Performance of Indian Manufacturing in the Post Reform Period

Many emerging countries in recent decades have relied on a development strategy that focused primarily on promoting the manufacturing sector and the exports of manufactured goods. However, an acceleration of growth of output and employment in manufacturing has eluded India. This is despite the fact that the central focus of the reforms in the 1980s and 1990s was to unshackle the manufacturing sector. Instead it is the services sector which has grown rapidly, contributing about two-third of GDP growth in recent years. This paper discusses the reasons behind the modest performance of the manufacturing sector in India post reforms. It argues that there are many factors that have inhibited the growth of industrial sector in India. One major factor is the rigid and strict labor laws which have affected the industrial performance in a number of ways, by keeping the size of the establishments small, by not encouraging the production of labor intensive goods, by pushing activities to the unorganized sector, and by keeping the Indian industry uncompetitive. Besides the labor laws other factors that are responsible for the modest performance of the manufacturing sector include difficulty in the acquisition of land for industrial use, inadequate financing and infrastructure, and cumbersome business climate. The paper presents arguments and evidence which shows the importance of these factors

Home language, school language and children's literacy attainments: A systematic review of evidence from low‐ and middle‐income countries

The general consensus in the field is that when the home language is different from the language of instruction in school then children's literacy attainments could slow down. In this 26-year review of the literature on children's literacy attainments in low- to middle-income countries, 40 correlational, ethnographic and intervention studies provide the data. We test the ‘home language advantage’ hypothesis where we expect children who speak the same language at home and school to show better literacy learning. We also examine other attributes in the home language and literacy environment (HLLE). Among the multivariate studies, trends differ across countries, age and grade levels, and child measures. Rather than a universal home language advantage, the evidence shows that home language advantage is context-sensitive. The correlational and ethnographic evidence point to a multiple risk factors model of home and school language disconnection; and the ethnographic and intervention studies provide complementary evidence of both feelings of unease, disempowerment and wish to help among family members, and increased confidence following guided support. Possible underlying mechanisms are examined through parallel synthesis of evidence from multiple research methods on three HLLE dimensions—books-at-home, home tutoring and adult literacy practices. The data partially corroborate findings from high-income countries (e.g. home environments impact literacy development, responsive parenting is present across families) but also bring focus on context-specific realities. Neither low-income nor low-print environments are uniform constraints because communities differ and some homes use available resources more efficiently than others

International Trade Theory and Policy: A Review of the Literature

This paper provides a survey of the literature on trade theory, from the classical example of comparative advantage to the New Trade theories currently used by many advanced countries to direct industrial policy and trade. An account is provided of the neo-classical brand of reciprocal demand and resource endowment theories, along with their usual empirical verifications and logical critiques. A useful supplement is provided in terms of Staffan Linder's theory of overlapping demand, which provides an explanation of trade structure in terms of aggregate demand. Attention is drawn to new developments in trade theory, with strategic trade providing inputs to industrial policy. Issues relating to trade, growth, and development are dealt with separately, supplemented by an account of the neo-Marxist versions of trade and underdevelopment

Firing costs and flexibility: evidence from firms’ employment responses to shocks in India

A key prediction of dynamic labor demand models is that firing restrictions attenuate firms’ employment responses to economic fluctuations. We provide the first direct test of this prediction using data from India. We exploit the fact that rainfall fluctuations, through their effects on agricultural productivity, generate variation in local demand within districts over time. Consistent with the theory, we find that industrial employment is more sensitive to shocks where labor regulation is less restrictive. Our results are robust to controlling for endogenous firm placement and vary across factory size in a pattern consistent with institutional features of Indian labor law

Profitability or Industrial Relations: What Explains Manufacturing Performance across Indian States?

This article begins with a critique of the well-known claim by Besley and Burgess concerning the negative impact of labour regulation on organized sector manufacturing performance in India. In the second part of the article, the authors use a state-level panel data set for the period 1969–2005 to analyse the relative importance of profitability (rate of profit as a percentage of the total replacement cost of capital stock) and industrial disputes (man-days lost to all industrial disputes as a percentage of total workers employed) to explain cross-state variations of manufacturing performance in India\u27s organized sector. Using three different measures of manufacturing performance — net value added, investment and employment — they find that profitability is more significant than industrial disputes in explaining the variation of manufacturing sector performance across Indian states. The findings presented here therefore question the uncritical acceptance of Besley and Burgess\u27s results in the literature on labour regulation