Technology-Intensive Industrialisation in LDCs: Experience of Indian Industries

The growth and composition of industries have been fast changing in the LDCs mainly through foreign collaborations during the last few decades. But does this tendency of technology import generate efficient utilisation of inputs when the process is becoming more capital deepening as reflected in rising capital coefficients? This study aims at revealing some interesting phenomena regarding the performance of Indian manufacturing industries over the period 1974-75 to 1985-86. First, the growth of output in individual industries and their corresponding changes in capital coefficients have been studied. Second, a decomposition analysis has been done to find out the factors responsible for the rise in capital-output ratio. Finally, the question of efficiency is examined from the relationship between capital-labour ratios and labour productivities by a comparative static analysis over different time spans. The study shows that while output grows at a very moderate rate, capital coefficients, on the other hand, rise at remarkably high rates. But this increasing capital coefficients fail to produce higher labour productivities across industries. Hence inefficiency of input used is the order of Indian industries during the period under review.