Saturday, January 25, 2014

Manufacturing Revival

I have an op-ed on the challenges facing India's manufacturing revival here. In short, the National Manufacturing Policy, with its industrial-cluster focus, will have to be complemented with critical economy-wide structural reforms if we are to change the stagnant trajectory of manufacturing in the country.

Update 1 (25/1/2014)

Excellent article in NYT about the troubles facing American manufacturing. This graphic highlights the deep slump undergone by US manufacturing.
Manufacturing's share of the economy is among the lowest in the US. It is even more depressing for India which at its stage of economic development should have been in the 25-30% range. 
One of India's big comparative advantages in manufacturing is its low wages. In automobile sector, its wages are much smaller than even its other emerging economy competitors. However, this advantage will be significantly eroded when adjusted for productivity. 

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