ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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A Study of Tradable Sectors

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.



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Updated On : 20th Jan, 2020

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