A Study of the Production Structure of the Indian Economy: An International Comparison

Abstract

This paper attempts an international comparison of production structures, using the input-output framework. An earlier study in this field has shown that the production structures of advanced countries such as Italy, Japan, Norway, and the United States are similar, in spite of the wide differences in their levels of per capita income. This paper extends the analysis to a comparison of the production structure of India, a developing country with a very low per capita income, with those of the above developed countries. The result shows that in spite of the differences in the levels of development and per capita incomes, the similarity is preserved. THE PURPOSE of this study is to find out whether the structure of production of India is in any way comparable to those of Italy, Japan, Norway, and the United States. Looking at the present stage of India's development, low per capita income, and the overwhelming importance of the agricultural sector, the general impression would be that the production structure of India is unlikely to be in any way similar to the production structures of industrially developed countries. It might, therefore, be suggested that any attempt to compare the structure of production in India with that of a relatively more developed country like the United States or Italy would yield poor results. The results of a pioneering study by Chenery and Watanabe [1], however, indicated that there could be similarities in production and use of intermediate products among such countries as Italy (1950), Japan (1951), Norway (1950), and the United States (1947), though there were wide differences among these countries with respect to their resource endowments, per capita income, and the level of dependence on foreign trade. In a recent study [3] Simpson and Tsukui, while pointing out similarities in the structure of production of Japan and the United States, reported what appeared to them to be an important empirical regularity, the existence of a fundamental structure of production. The present study provides some further evidence that irrespective of differences in resource endowments and the level of economic development similarities in the production structures of different countries appear to exist. It would be of some interest to note here briefly the basic forces that tend to create similarities or dissimilarities in the national structure of production before