Read on Twitter
1/ India's macro-trade-development puzzle stemming from 2 surprising facts
new paper w/ @shoumitro_c: https://ashoka.edu.in/static/doc_uploads/file_1603091513.pdf
Puzzle
Post-1991, world's 3rd fastest manufacturing export growth (Fact 1)
despite
Massive under-exports of unskilled labor goods (Fact 2)
new paper w/ @shoumitro_c: https://ashoka.edu.in/static/doc_uploads/file_1603091513.pdf
Puzzle
Post-1991, world's 3rd fastest manufacturing export growth (Fact 1)
despite
Massive under-exports of unskilled labor goods (Fact 2)
2/ Fact 1
India considered inward-oriented economy & premature "deindustrializer: https://drodrik.scholar.harvard.edu/files/dani-rodrik/files/premature_deindustrialization_revised2.pdf
But, for 3 decades, post-1991
Exports a key driver of growth
Not just services but manufacturing exports have grown rapidly (12% annual)
India an east Asian Tiger!
India considered inward-oriented economy & premature "deindustrializer: https://drodrik.scholar.harvard.edu/files/dani-rodrik/files/premature_deindustrialization_revised2.pdf
But, for 3 decades, post-1991
Exports a key driver of growth
Not just services but manufacturing exports have grown rapidly (12% annual)
India an east Asian Tiger!
3/ Fact 2
That Indian economy services not manufacturing-based economy well known: https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.34.1.3
But *magnitude* of defying comp. advantage striking: missing low-skill exports/production b/w $60-100 bn.
So too is duration. Under-performance several decades old
That Indian economy services not manufacturing-based economy well known: https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.34.1.3
But *magnitude* of defying comp. advantage striking: missing low-skill exports/production b/w $60-100 bn.
So too is duration. Under-performance several decades old
4/ Under-performance in low-skill mfg. is reflected in smaller gains in global market share compared to high skill sectors
But question arises:
Is India then an under-exporter or over-exporter?
But question arises:
Is India then an under-exporter or over-exporter?
5/ Answering this question requires accounting for size of India & trading partners & market access. Gravity model sheds light
India under-exports in mfg. but not overall in long run
So, over-performance in high-skill has not compensated under-performance in low-skill mfg.
India under-exports in mfg. but not overall in long run
So, over-performance in high-skill has not compensated under-performance in low-skill mfg.
6/ Challenge from India's strange specialization
Skill intensity of manufacturing exports rising and
Services exports (also skill intensive) growth moderating, & gaining global market share at slower pace
Skill intensity of manufacturing exports rising and
Services exports (also skill intensive) growth moderating, & gaining global market share at slower pace
7/ The challenge expressed as "Tale of Two Arthur Lewis curves"
India, unlike China, has not taken advantage of Lewis Curve in unskilled mfg.
And Lewis Curve for skilled manufacturing & services is threatening to turn up because based on *scarce* endowment: skilled labour
India, unlike China, has not taken advantage of Lewis Curve in unskilled mfg.
And Lewis Curve for skilled manufacturing & services is threatening to turn up because based on *scarce* endowment: skilled labour
8/ Policy response for each of these "Lewis Curves"
Reclaim low-skill manufacturing especially in key sectors (clothing and footwear): https://ashoka.edu.in/static/doc_uploads/file_1602585593.pdf
And keep expanding supply of skilled labour to maintain momentum of export growth through training & education
Reclaim low-skill manufacturing especially in key sectors (clothing and footwear): https://ashoka.edu.in/static/doc_uploads/file_1602585593.pdf
And keep expanding supply of skilled labour to maintain momentum of export growth through training & education
9/ India's unique growth model: A Trilogy
1.Growth surge of 1980s well before 1991 reforms (w/ @rodrikdani) : http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.498.7043&rep=rep1&type=pdf
2.Dynamism but lagging structural changes (w/ @rohlamba): https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.34.1.3
3. Unusual export specialization: this paper w/ @shoumitro_c
1.Growth surge of 1980s well before 1991 reforms (w/ @rodrikdani) : http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.498.7043&rep=rep1&type=pdf
2.Dynamism but lagging structural changes (w/ @rohlamba): https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.34.1.3
3. Unusual export specialization: this paper w/ @shoumitro_c
