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

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Contribution of Services to Output Growth and Productivity in Indian Manufacturing

As an input into the production process, services are playing an increasingly important role in manufacturing industries the world over. Yet, this has received very little attention in the empirical economic literature on producer behaviour and productivity. This paper estimates the contribution of services to output growth and productivity in Indian manufacturing using the capital-labour-energy-materials-services production function. Panel data estimations are undertaken for 148 three-digit level industries for 18 years, 1980-81 to 1997-98 and sources of growth are analysed. The results show that the contribution of services input to output and productivity growth in manufacturing (organised) has increased substantially in the 1990s. One of the major causes for this is found to be the trade reforms undertaken in the post-1990s period.


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