Abstract and Keywords
This article develops a three-sector general equilibrium model to account for India's unique pattern of structural transformation. Although this article also documents the rise of India's service sector, it constructs a theoretical growth model to understand India's pattern of growth vis-à-vis other Organization for Economic Cooperation and Development (OECD) and emerging economies to highlight what is sui generis about the Indian case. The preeminence of services in recent years meant that there has been a shift from agriculture to services, bypassing industry. Further, changes in GDP structure in India are asymmetrical to the workforce (employment in agriculture continues to persist at 58% of the population). The article's model shows that sector-specific total factor productivity (TFP) growth rates were important drivers of resource reallocation across the three principal sectors of Indian economy from 1970 to 2007.
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