Manufacturing as an engine of growth a case of India

Abstract

This study analyses the manufacturing sector s role in India s economic growth through Kaldor s Laws and regional disparities, using time series and panel data across developed/less developed and industrialized/less industrialized states. Revisiting Kaldor s First Law, it finds stronger support in more industrialized regions. Kaldor s Second Law, tested via Verdoorn s Law with capital stock inclusion, shows enhanced economies of scale but mixed outcomes. Structural change bonus analysis finds limited applicability to India. Shift-share results indicate neither intensive nor extensive industrialization consistently drives growth. Panel VAR analysis further shows manufacturing and services operate largely independently, with limited cross-sectoral spill-overs. newline