Technical Change in India’s Organized Manufacturing Sector

Levy Economics Institute of Bard College Working Paper No. 626

16 Pages Posted: 14 Oct 2010

See all articles by Jesus Felipe

Jesus Felipe

Asian Development Bank

Utsav Kumar

Asian Development Bank

Date Written: October 13, 2010

Abstract

We use the real wage–profit rate schedule to examine the direction of technical change in India’s organized manufacturing sector during 1980–2007. We find that technical change was Marx biased (i.e., declining capital productivity with increasing labor productivity) through the 1980s and 1990s; and Hicks neutral (increasing both capital and labor productivity) post-2000. The historical experience suggests that Hicks-neutral technical change may only be a passing phase before we see a return to the long-term trend of Marx-biased technical change. We also find that the real profit rate has increased from about 30 percent to a very high 45 percent, that the real wage rate increased marginally, and that the share of capital in value added doubled. Overall, technical change in India’s organized manufacturing sector during 1980–2007 favored capital.

Keywords: Hicks-neutral Technical Change, India, Marx-biased Technical Change, Real Wage–Profit Rate Schedule

JEL Classification: E10, O40, O47

Suggested Citation

Felipe, Jesus and Kumar, Utsav, Technical Change in India’s Organized Manufacturing Sector (October 13, 2010). Levy Economics Institute of Bard College Working Paper No. 626. Available at SSRN: https://ssrn.com/abstract=1691695 or http://dx.doi.org/10.2139/ssrn.1691695

Jesus Felipe (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Utsav Kumar

Asian Development Bank ( email )

6 ADB Avenue
Central and West Asia Department
Mandaluyong City
Philippines

HOME PAGE: http://works.bepress.com/kumarutsav/

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