IMF Working Papers

J-Curve of Productivity and Growth: Indian Manufacturing Post-Liberalization

ByArvind Virmani, Danish A Hashim

July 1, 2011

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Arvind Virmani, and Danish A Hashim. "J-Curve of Productivity and Growth: Indian Manufacturing Post-Liberalization", IMF Working Papers 2011, 163 (2011), accessed 12/5/2025, https://doi.org/10.5089/9781455298730.001

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Most estimates of Indian manufacturing productivity find a slowdown in the 1990s. This has puzzled analysts, given that 1990s reforms were deeper and wider than the 1980s reforms that raised the growth rate of the Indian economy by 2 per cent points. This paper tests the hypothesis of the J curve of Productivity and Growth following major liberalization and finds it to be broadly supported by the data: Technological obsolescence, gradual adoption of new technology and learning by doing result in negative effects on measured productivity.

Subject: Economic sectors, Labor, Manufacturing, Production, Production growth, Productivity, Total factor productivity

Keywords: aggregate manufacturing, capital goods, capital stock, cotton textiles consumer products, Economic reforms, fixed capital, Global, Indian manufacturing, industry composition, J-curve hypothesis, Manufacturing, output growth, petroleum product, petroleum refinery, petroleum refinery industry, plastic product, private sector, Production growth, Productivity, productivity & output growth, productivity differential, productivity growth, productivity slowdown, productivity spurt, productivity-enhancing effect, services productivity, technology-productivity incentive, Total factor productivity, WP

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