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Deciphering The Hindu Growth Epic

Author

Listed:
  • Peter E Robertson

    (UWA Business School, The University of Western Australia)

Abstract
India’s investment rate has increased fourfold since 1950 and is now nearly 40% of GDP. Many studies have suggested that this rising investment rate is the most significant component of India’s growth acceleration. I assess these hypotheses using the neoclassical growth model decomposition method. Unlike other methods based on this model, such as Hall and Jones (QJE 1999), the method used in this paper does not rely on the assumption of steady state. I find that the rise in investment rates since the 1970s explains only 30% of India’s growth over that period. I conclude that, notwithstanding the high investment rates, the main source of India’s growth acceleration is the modest upward trend in productivity growth since the 1970s.

Suggested Citation

  • Peter E Robertson, 2010. "Deciphering The Hindu Growth Epic," Economics Discussion / Working Papers 10-19, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:10-19
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    File URL: https://www.business.uwa.edu.au/__data/assets/pdf_file/0004/1082686/10-19_Deciphering_the_Hindu_Growth_Epic.pdf
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    References listed on IDEAS

    as
    1. Kaushik Basu & Annemie Maertens, 2007. "The pattern and causes of economic growth in India," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 23(2), pages 143-167, Summer.
    2. Caselli, Francesco, 2005. "Accounting for Cross-Country Income Differences," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 9, pages 679-741, Elsevier.
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    5. Peter E. Robertson, 2010. "Investment Led Growth In India: Hindu Fact or Mythology?," Economics Discussion / Working Papers 10-08, The University of Western Australia, Department of Economics.
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    Cited by:

    1. Nomoto, Takaaki, 2016. "Rainfall Variability and Macroeconomic Performance:A Case Study of India, 1952–2013," MPRA Paper 71976, University Library of Munich, Germany.
    2. Kevin S. Nell, 2015. "The Complementary Nature Between Technological Progress and Capital Accumulation in India's Long-Run Growth Transitions," Metroeconomica, Wiley Blackwell, vol. 66(4), pages 565-605, November.

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    Keywords

    Economic Growth; India; Growth Accounting; Investment; Productivity;
    All these keywords.

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