Technical Change in India's Organized Manufacturing Sector

摘要

The real wage-profit rate schedule allows one to analyze technical change through changes in the productivity parameters (labor and capital) and factor rewards (real wage and profit rates). Jesus Felipe and Utsav Kumar, Asian Development Bank, Manila, Philippines, examine the direction of technical change in India's organized manufacturing sector for the 1980-2007 period using the real wage-profit rate schedule (see also Working Paper no. 624). They find that the degree of technical change conformed to the international norm and was Marx biased (declining capital productivity with increasing labor productivity) until 2000, before becoming Hicks neutral (increasing capital and labor productivities). The finding suggests that the Hicks-neutral technical change is a temporary phase that is part of a long-term trend of Marx-biased technical change. The puzzling aspect of technical change in India is that there has not yet been an expected phase of steady decline in the profit rate.