Are high-linked sectors more productive in India? An analysis under an input–output framework

Abstract

This paper uses an input–output (I–O) framework, considering five I–O matrices, over the period 1989–90 to 2007–08 to evaluate the total factor productivity growth (TFPG) of different sectors of the Indian economy. The methodology adopted under this framework (Miller and Blair 2009) takes into account not only the contributions of the value-added inputs such as labour and capital but also the contribution of the intermediate inputs to production. Subsequently, we compute forward and backward linkages of sectors in terms of output as well as employment to examine whether the high-linked sectors of the economy are relatively better in terms of productive growth or not. Our results show that agriculture has high employment linkages with other sectors of the economy together with positive TFPG. Several other sectors such as food, beverages, textile, printing, and so on do not necessarily have high linkages even though they reveal positive TFPG, especially during the post-liberalization period. By carrying out a sector-wise analysis, the paper identifies the high-linked sectors that need special attention in terms of productivity improvements for improving overall competitiveness of those industry segments that can generate a high level of output and/or employment through their linkage effects.