ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Revisiting Factor Proportions in the Indian Economy

The underestimation of factor intensities when only direct factor contents are used is addressed in this paper. It expands the scope of measurement to include the indirect effects of factor use, which remain unaccounted for otherwise. It examines the structural coherence of factor proportions with output, exports, and foreign direct investment separately for each tradable sector. Using Semi-Input–Output modelling, factor proportions show a significant underestimation of capital intensity for the economy when compared with direct proportions. The analysis thus reveals that output and export distributions are largely aligned with factor endowments, whileFDI distribution is skewed towards sectors with high capital proportions.

China's Changing Export Structure: A Factor-Based Analysis

While China's stellar export performance is a well-established fact, the issue of diversification of China's exports continues to be debated. There are differing opinions on the factor proportions in its exports. Some argue that exports continue to be labour-intensive, while others have found a reallocation in favour of more skill-based and sophisticated exports. This paper is an attempt to address the ongoing debate. The study finds that post-2001 China's exports have diversified. The major finding is that, based on the competitiveness analysis, the share of hi-tech manufactures has increased, while the share of unskilled labour-intensive products has gone down during 2001-06. Post-2001 hi-tech products command a share of 32% in China's total exports and 43% in China's total imports. This is indicative of the fact that imports of hi-tech parts and components are assembled in China to be exported as finished hi-tech goods.
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