Technological Capability, Employment Growth and Industrial Development: A Quantitative Anatomy of Indian Scenario

The recent spurt of economic growth in India has been described as ‘jobless growth’. In this paper an attempt has been made to examine the question of when industrial development provides required dynamism for generating desired employment opportunities for labour force and when it does not. An industrial technological capability based approach has been adopted to analyse the Indian Industrial development experience during the period 1980 to 2005, which is a quarter century time period. The main finding that emerged from the empirical evidence is that the medium-high-tech industries have shown dynamism in terms of generating employment growth. The labour market regulation view put forward by various scholars supporting the liberalisation policies could not stand the scrutiny of clear demarcation among job creating and job destroying industries under the same circumstances. The relationship between industrial technological capabilities and employment growth turns out to be ambiguous. This implies that weak technological capabilities adversely affect employment growth and heavy dependence on imported technological know-how from the developed countries is labour displacing. It is thus suggested that developing countries should invest both in institutions and industrial firms to develop technological development that suits to resource endowment, specificities of local conditions and suitable to the stage of industrial development. There is a dire need to explore alternative paths of industrial and technological capability development to sustain economic transformation process for achieving prosperity and reducing the time for catch-up development.