Services growth in India: A look inside the black box

Abstract

It is now widely recognized that the pattern of growth in India in recent years has been an unconventional one. Virtually all labor-abundant developing countries such as Taiwan, South Korea and China saw the shares of labor-intensive manufacturing in the GDP and employment rise and those of agriculture fall during their high-growth phases. In contrast, during its recent high-growth phase, India has witnessed the share of labor-intensive manufacturing in the GDP stagnate despite a declining share of agriculture. Moreover, the movement of workers out of agriculture has been extremely piecemeal, with shifts in the relative employment shares barely visible