From "Hindu Growth" to Productivity Surge: The Mystery of the Indian Growth Transition

43 Pages Posted: 15 Feb 2006

See all articles by Dani Rodrik

Dani Rodrik

Harvard University - Harvard Kennedy School (HKS); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Arvind Subramanian

International Monetary Fund (IMF); Center for Global Development

Multiple version iconThere are 2 versions of this paper

Date Written: May 2004

Abstract

This paper explores the causes of India`s productivity surge around 1980, more than a decade before serious economic reforms were initiated. Trade liberalization, expansionary demand, a favorable external environment, and improved agricultural performance did not play a role. We find evidence that the trigger may have been an attitudinal shift by the government in the early 1980s that unlike the reforms of the 1990s, was probusiness rather than promarket in character, favoring the interests of existing businesses rather than new entrants or consumers. A relatively small shift elicited a large productivity response, because India was far away from its income-possibility frontier. Registered manufacturing, which had been built up in previous decades, played an important role in determining which states took advantage of the changed environment.

Keywords: Productivity growth, India, liberalization, manufacturing, probusiness

JEL Classification: O11, O47, O53

Suggested Citation

Rodrik, Dani and Subramanian, Arvind, From "Hindu Growth" to Productivity Surge: The Mystery of the Indian Growth Transition (May 2004). IMF Working Paper, Vol. , pp. 1-26, 2004. Available at SSRN: https://ssrn.com/abstract=878900

Dani Rodrik (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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Arvind Subramanian

International Monetary Fund (IMF) ( email )

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Center for Global Development

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