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Structural Change and Productivity Growth in India and the People’s Republic of China

Author

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  • Mallick, Jagannath

    (Asian Development Bank Institute)

Abstract
Globalization has significantly changed the composition and structure of emerging economies, which has in turn reallocated factors across various economic activities. In this context, we examine the sources of labor reallocation or structural change, and measures and empirically evaluates the contribution of structural change to labor productivity growth (LPG) by controlling for indicators of economic globalization and types of human capital. We also evaluate the relative contributions of human and physical capital to LPG. We found that changing final demand is the most crucial factor in labor reallocation in India. In the PRC, this and changes in technology are factors of labor allocation. The regression analysis confirmed that structural change, globalization, and human capital significantly contribute to LPG. Due to its prevailing structure, India is capable of leading global economic growth in the future, provided that certain necessary policies on human capital development, outward-oriented policies, and other conducive economic reform measures are taken.

Suggested Citation

  • Mallick, Jagannath, 2017. "Structural Change and Productivity Growth in India and the People’s Republic of China," ADBI Working Papers 656, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0656
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    Cited by:

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    3. Laiqun Jin & Changwei Mo & Bochao Zhang & Bing Yu, 2018. "What Is the Focus of Structural Reform in China?—Comparison of the Factor Misallocation Degree within the Manufacturing Industry with a Unified Model," Sustainability, MDPI, vol. 10(11), pages 1-19, November.

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    More about this item

    Keywords

    FDI; Trade; structural change; productivity growth; emerging economy;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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