Indian Journal of Industrial Relations: Economics & Social Dev.

Satya Prasad Padhi ¹

Affiliations
1 Department of Economics, Panjab University, Chandigarh, IN

Abstract

This paper attempts to assess the manufacturing growth performance in India. Instead of dealing with total factor productivity growth indices the focus is on the creation of more productive employment opportunities. The attention is on achieving the sophistication in intermediate goods production. What distinguishes the underdeveloped countries from the developed ones is the degree and sophistication of the intermediate goods production. The vast network of auxiliary industries which we can take for granted will not be available in small economies. Their educational institutions will be unable to supply narrowly specialized personnel, they will lack the specialists who can improve raw materials and products, argues the author.

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Satya Prasad Padhi ¹

Affiliations
1 Department of Economics, Panjab University, IN

Abstract

The skill gap constraints in India are the symptoms of the lack of initiation of division of laborled sophisticated industrial differentiation. The focus on education and institutional initiatives for skill creation have to be integrated with sophisticated industrial differentiation; the subsidies have to target firm-specific skill formation that amounts to subsidies being directed at firms that employ higher labor force and targets larger volume of output. The higher labor productivity should be in terms of intermediate costs reductions that in turn permit higher wages and profits. Such growth process propagates itself in a cumulative way - supporting the coming up of new tasks, new skills without facing skill gap constraints.

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Satya Prasad Padhi ¹

Affiliations
1 Department of Economics, Panjab University, Chandigarh 160014, IN

Abstract

This paper advocates two different demand side explanations of the Verdoorn-Kaldor law that permits two different types of increasing returns with different employment implications. One is the realization of economies of scale that does not permit a strong relationship between employment growth and productivity growth. The other is the division of labor-led increasing returns as part of economic progress with robust induced employment growth for maintaining division of labor-led productivity growth in a cumulative manner.

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Satya Prasad Padhi ¹

Affiliations
1 Department of Economics, Panjab University, Chandigarh 160014, IN

Abstract

This paper adopts a framework of analysis where education is seen as a narrow specialization to coordinate narrow specializations in production. There is the symbiotic relationship when its development also improves the specializations in production. In this perspective, the human capital formation is an intrinsic aspect of the growth of firms who in trying to achieve higher market access (and higher returns) are responsible for new and good employment opportunities that in turn create external economies permitting higher development status. Much therefore depends on the growth of firms that creates such good employment opportunities.

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Satya Prasad Padhi ¹

Affiliations
1 Department of Economics, Panjab University, Chandigarh 160014, IN

Abstract

This paper maintains that the conceptualization of a large firm that is based on the realization of increasing returns to scale phenomenon, which is based on pecuniary external economies created by other such large firms, is problematic. It, by design, is dependent on the external increase in the size of the market. An alternative is the Youngian conception of the 'increasing returns' phenomenon that provides a better policy focus. It discusses the conditions under which investment by a 'large firm' in an industry that is productive (i.e. embodies technological improvement) creates external economies, and forms the basis of further investments that are more productive. The Youngian external economies-based 'acceleration' principle propagates in a cumulative way, permitting in turn continuous advanced growth.

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Satya Prasad Padhi ¹

Affiliations
1 Department of Economics, Panjab University Chandigarh - 160014, IN

Abstract

There is nothing to be gained by exports surplus, unless it is important for bringing forth finance- led new investment opportunities that embody better supply responses. The causation should be: export surplus actualizes initial better supply responses, which in turn creates the Youngian external economies i.e. the possibility of further investments that are more productive. Interestingly, then advanced growth processes, enabled by this causation, also provides (in a sequential manner) the opportunity for the late comers to catch up – permits them to gainfully participate in international trade, which amounts not to static gains, but to experiencing a symbiotic exports and output growth relationship with trade balance, which could be true of their major trading partners.

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Satya Prasad Padhi ¹

Affiliations
1 Department of Economics, Punjab University, Chandigarh - 160014, IN

Abstract

This paper discusses how economic development processes incorporate Keynes’s insight into a monetary production economy and the related analytical tools. Money supply has to be endogenous, in response to demand conditions; though it provides an understanding different from the one underlying the existing post Keynesian thesis. The present paper focuses on a different translation of the liquidity preference-led determination of rate of interest. Higher growth phases, associated with higher growth of endogenous money supply do not have any inflationary bias. Inflationary pressures then should be ascribed to improper development biases i.e. economic development problems. This understanding provides a counternarrative of the Taylor rule; understanding evolutions of real forces for the purpose of understanding the pressures on rate of interest and inflation should be the basic policy focus.

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Satya Prasad Padhi ¹

Affiliations
1 Department of Economics, Panjab University, Chandigarh 160014, IN

Abstract

The present paper suggests that the logic of ISLM, as understood by Keynes, permits a dynamic version of it. The latter can illustrate a short run that can capture growth prospect facing it. This understanding shows that growth prospects define the monetary prospects that in turn determine the rate of interest, as a monetary phenomenon. The comovement of interest rate and prices is a response to growth prospects, and the former plays the signaling device to indicate the growth prospects facing the current period. The broader conclusion is monetary policy should play a passive role and align the rate of interest to actual growth prospects; the policy focus is on the management of the growth prospects

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Satya Prasad Padhi ¹

Affiliations
1 Department of Economics, Panjab University, Chandigarh 160014, IN

Abstract

The present paper argues that if banks and central banks are sensitive to growth prospects that create both good assets (for banks) and better macro fundamentals (for the central bank), NPAs as a percentage of advances would be low. The argument rests on an endogenous money thesis that supports higher growth of advances that in turn permits expansions, expansion-led learning by doing and further investment opportunities that are more productive. Rate of interest policy that best attends to this growth prospects and bank advances nexus best manages monetary prospects, including, of course, NPAs issues.

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Satya Prasad Padhi ¹

Affiliations
1 Professor, Department of Economics, Punjab University, Chandigarh 160014, IN

Abstract

Industrial clusters and districts have been recognized as key drivers of advanced growth. The existing literature perhaps focuses more on Marshallian industrial organization in which how small firms define the dynamic organization form is important. The present paper argues that a Keynesian growth perspective should dominate in which new investments and growth manifested in narrow specializations promote the dynamism of small firms that underpins large-small firm nexus. The policy focus is on enriching the manufacturing as an engine of growth. Growth promotes the dynamism of small-large firm nexus which in turn reinforces growth. The focus is on the proper industrialization that advances the endogenous evolution of the dynamism of small firm that sustains learning by doing to innovate.

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