Post-reform Growth Research Articles

Growth elasticity of poverty and pro-poor growth during post reform period: a tale of two Indian states

ABSTRACT In 1991, India embarked on economic reform. This research asked if post-reform growth in the two newly formed states of Undivided Andhra Pradesh was or was not pro-poor. In both states, real monthly per capita expenditure increased, but poverty declined faster in 2004–05 to 2011–12 than in 1993–94 to 2004–05. Even though Telangana’s economic growth was lower than that of Andhra Pradesh, its growth elasticity of poverty was high enough to cause a more rapid decline in poverty. In the second period, growth in both states was found to be pro-poor because of high-growth elasticities of poverty and lower income inequality.

Talent Allocation and Post-Reform Growth in Central America

Talent Allocation and Post-Reform Growth in Central America

Gender wage inequality during Sri Lanka’s post-reform growth: A distributional analysis

Abstract This paper investigates gender wage inequality in Sri Lanka during 1992–2014, a period of robust economic growth following pro-market reforms. The gap in mean wages between men and women decreased steadily over this period. Unconditional quantile regression reveals the decline in gender wage inequality was driven by the upper half of the distribution, and was due to improvements in women’s observable human capital. Yet, the pay structure became more unequal, indicating widening gender gaps in the returns to labor market characteristics and in unobservable determinants of wages. The gender gap in pay structure widened disproportionately in the lower half of the distribution, coinciding with falling absolute and relative returns to women in manufacturing industries and production occupations facing greater international competition. The study also demonstrates selection bias underestimates the gender wage gap and overestimates the gains in equality over time. Factors that hinder gender equality in the labor market are discussed along with policy implications.

The Political Economy of Economic Growth in India, 1993-2013

We examine the political economy causes of India’s growth acceleration in the early 1990s, the periods of high growth in the 1990s and early 2000s, and the subsequent slowdown since 2011, drawing from the ESID conceptual framework (Pritchett and Werker 2013) and periodisation of growth episodes (Kar et al. 2013a). We argue that India’s post-reform growth experience can be separated into three distinct growth episodes. The first growth episode, from 1993 to 2002, was characterised by a set of predictable informal (and relatively open) relationships (which we call ‘ordered deals’) between political and economic elites. The second episode was from 2002 to 2010; deals in this period became increasingly closed, leading to negative feedback effects from accountability institutions, the middle class and non-elites, along with structural retrogression of the economy. The third episode, beginning in 2011, was one of an incipient growth deceleration, and was characterised by increasingly disordered deals. Our analysis of the Indian growth experience provides support for the conceptual framework we have used here and our other ESID growth studies. The wider implication of our analysis is that economic growth in most developing country contexts remains episodic and prone to collapse, as institutions do not evolve over the growth process, and in many instances, deteriorate.

Indian Economy in Two Decades of Reforms: Some Critical Issues

It is widely believed that the Indian economy has grown by leaps and bounds during the last twenty years of reforms. Many also believe that the post reform growth has been much faster than that of the pre-reform period. The present paper makes an investigation into the reality. Considering the critical issues such as national income parameters, GDS, GDCF and employment, the paper tries to unfold the fact that there has not been any marked improvement in the Indian economy during the post reform decades as compared to the pre-reform period.

Jobless Growth based on a 2-Digit Industry-wise Analysis for Tamil Nadu : Pre and Post Reform Years 1984-2006

Analysing the ASI data for the state of T.N. at 2-digit industry level, the paper finds that despite a relative decline in the growth of employment, value added and labour productivity, there is an increase in the employment elasticity (EE) during the post-reform years (1994-2006). Thus, although the post-reform growth in these variables is less than that in the pre-reform years (1984-1993), there is a high-base effect contributing to an increase in employment generated in the latter half of the period under focus. This is reflected in the employment elasticity for 10 out of 14 industries, derived by considering the joint impact of both output and capital on employment. The net effect is, therefore, a significant increase in the employment content of jobs at the ‘all industries’ level. Capital intensity has not altogether affected the employment creation process to give credence to the hypothesis of jobless growth in the state.

Do economic reforms and human capital explain post-reform growth?

By employing a conventional production function, this study advances theoretical and empirical research on the role of economic reforms and human capital on the post-reform economic growth. We construct two unique indices – a composite economic reform index and a human capital index – to perform a comparative analysis of a panel data model and to demonstrate that human capital and economic reforms have had a significant positive effect on economic growth in India and South Korea in the post-reform period. This positive effect is revealed in both contemporaneous and lagged estimations. The impact of reforms is found to be much stronger in South Korea than in India. This study also demonstrates the importance of time-invariant country-specific characteristics, and suggests that policies aimed to improve human capital accumulation have complementary effects on the efficacy of economic reforms.

Is the post-reform growth of the Indian manufacturing sector efficiency driven? Empirical evidence from plant-level data

It is generally believed that the structural reforms that were introduced in India following the macro-economic crisis of 1991 ushered in competition and forced companies to become more efficient. However, whether the post-1991 growth is an outcome of more efficient use of resources or greater use of factor inputs remains an open empirical question. In this paper, we use plant-level data from 1989–1990 and 2000–2001 to address this question. Our results indicate that while there was an increase in the productivity of factor inputs during the 1990s, most of the growth in value added is explained by growth in the use of factor inputs. We also find that median technical efficiency declined in all but one of the industries between 1989–1990 and 2000–2001, and that change in technical efficiency explains a very small proportion of the change in gross value added.

A drive up the capital coast? Contributions to post-reform growth across Chinese provinces

We use nonparametric production-frontier methods to decompose the growth of labor productivity of Chinese provinces in the post-reform period. These techniques, combined with kernel density estimates, allow us to decompose the shift in the distribution of labor productivity without the need for many assumptions common in the empirical growth literature. We find that (1) the distribution of output per worker across Chinese provinces is multimodal, (2) technology change is decidedly nonneutral, (3) physical capital accumulation has been the major driving force behind the growth performance of Chinese provinces and (4) it attempts to drive convergence between provinces, but (5) minimal technological progress and human capital accumulation are key factors responsible for the regional disparities in China.

Reform and Growth in Latin America: All Pain, No Gain?

This paper addresses the adequacy of post-reform growth in Latin America in the 1990s on the basis of international comparisons as well as historical and other relevant standards, analytically exploring and empirically testing a number of hypotheses to explain the perceived dissatisfaction with growth performance in the region. We find that there is no “growth puzzle” in Latin America. Growth has not been higher in the post-reform period not because of a failure of reforms to yield the growth payoff that they should have been expected to do on the basis of international experience, but because of the combination of an unfavorable external environment with insufficient depth and breadth of reform. We also estimate the long-run growth payoff of macroeconomic reforms, the additional gains that can be achieved by deepening this first generation of reforms, and the potential payoff from broadening the scope of reform into a second generation of reforms encompassing deeper structural and institutional

Has Latin America's post-reform growth been disappointing?

After years of poor macroeconomic performance, many Latin American countries undertook ambitious programs of macroeconomic stabilization and structural reform during recent years. The change in policy created high expectations for the region. Some observers question, however, whether actual growth outcomes in several Latin American countries have measured up to such expectations. This paper offers some evidence that the response of economic growth to reforms in Latin America has not been disappointing. Because of the significant changes in policies achieved in Latin America by the 1990s and in spite of the global slowdown, Latin America did well to return to its historic rate of growth of 2 percent per capita in 1991–93. Latin American growth has responded to changes in policy variables as would have been predicted by the experience of other times and places, as summarized by a panel regression spanning a large number of countries and multi-year periods from 1960 to 1993. In order to obtain consistent estimates of the parameters linking policy variables and growth, this paper uses a dynamic panel methodology that both controls for unobserved time- and country-specific effects and accounts for the likely joint endogeneity of the explanatory variables.

Reform and Growth in Latin America: All Pain, No Gain?

The paper addresses the adequacy of post-reform growth in Latin America in the 1990s on the basis of international comparison and other relevant standards, analytically exploring and empirically testing a number of hypotheses to explain the perceived dissatisfaction with growth performance. It also estimates the long-run growth payoff of macroeconomic reforms, the additional gains that can be achieved by deepening this first generation of reforms, and the potential payoff from broadening the scope of reform into a second generation of reforms encompassing deeper structural and institutional areas.