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Working Paper- India’s Export-Led Growth: Exemplar and Exception

Shoumitro Chatterjee, Pennsylvania State University and Centre for Policy Research, Arvind Subramanian, Ashoka University

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13 October, 2020 | 3 min read

Abstract

Two new facts motivate this long-run assessment of India’s exports and growth. First, since the early 1990s, India has posted the world’s third-highest growth rate in overall and manufacturing exports, which has been critical to India’s overall growth performance. Contrary to perception, India has been an exemplar of the export-led growth model. Second, this aggregate performance has, however, co-existed with an underperformance in unskilled manufacturing exports. This has resulted in at least $140 billion in “missing” unskilled economic activity annually. A cross-country gravity perspective suggests that India is a “normal” exporter and importer of goods and services, but an under-exporter of manufacturing goods. Going forward, India’s unusual, endowment-defying specialization could limit export dynamism. Having not traversed the Lewis curve for unskilled manufacturing, the curve for skilled exports is threatening to turn up as skilled labor becomes scarce. 

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Study at Ashoka

Study at Ashoka