This research study aims to explain why the higher-growth phase in India, witnessed in the post-reform period of 1991–2011, failed to have the impact of significant increases in formal, modern sector employment or a transition toward the Lewis turning point. The article illustrates that it is more realistic to view a transition toward the Lewis turning point as involving increases in capital intensity. A desired increase in demand for labor will follow if the increases in capital intensity are associated with productivity growth in terms of increases in the share of intermediate goods specializations as output is increased. Autoregressive distributed lagged regression has been used to analyze whether investment behavior captures Young–Kaldor investments that can indicate growth in intermediate goods specialization. This is key to a higher pace of investment and specialized employment outcomes. The findings support existing literature, highlighting that increases in capital intensity constitute a significant factor explaining the lack of proper employment growth and the Lewis turning point. However, they also show that the problem is not with increases in capital intensity per se. Rather, the increases do not indicate dynamism regarding investments associated with intermediate goods specializations.
AdelmanM. A. (1955). Concept and statistical measurement of vertical integration. In NBER chapters, Business concentration and price policy (pp. 281–330). National Bureau of Economic Research, Inc.
2.
AghionP., & HowittP. (2009). The economic growth. MIT Press.
3.
ArrowK. J. (2000). Innovations in large and small firms. InSwedbergR.(Ed.), Entrepreneurship: The social science view (pp. 229–243). Oxford University Press.
4.
BairagiS., & KamalM. (2019). Is Bangladesh’s economy approaching the Lewis Turning Point?South Asia Economic Journal, 20(1), 19–45.
BasuD. (2018). An approach to the problem of employment in India(UMASS Amherst Economics Working Paper Series). Department of Economics, University of Massachusetts Amherst. https://hdl.handle.net/20.500.14394/22216
7.
BishopD. (2020). Firm size and workplace learning processes: A study of the restaurant sector. European Journal of Training and Development, 44(2/3), 305–320.
8.
BleckerR. A. (2013). Long-run growth in open economies: Export-led cumulative causation or a balance-of-payments constraint?InHarcourtG.C. & KrieslerP.(Eds.), The Oxford handbook of post-Keynesian economics (Vol. 1, pp. 390–414). Oxford University Press.
9.
BleckerR. A., & SetterfieldM. (2019). Heterodox macroeconomics: Models of demand, distribution and growth. Edward Elgar.
10.
BrodaC., & WeinsteinD. E. (2006). Globalization and the gains from variety. Quarterly Journal of Economics, 121(2), 541–585.
11.
Brookings Institution. (2018). Global manufacturing scorecard: How the U.S. compares to 18 other nations. https://www.brookings.edu/research/global-manufacturing-scorecard-how-the-us-compares-to-18-other-nations/
ChakravartyS. (1974). Reflections on the growth process of the Indian economy. Administrative Staff College.
14.
ChiswickC. W. (2018). Modelling economic development: The Lewis Model updated. IIEP-WP-2018-5. Institute of International Economic Policy. The George Washington University. https://www2.gwu.edu/~iiep/assets/docs/papers/2018WP/ChiswickIIEP2018-5.pdf
15.
CortukO., & SinghN. (2015). Analysing the structural change and growth relationship in India: State-level evidence. Economic & Political Weekly, 1(24), 91–98.
16.
CouttsK., & NormanN. (2013). Post-Keynesian approaches to industrial pricing: A survey and critique. In HarcourtG. C., & KrieslerP. (Eds.), The Oxford handbook of post-Keynesian economics (Vol. 1, pp. 443–466). Oxford University Press.
17.
DasM., & N’DiayeP. (2013). Chronicle of a decline foretold: Has China reached the Lewis Turning Point(WP-13/26, IMF Working Paper Research Department and Asia and Pacific Department). International Monetary Fund.
18.
GollinD. (2014). The Lewis Model: A 60-year retrospective. Journal of Economic Perspective, 28(3), 71–88.
19.
GoodwinN., HarrisJ., NelsonJ. A., RoachB., & TorrasM. (2013). Macroeconomics in context. Routledge.
20.
GrothC. (2015). Lecture notes in economic growth (mimeo). https://web.econ.ku.dk>lecturesandlecturenotes
21.
HaugA. A. (2002). Temporal aggregation and the power of cointegration tests: A Monte Carlo study. Oxford Bulletin of Economics and Statistics, 64(4), 399–412.
22.
HuangK. X. D., LiuZ., & PhaneufL. (2004). Why does the cyclical behavior of real wages change over time?American Economic Review, 94(4), 836–856.
23.
KaldorN. (1961). Capital accumulation and economic growth. In LutzF. (Ed.), Theory of capital. Macmillan.
24.
KaldorN. (1966). Causes of the slow rate of economic growth in the United Kingdom. Cambridge University Press.
25.
KaldorN. (1972). The irrelevance of equilibrium economics. Economic Journal, 82(328), 1237–1255.
26.
KalirajanK. (2004). Is the manufacturing sector in India an engine of growth?(Working Papers 151). Institute for Social and Economic Change, Bangalore. https://www.isec.ac.in/wp-content/uploads/2023/07/WP-151.pdf
27.
KannanK. P., & RaveendranG. (2009). Growth sans employment: A quarter century of jobless growth in India’s organised manufacturing. Economic & Political Weekly, 44(10), 80–91.
28.
KapoorR. (2018). Understanding the performance of India’s manufacturing sector: Evidence from firm-level data(CSE Working Paper: 2018-2). Centre for Sustainable Employment. Azim Premji University. https://publications.azimpremjiuniversity.edu.in/4325/1/Kapoor_India_s_Manufacturing_Sector_Firm_Level_Data_March_2018.pdf
29.
KathuriaV., & NatarajanR. R. (2013). Is manufacturing an engine of growth of India in the post-nineties?Journal of South Asian Development, 8(3), 385–408.
30.
KathuriaV., RajS. N., & SenK. (2013). The effects of economic reforms on manufacturing dualism: Evidence from India. Journal of Comparative Economics, 41(4), 1240–1262.
31.
KesarS. (2020). Economic transition, dualism, and informality in India: Nature and patterns of household-level transitions(Centre for Sustainable Employment Working Paper #31). Azim Premji University. https://publications.azimpremjiuniversity.edu.in/4326/1/Kesar_Economic-Transitions_Dualism_Informality_Oct_2020.pdf
32.
KeynesJ. M. (1936). The general theory of employment, interest, and money. Macmillan and Co. Ltd.
33.
KeynesJ. M. (1937). Some economic consequences of declining population. Eugenics Review, 29(1), 13–17.
34.
KrishnaK. L., ErumbanA. A., DasD. K., AgarwalS., & DasP. C. (2015). Industry origins of economic growth and structural change in India(Working Paper No. 273). Centre for Development Economics, Delhi School of Economics. http://cdedse.org/pdf/work273.pdf
35.
KrugmanP. (1992). Toward a counter-counterrevolution in development theory. World Bank Economic Review, 6(1), 15–38.
36.
KrugmanP. (1994). The myth of Asia’s miracle. Foreign Affairs, 73(6), 62–78.
37.
KumariR., & DuttaM. (2023). Growth of informal sector enterprises in India. Economic & Political Weekly, 58(41), 49–55.
38.
LewisW. A. (1954). Economic development with unlimited supplies of labour. Manchester School, 22(2), 139–191.
39.
LiuD. (2015). Has the Chinese economy passed the Lewis turning point?Journal of the Asia Pacific Economy, 20(3), 404–422.
40.
LucasR. E.Jr. (1978). On the size distribution of business firms. Bell Journal of Economics, 9(2), 508–523.
41.
LucasR. E.Jr. (2002). Lectures on economic growth. Oxford University Press.
42.
MazumdarS. (2010). Growth and structural changes in output in India since independence: A study report. Institute for Studies in Industrial Development.
43.
McCauslandW., & TheodossiouI. (2012). Is manufacturing still the engine of growth?Journal of Post Keynesian Economics, 35(1), 79–92.
44.
McCombieJ. S. L., & SpreaficoM. R. M. (2016). Kaldor’s ‘Technical Progress Function’ and Verdoorn’s Law revisited. Cambridge Journal of Economics, 40(4), 1117–1136.
45.
MehrotraS. K. (2019). Informal employment trends in the Indian economy: Persistent informality, but growing positive development(ILO Working Papers 995066393502676). International Labour Organization. https://ilo.primo.exlibrisgroup.com/discovery/delivery/41ILO_INST:41ILO_V1/1267699990002676
46.
MinamiR., & MaX. (2010). The Lewis turning point of Chinese economy: Comparison with Japanese experience. China Economic Journal, 3(2), 163–179.
47.
Ministry of Finance, Government of India. (2016). Economic Survey 2015-16, OUP Catalogue. Oxford University Press, number 9780199469284. https://global.oup.com/academic/product/economic-survey-2015-16-9780199469284?cc=in&lang=en&
48.
MookherjeeD., & RayD. (2001). Reading in the theory of economic development. Oxford University Press.
49.
MurphyK., ShleiferA., & VishnyR. (1989). Industrialization and the big push. Journal of Political Economy, 97(5), 1003–1026.
50.
MurthyS. V. R. (2019). Measuring informal economy in India_Indian experience. 7th IMF Statistical Forum, International Monetary Fund. www.imf.org
51.
NarayanP. K. (2005). The saving and investment nexus for China: Evidence from cointegration tests. Applied Economics, 37(17), 1979–1990.
52.
NayyarD. (1978). Industrial development in India: Some reflections on growth and stagnation. Economic & Political Weekly, 13(31/33), 1265–1278.
53.
NayyarD. (1997). Themes in trade and industrialization. In NayyarD. (Ed.), Trade and industrialization (pp. 1–42). Oxford University Press.
54.
NkoroE., & UkoA. K. (2016). Autoregressive distributed lag (ARDL) cointegration technique: Application and interpretation. Journal of Statistical and Econometric Methods, 5(4), 63–91.
55.
PadhiS. P. (2014). Assessing manufacturing growth in India: An alternative view. Indian Journal of Industrial Relations, 49(3), 526–540.
56.
PadhiS. P. (2018). Importance of employment growth: A perspective on technological progress. Indian Journal of Labour Economics, 61(2), 401–409.
57.
PadhiS. P. (2019). Technological versus pecuniary external economies: The former rule the roost. Journal of Economic Issues, 53(1), 81–97.
58.
PadhiS. P. (2024). Determinants of foreign direct investment: Employment status and potential of food processing industry in India. International Journal of Emerging Markets, 19(3), 605–623.
59.
PesaranM. H., ShinY., & SmithR. J. (2001). Bounds testing approaches to the analysis of level relationship. Journal of Applied Economics, 16(3), 289–326.
60.
RomerP. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5), 71–102.
61.
RomerP. M. (1994). The origins of endogenous growth. Journal of Economic Perspectives, Political Economy, 8(1), 3–22.
62.
RowthornR., & CouttsK. (2013). De-industrialisation and the balance of payments in advanced economies(Working Paper No. 453). University of Cambridge, Centre for Business Research.
63.
SchmooklerJ. (1966). Invention and economic growth. Harvard University Press.
64.
SerefogluC. (2016). Weakness and limitations of Lewis Model. Akademik Bakis Dergisi, 56, 175–182.
65.
SenA. (1967). Review of J.C.H. Fei and G. Ranis, Development of the labour surplus economy: Theory and policy. The Economic Journal, 77(306), 346–349.
66.
SenA. (1975). Employment, technology and development. Oxford University Press.
67.
SkarsteinR. (1999). Development theory: A guide to some unfashionable perspectives. Oxford University Press.
68.
SkottP., & AuerbachP. (1995). Cumulative causation and the “new” theories of economic growth. Journal of Post Keynesian Economics, 17(3), 381–402.
69.
StiglerG. J. (1951). The division of labor is limited by the extent of the market. Journal of Political Economy, 59(3), 185–193.
70.
TejaniS. (2016). Jobless growth in India: An investigation. Cambridge Journal of Economics, 40(3), 843–870.
71.
ThirlwallA. P. (1994). Growth and development. Macmillan Press Ltd.
72.
United Nations Conference on Trade and Development (UNCTAD). (2015). Handbook of statistics. https://unctad.org/system/files/official-document/tdstat40_en.pdf
73.
VermaR. (2012). Structural transformation and jobless growth in the Indian economy. In GhateC. (Ed.), Oxford handbook of the Indian economy (pp. 276–310). Oxford University Press.
74.
WeiZ., & KwanF. (2018). Revisit China’s Lewis turning point: An analysis from a regional perspective. Asian Economic Journal, 32(4), 333–357.
75.
YoungA. A. (1928). Increasing returns and economic progress. Economic Journal, 38(152), 527–542.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
