‘Make in India’ Strategy of Manufacturing Led Growth: A Comparison with the East Asian Model of Development with Emphasis on Human Capital Formation and Labour Market Flexibility

Abstract

The structural transformation of the Indian economy from agriculture (primary sector) dominated to one led by the services sector (tertiary sector), bypassing the intermediate stage of manufacturing (secondary sector) led growth, offers an alternative to conventional theories of economic development based on the historical pathway of development exhibited by developed countries. ‘Make in India’ with its resumption of focus on manufacturing led growth is an addition to this unique approach. This paper, therefore, discusses the need to deviate from the existing pattern of services led growth. It also endeavours to highlight the timeliness of pursuing this approach and its comparison with the East Asian model of development with emphasis on two variables: human capital formation and labour market flexibility. A case study methodology, which uses the economic success of the East Asian tigers as a reference point, has been adopted for the purpose of this study. By investigating the key challenges, confronting human capital formation and labour market flexibility, which can constrain the pursuit of ‘Make in India’, this paper aims to propose strategies to make ‘Make in India’ a successful model of employment generation, inclusive growth and economic development.

Keywords: Make in India, Structural Transformation in India, Indian Economy Growth Pattern, Services-Led Growth in India, Manufacturing and Services in India, Indian Education System, Human Capital Formation in India, East Asian Model, Unemployment in India, Skill Development in India

JEL Classification: A00, E60, I20, J00, J10, J21, J23, J24, J68, L60, L80, N10, N30, N40, N60, O00, O20, O57,