Advertisement

DECISION

, Volume 45, Issue 2, pp 147–160 | Cite as

The services sector in India

  • Rafiq Dossani
Research Article
  • 73 Downloads

Abstract

This paper discusses the role of services in India’s economy. Through analyzing global data on the relationship between services, manufacturing, and GDP, we show that the relationship of services to economic growth is complex and usually involves a consideration of the manufacturing sector. In India’s case, somewhat unusually, services and manufacturing grew independently of each other for many years. This independence was in large part due to public policies that encouraged low value-added, capital-intensive manufacturing through protectionist policies. This helps explain why both services and manufacturing were relatively low value added compared to other countries, such as China, that consciously sought to integrate the two sectors. We discuss policymakers’ options for promoting higher value-added services in India, what this means for the manufacturing sector, and the linkages between services and manufacturing.

Keywords

Service sector India Value-addition Relationship between services Manufacturing 

References

  1. Arnold JM et al (2016) Services reform and manufacturing performance: evidence from India. Econ J 126(590):1–39CrossRefGoogle Scholar
  2. Baumol WJ (1967) Macroeconomics of unbalanced growth: the anatomy of urban crisis. Am Econ Rev 57(3):415–426Google Scholar
  3. Bacon R, Eltis W (1978) Britain's economic problem: too few producers, vol 2. Macmillan, LondonCrossRefGoogle Scholar
  4. Donkin A, Goldblatt P, Lynch K (2002) Inequalities in life expectancy by social class, 1972–1999. Health Stat Q 15:15Google Scholar
  5. Dossani R (2007) Entrepreneurship: the true story behind Indian IT. In: Rowen HS, Hancock MG, Miller WF (eds) Making IT—the rise of Asia in high tech. Stanford University Press, Stanford, CAGoogle Scholar
  6. Eichengreen B, Gupta P (2011) The two waves of service-sector growth. Oxford Econ Pap 65(1):96–123CrossRefGoogle Scholar
  7. Erdil E, Hakan Yetkiner I (2009) The Granger-causality between health care expenditure and output: a panel data approach. Appl Econ 41(4):511–518CrossRefGoogle Scholar
  8. Hasan R, Mitra Devashish, Sundaram Asha (2013) What explains the high capital intensity of Indian manufacturing? Indian Growth Dev Rev 6(2):212–241CrossRefGoogle Scholar
  9. Kaldor N (1966) Causes of the slow rate of growth in the United Kingdom. Cambridge University Press, LondonGoogle Scholar
  10. Kuznets S (1957) Quantitative aspects of the economic growth of nations: II. Industrial distribution of national product and labor force. Econ Dev Cult Change 5(S4):1–111CrossRefGoogle Scholar
  11. Lee CH (1984) The service sector, regional specialization, and economic growth in the Victorian economy. J Hist Geogr 10(2):139–155CrossRefGoogle Scholar
  12. Loungani P et al (2017) World trade in services: evidence from a new dataset. Working Paper WP/17/77Google Scholar
  13. Nayyar G (2012) The quality of employment in India’s services sector: exploring the heterogeneity. Appl Econ 44(36):4701–4719CrossRefGoogle Scholar
  14. Smith A, McCulloch JR (1838) An inquiry into the nature and causes of the wealth of nations. A. and C. Black and W. Tait, LondonGoogle Scholar
  15. Solow RM (1956) A contribution to the theory of economic growth. Q J Econ 70(1):65–94CrossRefGoogle Scholar

Copyright information

© Indian Institute of Management Calcutta 2018

Authors and Affiliations

  1. 1.RAND Center for Asia Pacific PolicySanta MonicaUSA

Personalised recommendations