Save this paper

Productivity Dynamics In India’S Service Sector: An Industry-Level Perspective

Author

Listed:
  • K L KRISHNA

    (Department of Economics, Delhi School of Economics, University of Delhi)

  • DEB KUSUM DAS

    (Department of Economics, Ramjas College, University of Delhi)

  • ABDUL A ERUMBAN

    (The Conference Board and University of Groningen)

  • SURESH AGGARWAL

    (Department of Business Economics, University of Delhi, South Campus)

  • PILU CHANDRA DAS

    (Dyal Singh Evening College, University of Delhi,)

Abstract
The rapid rise of service sector in India, as in its developing counterparts in Asia, follows the pattern of skipped industrialization and raises concern for sustaining economic growth in India. While the share of services in India’s GDP has risen over much of the post-independence period, the economic liberalization in the 1990s paved the way for the emergence of service sector as a key player in India’s growth story. The present paper examines the productivity dynamics in service sector at detailed industry level—the India KLEMS (K = capital, L = labor, E = energy, M = materials, and S = services) panel dataset version 2015. Our results suggest that labor productivity in Indian service sector has been growing substantially over decades, and much of this productivity gain is accruing through acceleration in market services labor productivity. This observed productivity gain in market services, and in particular information and communications technology (ICT) intense services, might indicate the role of increasing ICT in contributing to labor productivity growth. The labor reallocation effect is positive for the period 1980–2011 and has increased in the 2000s, suggesting a structural transformation which is growth enhancing. The paper also examines the dynamics of total factor productivity in the service sector, measured using KLEMS growth accounting framework. The observed growth pattern in the service sector has not been uniform across all services in India. The performance of market-based ICT intensive sectors is impressive, especially in telecommunications and financial services. However, by and large, we find a dominance of capital deepening in accounting for growth.

Suggested Citation

  • K L Krishna & Deb Kusum Das & Abdul A Erumban & Suresh Aggarwal & Pilu Chandra Das, 2016. "Productivity Dynamics In India’S Service Sector: An Industry-Level Perspective," Working papers 261, Centre for Development Economics, Delhi School of Economics.
    • Handle: RePEc:cde:cdewps:261
    as

    Download full text from publisher

    File URL: http://www.cdedse.org/pdf/work261.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rupa Chanda & Pralok Gupta, 2013. "Services Sector Reforms in India: Update and Challenges," World Scientific Book Chapters, in: Christopher Findlay (ed.), Priorities and Pathways in Services Reform Part II — Political Economy Studies, chapter 11, pages 269-305, World Scientific Publishing Co. Pte. Ltd..
    2. Dale W. Jorgenson & Khuong Vu, 2005. "Information technology and the world economy," Proceedings, Federal Reserve Bank of San Francisco.
    3. de Vries, Gaaitzen J. & Erumban, Abdul A. & Timmer, Marcel P. & Voskoboynikov, Ilya & Wu, Harry X., 2012. "Deconstructing the BRICs: Structural transformation and aggregate productivity growth," Journal of Comparative Economics, Elsevier, vol. 40(2), pages 211-227.
    4. Nayyar,Gaurav, 2014. "The Service Sector in India's Development," Cambridge Books, Cambridge University Press, number 9781107475922, October.
    5. Bosworth, Barry & Collins, Susan M. & Virmani, Arvind, 2007. "Sources of Growth in the Indian Economy," India Policy Forum, National Council of Applied Economic Research, vol. 3(1), pages 1-69.
    6. Eichengreen, Barry & Gupta, Poonam, 2012. "The Real Exchange Rate and Export Growth: Are Services Different?," Working Papers 12/112, National Institute of Public Finance and Policy.
    7. Lema, Rasmus & Quadros, Ruy & Schmitz, Hubert, 2012. "Shifts in Innovation Power to Brazil and India: Insights from the Auto and Software Industries," MPRA Paper 49591, University Library of Munich, Germany.
    8. Barry Eichengreen & Poonam Gupta, 2013. "The two waves of service-sector growth," Oxford Economic Papers, Oxford University Press, vol. 65(1), pages 96-123, January.
    9. Singh, Nirvikar, 2006. "ICTs and rural development in India," MPRA Paper 1274, University Library of Munich, Germany.
    10. Panagariya, Arvind & Chakraborty, Pinaki & Rao, M. Govinda, 2014. "State Level Reforms, Growth, and Development in Indian States," OUP Catalogue, Oxford University Press, number 9780199367863.
    11. Timmer,Marcel P. & Inklaar,Robert & O'Mahony,Mary & Ark,Bart van, 2013. "Economic Growth in Europe," Cambridge Books, Cambridge University Press, number 9781107412446, October.
    12. Gaurav Nayyar, 2009. "The Nature of Employment in India's Services Sector: Exploring the Heterogeneity," Economics Series Working Papers 452, University of Oxford, Department of Economics.
    13. Abhijit Das & Rashmi Banga & Dinesh Kumar, 2011. "Global Economic Crisis : Impact and Restructuring of the Services Sector in India," Trade Working Papers 23225, East Asian Bureau of Economic Research.
    14. repec:bla:revinw:v:41:y:1995:i:4:p:481-94 is not listed on IDEAS
    15. K.V. Ramaswamy & Tushar Agrawal, 2012. "Services-led growth, employment and job quality: A Study of manufacturing and service-sector in urban India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-007, Indira Gandhi Institute of Development Research, Mumbai, India.
    16. Kochhar, Kalpana & Kumar, Utsav & Rajan, Raghuram & Subramanian, Arvind & Tokatlidis, Ioannis, 2006. "India's pattern of development: What happened, what follows?," Journal of Monetary Economics, Elsevier, vol. 53(5), pages 981-1019, July.
    17. Barry Bosworth & Susan M. Collins, 2008. "Accounting for Growth: Comparing China and India," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 45-66, Winter.
    18. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2005. "Productivity, Volume 3: Information Technology and the American Growth Resurgence," MIT Press Books, The MIT Press, edition 1, volume 3, number 0262101114, April.
    19. Panagariya, Arvind, 2011. "India: The Emerging Giant," OUP Catalogue, Oxford University Press, number 9780199751563.
    20. J.J. Heckman & E.E. Leamer (ed.), 2007. "Handbook of Econometrics," Handbook of Econometrics, Elsevier, edition 1, volume 6, number 6b.
    21. Verma, Rubina, 2012. "Can total factor productivity explain value added growth in services?," Journal of Development Economics, Elsevier, vol. 99(1), pages 163-177.
    22. Barry Eichengreen & Poonam Gupta, 2010. "The Service Sector as India’s Road to Economic Growth?," Development Economics Working Papers 23030, East Asian Bureau of Economic Research.
    23. Abdul Azeez Erumban, 2008. "Rental Prices, Rates of Return, Capital Aggregation and Productivity: Evidence from EU and US," CESifo Economic Studies, CESifo Group, vol. 54(3), pages 499-533, September.
    24. J.J. Heckman & E.E. Leamer (ed.), 2007. "Handbook of Econometrics," Handbook of Econometrics, Elsevier, edition 1, volume 6, number 6a.
    25. Diewert, Erwin, 2007. "Measuring Productivity in the System of National Accounts," Economics working papers diewert-07-11-16-12-39-23, Vancouver School of Economics, revised 16 Nov 2007.
    26. Singh, Nirvikar, 2006. "Services-Led Industrialization in India: Assessment and Lessons," Santa Cruz Department of Economics, Working Paper Series qt8jn2b8z6, Department of Economics, UC Santa Cruz.
    27. James R. Melvin, 1995. "History And Measurement In The Service Sector: A Review," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 41(4), pages 481-494, December.
    28. Paul Schreyer, 2002. "Computer Price Indices and International Growth and Productivity Comparisons," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(1), pages 15-31, March.
    29. Diewert, W. Erwin & Nakamura, Alice O., 2007. "The Measurement of Productivity for Nations," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 66, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Deb Kusum Das & Abdul Azeez Erumban & Jagannath Mallick, 2021. "Economic Growth In India During 1950–2015: Nehruvian Socialism To Market Capitalism," Journal of Economic Surveys, Wiley Blackwell, vol. 35(3), pages 926-951, July.
    2. Balasubramanyam, V N & Virmani, Swati, 2018. "The Enigmatic Services Sector of India," MPRA Paper 89174, University Library of Munich, Germany.
    3. Nataraj, Manikantha & Bhattacharya, Soham, 2020. "Bitter Convergence: Contemporary Crisis of Labour in Rural West Bengal," MPRA Paper 103363, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Erumban, Abdul Azeez & Das, Deb Kusum & Aggarwal, Suresh & Das, Pilu Chandra, 2019. "Structural change and economic growth in India," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 186-202.
    2. K L Krishna & Suresh Chand Aggarwal & Bishwanath Goldar & Deb Kusum Das & Abdul A Erumban & Pilu Chandra Das, 2018. "Trends and Patterns in Labour Quality in India at Sectoral Level," Working papers 285, Centre for Development Economics, Delhi School of Economics.
    3. Erumban, Abdul A. & Das, Deb Kusum, 2016. "Information and communication technology and economic growth in India," Telecommunications Policy, Elsevier, vol. 40(5), pages 412-431.
    4. Bishwanath Goldar & K. L. Krishna & Suresh Chand Aggarwal & Deb Kusum Das & Abdul Azeez Erumban & Pilu Chandra Das, 2017. "Productivity growth in India since the 1980s: the KLEMS approach," Indian Economic Review, Springer, vol. 52(1), pages 37-71, December.
    5. Singh, Nirvikar, 2008. "India’s Development Strategy: Accidents, Design and Replicability," MPRA Paper 12453, University Library of Munich, Germany.
    6. Ashok Kotwal & Bharat Ramaswami & Wilima Wadhwa, 2011. "Economic Liberalization and Indian Economic Growth: What's the Evidence?," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1152-1199, December.
    7. Kausik Gangopadhyay & Debasis Mondal & Thasni T, 2024. "The Decomposition of Productivity Growth for India: Before and After 1991," IIM Kozhikode Society & Management Review, , vol. 13(1), pages 90-100, January.
    8. Gupta, Poonam & Kumar, Utsav, 2010. "Performance of Indian Manufacturing in the Post Reform Period," MPRA Paper 24898, University Library of Munich, Germany.
    9. Banerjee, Rajabrata & Roy, Saikat Sinha, 2014. "Human capital, technological progress and trade: What explains India's long run growth?," Journal of Asian Economics, Elsevier, vol. 30(C), pages 15-31.
    10. Mishra, Saurabh & Lundstrom, Susanna & Anand, Rahul, 2011. "Service export sophistication and economic growth," Policy Research Working Paper Series 5606, The World Bank.
    11. Sohini Sahu, 2015. "Source of Service Sector TFP Growth in India: Evidence from Micro-data," South Asian Journal of Macroeconomics and Public Finance, , vol. 4(1), pages 62-90, June.
    12. Cortuk, O & Singh, N, 2015. "Analysing the structural change and growth relationship in India," Santa Cruz Department of Economics, Working Paper Series qt4qx907p3, Department of Economics, UC Santa Cruz.
    13. Castelló-Climent, Amparo & Mukhopadhyay, Abhiroop, 2013. "Mass education or a minority well educated elite in the process of growth: The case of India," Journal of Development Economics, Elsevier, vol. 105(C), pages 303-320.
    14. Ajit K. Ghose, 2021. "Structural Change and Development in India," Indian Journal of Human Development, , vol. 15(1), pages 7-29, April.
    15. Vittorio Valli & Donatella Saccone, 2015. "Structural Change, Globalization and Economic Growth in China and India," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 12(2), pages 133-163, December.
    16. Baldwin, Richard & Forslid, Rikard, 2023. "Globotics and Development: When Manufacturing Is Jobless and Services Are Tradeable," World Trade Review, Cambridge University Press, vol. 22(3-4), pages 302-311, October.
    17. Ilya B. Voskoboynikov, 2023. "Sources of productivity growth in Eastern Europe and Russia before the global financial crisis," Journal of Productivity Analysis, Springer, vol. 59(3), pages 225-241, June.
    18. Jens Matthias Arnold & Beata Javorcik & Molly Lipscomb & Aaditya Mattoo, 2016. "Services Reform and Manufacturing Performance: Evidence from India," Economic Journal, Royal Economic Society, vol. 126(590), pages 1-39, February.
    19. Bishnupriya Gupta, 2019. "Falling behind and catching up: India's transition from a colonial economy," Economic History Review, Economic History Society, vol. 72(3), pages 803-827, August.
    20. Laura Alfaro & Anusha Chari, 2009. "India Transformed? Insights from the Firm Level 1988-2005," Harvard Business School Working Papers 10-030, Harvard Business School.

    More about this item

    Keywords

    labor productivity; resource allocation; services; India;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cde:cdewps:261. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sanjeev Sharma (email available below). General contact details of provider: https://edirc.repec.org/data/cdudein.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.