The historical roots of India’s service-led development: A sectoral analysis of Anglo-Indian productivity differences, 1870-2000

India fell further behind the UK in terms of GDP per capita and overall labour productivity between the 1870s and the 1970s, but has been catching-up since. This paper offers a sectoral analysis of these trends. Comparative India/UK labour productivity in agriculture has declined continuously, and agriculture still accounts for around two-thirds of employment in India. Agriculture thus played a key role in India’s falling behind and has subsequently slowed down the process of catching up. Although there have been substantial fluctuations in comparative India/UK labour productivity in industry, this sector has exhibited no long run trend. The only sector to exhibit an upward trend in comparative India/UK labour productivity is services. India’s recent emergence as a dynamic service-led economy thus appears to have long historical roots. Although India has been characterised by relatively low levels of physical and human capital formation overall, its education provision has historically been unusually skewed towards secondary and tertiary levels. This has provided a limited supply of high productivity workers who have been employed predominantly in services.     

India's missing girls: biology, customs, and economic development

We review the evidence on the sex ratio among children belowthe age of six. International evidence shows that the sex ratioat birth is slightly biased towards boys, but boys suffer greatermortality, a pattern consistent with Darwinian evolution. Witheconomic development, the male bias in the child sex ratio increases.South and East India show levels and trends in the child sexratio that are consistent with this evidence. However, unbalancedsex ratios in the northern and western states since the firstcensuses indicate discrimination against girls. Technologicaldevelopments permitting sex-selective abortions have seriouslyaggravated the imbalances in these states. Economic modellingof parental choice regarding a child's gender suggests thatgender imbalances may be consistent with individual maximizationand marriage-market equilibrium. Nevertheless, these choiceshave adverse welfare consequences, which will be aggravatedby the decline in population growth and consequent relaxationof the ‘marriage squeeze’.     

Where have all the brides gone? Son preference and marriage in India over the twentieth century

Marriage is universal for women in India, but the marriage rate for men varies across regions, where the region is a proxy for shared cultural norms. A preference for sons results in a biased sex ratio towards men and creates a shortage of brides in the marriage market. Using the Indian census of 1931, the article finds that son preference was a regional phenomenon and led to a low marriage rate for men. Using caste‐level information, the article finds no evidence that men from the upper castes enjoyed an advantage in the marriage market as the theoretical literature predicts. The regional differences in gender bias and marriage market outcomes have persisted over the twentieth century and indicate the persistence of cultural values. The long‐run changes show that the marriage squeeze has reduced the surplus of men in all regions; however, the regional differences in son preference and marriage outcomes were still the same in 2001.     

India's development in the era of growth

The recent growth pattern of India is set in the context ofthe parallel experience of China, the experience of povertyreduction is reviewed, and a number of papers illuminating India'sdevelopment are introduced.     

Parental altruism and child labor: examining the historical evidence from the United States

Parsons and Goldin (in Econ Inq 637?C659, 1989) use the US Commissioner of Labor Survey of (1890) to argue that many American parents sacrificed the future earnings of their children by sending them to work rather than to school. We analyze the same data and argue that parental choices were dictated by constraints rather than the desire to exploit child labor opportunities. We also find significant income effects on child labor supply, indicating that affluence played an important part in the decline of child labor. The coexistence of positive assets with child labor is not inconsistent with parental altruism, indicating instead a failure of perfect two-sided altruism.     

Falling behind and catching up: India's transition from a colonial economy

India fell behind during colonial rule. The absolute and relative decline of Indian GDP per capita with respect to Britain began before colonization and coincided with the rise of the textile trade with Europe. However, the fortunes of the traditional textile industry cannot explain the decline in the eighteenth century and stagnation in the nineteenth century as India integrated into the global economy of the British Empire. Inadequate investment in agriculture and consequent decline in yield per acre stalled economic growth. Modern industries emerged and grew relatively fast. The reversal began after independence. Policies of industrialization and a green revolution in agriculture increased productivity in agriculture and industry. However, India's growth in the closing decades of the twentieth century has been led by services. A concentration of human capital in the service sector has origins in colonial policy. Expenditure on education prioritized higher education, creating an advantage for the service sector. At the same time, the slow expansion of primary education lowered the accumulation of human capital and put India at a disadvantage in comparison with the fast‐growing economies of East Asia.     

Partial privatization and yardstick competition

We analyse the dynamics of public and private sector employment in Bangladesh, using the natural experiment provided by the partial privatization of the jute industry. The public sector had substantial excess employment of workers initially, but this excess was substantially eroded by the end of the period we studied. The extent of erosion differs between white‐collar and manual worker categories, with excess employment persisting only in the former. Our findings suggest that partial privatization increases the efficacy of yardstick competition in the regulation of public firms, because heterogeneous ownership undermines collusion between public sector managers, and also makes excess employment more transparent to the general public.