Liberalisation and Net Resource Saving (Dissaving)

While calculating factor intensity of production it is usually (the Orthodox Measure of total factor intensity developed by Leontief), it is assumed that all intermediate inputs are produced domestically. When some intermediate inputs are imported, Riedel (1975) has suggested a method of calculating total factor intensity which takes into account the factor requirements in producing goods which are exchanged for imported inputs. Using these two alternative methods, this paper obtains estimates of factor intensity for different producing sectors in India. The exercise has shown that the importation of intermediate inputs as prevailed in 1989-1990, 1993-1994, 1998-1999 and 2003-2004 results in a net saving of capital and a net dissaving of labour.