Chapter

Trade-induced Structural Change

M. Parameswaran

in Growth, Development, and Diversity

Published in print June 2012 | ISBN: 9780198077992
Published online September 2012 | e-ISBN: 9780199081608 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198077992.003.0013
Trade-induced Structural Change

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This chapter analyses the effect of international trade on the structure of the Indian manufacturing industry and its implications for technological progress and employment. The theoretical literature on this issue shows that trade-induced structural change is contingent on factors specific to the economy and industries, rendering the theoretical predictions to depend on the assumed domestic conditions. The chapter examines whether trade expanded or contracted the share of sectors with potential for technological progress and employment. The results show that trade has had a contractionary effect on the shares of growth generating sectors and an expansionary effect on labour-intensive sectors. Technology-intensive sectors were able to increase their shares in total manufacturing output due to expansion in domestic demand which was more than offset by the contractionary effect of international trade.

Keywords: labour-intensive sector; trade; liberalization; manufacturing; technology; India; employment; industry

Chapter.  7292 words. 

Subjects: Economic Development and Growth

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