Advancing India’s Structural Transformation and Catch-up to the Technology Frontier

July 9, 2024

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Cristian Alonso, and Margaux MacDonald. Advancing India’s Structural Transformation and Catch-up to the Technology Frontier, (USA: International Monetary Fund, 2024) accessed December 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

While India’s growth has been strong in recent decades, its structural transformation remains incomplete. In this paper, we first take stock of India’s growth to date. We find that economic activity has shifted from agriculture to services, but agriculture remains the predominant employer. Catch up to the technological frontier has been uneven, with limited progress in agriculture, but also in construction and trade, which have grown the most in terms of employment. We do find some Indian firms already operating at the technological frontier. These strong performers tend to be large firms. We then consider India’s employment challenge going forward. We find that India needs to create between 143-324 million jobs by 2050 and that doing so and with workers shifting towards more dynamic sectors could boost GDP growth by 0.2-0.5 percentage points. Structural reforms can help India create high-quality jobs and accelerate growth.

Subject: Agricultural sector, Economic sectors, Employment, Labor, Labor productivity, Production, Productivity

Keywords: Agricultural sector, Economywide Production, Employment, Frontier employment, Global, Growth decomposition, IMF staff estimate, India's employment challenge, Industry level, Labor Productivity, Potential Output, Productivity, Structural Transformation, Technological Frontier., Technology frontier

Publication Details

Pages:

33
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2024/138
Stock No:

WPIEA2024138
ISBN:

9798400281617
ISSN:

1018-5941

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