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Past Issue • Apr-Jun 2014

Inclusive Growth Through Economic Reforms

Professors Rajeev Dehejia and Arvind Panagariya examine India’s services-led growth trajectory in the post-reform period, with a specifi c focus on the role of manufacturing in the growth of the service sector and the impact of economic reforms on the socially disadvantaged. Their research addresses some of the key concerns of growth sceptics and adds valuable knowledge to the current debate on whether liberalisation is, in fact, an inclusive growth strategy in the Indian context.

The critical role of manufacturing growth, especially in the labour-intensive sectors, in the early stages of development in labour-abundant economies is widely recognised (for example, Kuznets, 1957 and 1973 and Chenery, 1960). Some of the more dramatic examples from recent history are South Korea and Taiwan in the 1960s and 1970s, and more recently, India and China, which have grown at near miracle rates. The opening of these countries to the world economy at different points in time was followed by accelerated growth. While there remains some controversy over whether openness or industrial targeting is to be credited for the high growth rates, the importance of manufacturing growth in the making of these miracles is rarely questioned except in the case of India. And even in the latter case, the upward shift in the growth rate has been accompanied by an acceleration in the growth rate of manufacturing.


  • Rajeev-Dehejia

    Rajeev Dehejia

    Associate Professor of Public Policy at the Robert F. Wagner Graduate School of Public Service, New York University, New York, and a Faculty Research Fellow at the National Bureau of Economic Research, Cambridge, Massachusetts.
  • Arvind-Panagariya

    Arvind Panagariya

    Professor of Economics and the Jagdish Bhagwati Professor of Indian Political Economy and Director of the Program on Indian Economic Policies at Columbia University, New York.
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