Growth, trade and structural change in low income industrializing economies.

摘要

The objective of this dissertation is to explain the rapid growth of value added in the service sector in India, and to examine the factors driving this services led growth in the economy. In the first chapter of this dissertation, I record the empirical data facts on output, employment and trade, for the three principal sectors of the economy, namely, agriculture, industry and services. This is followed by a sectoral growth accounting exercise which I conduct for the 1980-2003 period. Two empirical facts emerge from the analysis: changes in total factor productivity (TFP) were the largest source of service sector value added growth in India and a sharp acceleration in industrial and services' trade occurred following liberalization in 1991. Motivated by these findings, in the second chapter of this dissertation, I build a simple three sector growth model with two main inputs: growth in sectoral TFP and trade in industry and services. The model is calibrated to Indian sectoral data across two steady state years during which trade is balanced. The results from this chapter indicate that productivity growth versus trade has a more important role in capturing the sectoral composition of GDP in India. In the second chapter of my dissertation, I extend the steady state analysis and develop a three sector growth model to evaluate the quantitative performance of differential sectoral TFP growth in accounting for the structural transformation of India during the 1980-2003 period. The model is calibrated to Indian data using average growth rates of sectoral TFP as primary inputs, and performs well in accounting for the evolution of sectoral value added shares and the growth rates of these shares over the period 1980-2003. Moreover, the performance of the model improves significantly when the post 1991 increase in service sector TFP growth is accounted for. I find that the liberalization policies adopted by India from 1991, especially the deregulation and privatization of business and communications services, and quite possibly technological progress, explain the improvement in service sector TFP, and hence the dominance of service sector activity in India's recent GDP growth.