A COMPARATIVE ANALYSIS OF COMPETITIVENESS IN INDIAN
MANUFACTURING INDUSTRIES WITH SELECT DEVELOPED NATIONS
Dr.R.S.Dhananjeyan* & Vidya suresh**
ABSTRACT
Economic growth has been demonstrated with the growth of manufacturing industry.
Industrialization is a process that has invariably been the outcome or accompaniment of
economic development. It is fostered by a set of polices which, more than any other
broad set of polices are seen as the means toward economic development. The process
involves ‘deepening’ as well as ‘widening’ of capital in the productive sectors of a
nation. Moreover, it is the sine-qua-non of economic progress and its resultant effect
causes rise in the per capita income and standard of living of the people in any country. It
has set in motion new economic forces, which transforms the socio-economic system of
the less developed countries and strengthens their economic development.
The development experience of world economies reveals a strong correlation between
their rate of economic growth and the progress achieved in their industrial manufacturing
activity. Besides promoting economic growth, such industrialization process also enables
the economies to generate more diversified and productive manufacturing systems with
structurally well spread employment and income. As a result, the nations, which have
successfully industrialized their economies, have achieved stability in the growth of the
gross domestic product and are poised to reach commanding heights of development
characterized by high standards of living of the people.
Different stages in the process of industrialization results from the interplay of factors
such as the rising demand for manufactured goods, structural adjustments of the
production system, substitution between the factor inputs, technological change,
employment growth etc. Even though, these factors play similar roles in the process of
industrial advancement among nations, they tend to be different across industrial
structures and time at which they occur in individual nations. In the Western economies,
several studies have dealt with the post-war patterns industrial structure and growth.
However, such studies are quite limited that have attempted to compare industrialization
and structural change in the developed and developing nations.
A study of these issues in terms of both theoretical and empirical perspectives has in
recent years emerged to be an important area of research in economics. A comparative
analysis of the factors governing the pace and pattern of industrialization using various
econometric and statistical tools for manufacturing industries of India with that of select
developed nations will be an interesting field of research work. A comprehensive and
comparative analysis of the above aspects would help to identify factors that characterize
the nature of industrialization in the select nations. The present study makes an attempt in
this direction, for twenty-four manufacturing industries and seven select nations namely
India, the USA, Canada, Australia, Japan, the UK and South Korea at three-digit
disaggregation during 1985-86 to 2000-2001. The choice of the above nations is purely
based on the level of industrialization characterizing them.
Besides, being an interesting area of applied research in industrial economics, the finding
will prove to be useful for devising normative policy decisions to ensure stable and
accelerated pace of economic growth.
The present study is based on the secondary data published by the various United Nations
organizations such as, Industrial Statistics Year Book (ISYB), Year Book of National
Accounts Statistics (YBNAS). Following the International Standard Industrial
classification (ISIC), twenty-four manufacturing industries are selected at three digit level
disaggregation for the reference period. The study also has used a wide spectrum of
macro economic variables like GNP, Government consumption, GNP structure,
Exchange Rate, Capital Stocks, Domestic Saving and Capital Formation, Commodity
Exports, Imports, Population, Employment, and Labour Force Data. For the empirical
analysis and for fitting various econometric models we have defined all the monetary
variables in US $ terms to the base 1985-86.
Mathematical and statistical tools like Simple ratios, Percentage, Compound Growth
Rate, Mean, Standard deviation and coefficient of variation are appropriately used for the
purpose of analyzing the data and examine the objective proposed in the study.
KEY WORDS:
Manufacturing Industries, Total Factor Productivity, Kendrick, Solow and
technical growth.
*Dr.R.S.Dhananjeyan is a Professor & Head, Dept. of Economics, Bharathiar
University,Coimbatore.
**Vidya Suresh is a final year Ph.D student @ Bharathiar University, Coimbatore & at
present placed as an Academic Intern @ IIMB in Corporate Strategy and Policy Area,
206 New Faculty Block, Indian Institute of Management Bangalore
Bannerghatta Road, Bangalore-560 076.
vidyas@iimb.ernet.in , vidhusuresch@yahoo.co.in
Mobile: 0 998689 6410 / +91 80 26993740