Manufacturing and Jobs in South Asia by Unknown

Author:Unknown
Language: eng
Format: epub
ISBN: 9789811083815
Publisher: Springer Singapore

3.1 Value Added

It was postulated that delicencing along with trade and investment reforms would foster the growth. Hence, a number of scholars have analysed the growth performance of manufacturing sector (Balakrishnan and Babu 2003; Chandrasekhar 1996; Chaudhuri 2002; Goldar 2011; Gupta et al. 2008; Gupta et al. 2008a, b; Gupta and Kumar 2010; Mani 1995; Nagaraj 2003, 2011, 2017; among others). Figure 1 shows the annual growth rates of manufacturing value added during the past 25 years after economic liberalization. The empirical evidence suggests the annual rate of growth of manufacturing has fluctuated considerably in the 1990s. In accord with the studies by Chaudhuri (2002) and Nagaraj (2017), the growth in value added increased consistently up to 1995–96 and decelerated thereafter (Fig. 1).2 By comparing the growth of manufacturing in 1990s to that of 1980s, scholars (Nagaraj 2011) argue that there is no significant increase in the growth particularly after the reforms. The growth in the manufacturing sector’s decadal average growth rates have remained less than 6% right from 1950s to 1990s (Nagaraj 2017). However, it is important to note that the growth picked from 2000–01 onwards and the sector experienced a slight rise in its average growth rate to 8% in the decade of 2000. More importantly, its performance since then has been worsening with growth rates declining since 2006 onwards (Fig. 1). The studies highlight that the growth in manufacturing is led by the fast growth of medium and high-tech industries such as electrical and electronics, chemicals, metal and non-mental and transport industries (Nagaraj 2011 for example). From Fig. 1, it appears that the value-added growth during the last 25 years presents a cyclical pattern instead of a sustained growth. It is also evident that in contrast to the shorter cycle length during the early years of reform, the cycle length expands as we move to the later period; an issue which needs further enquiry.

Fig. 1Growth in value added and share of value added in output.

Source Computed using ASI, various years and CSO

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