Pub Date : 2018-09-01DOI: 10.1177/1391561418794693
Sonia Mukherjee
The article studies the impact of outsourcing services on the productivity growth of the Indian manufacturing firms. By the term services we mean different expenses on services incurred by the manufacturing firms, such as, advertising, marketing, research and development, consultancy, auditing, business services, knowledge-based services, technical, legal and other professional services (including information communication and technology services). With further expansion in newer services, a higher demand has come from the Indian manufacturing sector. With intensive usage of services in the manufacturing production process, the performance and the manufacturing can focus on the core competencies with outsourced and cheaper services from expert service provider. For this purpose, the firm-level data have been collected from the annual financial statements of the Centre for Monitoring of the Indian Economy’s Prowess database. The econometric results conclude that services have played a positive role in improving the productivity growth of the aggregate Indian manufacturing firms and at the disaggregated level, especially for industrial groups such as food, beverage and tobacco; textiles, gems and jewellery; transport; machinery; metal, rubber and plastic; leather and footwear; and chemicals, services have played a favourable role in boosting the productivity growth. JEL: D24, L80, L60
{"title":"Services Outsourcing and Productivity Growth","authors":"Sonia Mukherjee","doi":"10.1177/1391561418794693","DOIUrl":"https://doi.org/10.1177/1391561418794693","url":null,"abstract":"The article studies the impact of outsourcing services on the productivity growth of the Indian manufacturing firms. By the term services we mean different expenses on services incurred by the manufacturing firms, such as, advertising, marketing, research and development, consultancy, auditing, business services, knowledge-based services, technical, legal and other professional services (including information communication and technology services). With further expansion in newer services, a higher demand has come from the Indian manufacturing sector. With intensive usage of services in the manufacturing production process, the performance and the manufacturing can focus on the core competencies with outsourced and cheaper services from expert service provider. For this purpose, the firm-level data have been collected from the annual financial statements of the Centre for Monitoring of the Indian Economy’s Prowess database. The econometric results conclude that services have played a positive role in improving the productivity growth of the aggregate Indian manufacturing firms and at the disaggregated level, especially for industrial groups such as food, beverage and tobacco; textiles, gems and jewellery; transport; machinery; metal, rubber and plastic; leather and footwear; and chemicals, services have played a favourable role in boosting the productivity growth. JEL: D24, L80, L60","PeriodicalId":39966,"journal":{"name":"South Asia Economic Journal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83621535","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-09-01DOI: 10.1177/1391561418794690
H. Weerasekera
The study empirically examines the relationship between tax rates and tax evasion for Sri Lanka. This is examined in the context of border tax evasion, where I test for the presence of evasion via the ‘evasion gap’: the discrepancy between exports to Sri Lanka (as reported by Sri Lanka’s trade partners) and imports by Sri Lanka (as reported by Sri Lanka) for products imported by Sri Lanka from its top seven import partners in 2014. The study focuses on two forms of border tax evasion: underreporting and mislabelling. In addition, the study estimates the effect of a policy to bring selected value-added tax (VAT)-exempt products into the VAT net, on the evasion gap. Results from OLS estimation suggest that both forms of evasion are present. The difference-in-difference results of the impact of the policy change on the evasion gap are insignificant, but require post-treatment data to arrive at a more concrete conclusion. JEL: H200, H260
{"title":"Tax Rates and Tax Evasion","authors":"H. Weerasekera","doi":"10.1177/1391561418794690","DOIUrl":"https://doi.org/10.1177/1391561418794690","url":null,"abstract":"The study empirically examines the relationship between tax rates and tax evasion for Sri Lanka. This is examined in the context of border tax evasion, where I test for the presence of evasion via the ‘evasion gap’: the discrepancy between exports to Sri Lanka (as reported by Sri Lanka’s trade partners) and imports by Sri Lanka (as reported by Sri Lanka) for products imported by Sri Lanka from its top seven import partners in 2014. The study focuses on two forms of border tax evasion: underreporting and mislabelling. In addition, the study estimates the effect of a policy to bring selected value-added tax (VAT)-exempt products into the VAT net, on the evasion gap. Results from OLS estimation suggest that both forms of evasion are present. The difference-in-difference results of the impact of the policy change on the evasion gap are insignificant, but require post-treatment data to arrive at a more concrete conclusion. JEL: H200, H260","PeriodicalId":39966,"journal":{"name":"South Asia Economic Journal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85258122","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-09-01DOI: 10.1177/1391561418794696
Sunetra Ghatak
{"title":"Book Review: Prem Shankar Jha, Dawn of the Solar Age: An End to Global Warming and to Fear","authors":"Sunetra Ghatak","doi":"10.1177/1391561418794696","DOIUrl":"https://doi.org/10.1177/1391561418794696","url":null,"abstract":"","PeriodicalId":39966,"journal":{"name":"South Asia Economic Journal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75853475","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-09-01DOI: 10.1177/1391561418799110
Biswajit Maitra
This article studies the efficacy of the public investment in human capital and physical capital to raise income in Bangladesh over the period 1980–2016. This article also assesses whether the investment in human capital and income have raised life expectancy of the country. The Johansen cointegration test identifies a long-run relation of income with investment on education, health care and physical capital. The error correction mechanism (ECM) based on the cointegrating relation followed by the Wald test of Granger causality has found that these investments have caused income to rise with some lag periods. Robustness of these findings is confirmed by involving an autoregressive distributed lag (ARDL) model of cointegration followed by its ECM representation. On the other hand, the Johansen and ARDL methods of cointegration followed by their ECMs have also found a long-run relation of life expectancy with the investment in education, health care and income. A decisive role of the investment in health care and income on life expectancy is observed, while an unusual negative role of the investment in education is also found. However, positive value of the long-run coefficients of the education and health-care investments of the ECM-ARDL model indicate some long-run favourable impact of these investments on life expectancy in Bangladesh. JEL: I26, I15, C32
{"title":"Investment in Physical, Human Capital, Economic Growth and Life Expectancy in Bangladesh","authors":"Biswajit Maitra","doi":"10.1177/1391561418799110","DOIUrl":"https://doi.org/10.1177/1391561418799110","url":null,"abstract":"This article studies the efficacy of the public investment in human capital and physical capital to raise income in Bangladesh over the period 1980–2016. This article also assesses whether the investment in human capital and income have raised life expectancy of the country. The Johansen cointegration test identifies a long-run relation of income with investment on education, health care and physical capital. The error correction mechanism (ECM) based on the cointegrating relation followed by the Wald test of Granger causality has found that these investments have caused income to rise with some lag periods. Robustness of these findings is confirmed by involving an autoregressive distributed lag (ARDL) model of cointegration followed by its ECM representation. On the other hand, the Johansen and ARDL methods of cointegration followed by their ECMs have also found a long-run relation of life expectancy with the investment in education, health care and income. A decisive role of the investment in health care and income on life expectancy is observed, while an unusual negative role of the investment in education is also found. However, positive value of the long-run coefficients of the education and health-care investments of the ECM-ARDL model indicate some long-run favourable impact of these investments on life expectancy in Bangladesh. JEL: I26, I15, C32","PeriodicalId":39966,"journal":{"name":"South Asia Economic Journal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90944629","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-03-01DOI: 10.1177/1391561418761077
Ujjal Protim Dutta, P. Sengupta
Remittances in India have been growing rapidly since 1991. Most of the studies find that remittance has had a significant impact on real effective exchange rate (REER). It is imperative to evaluate the impact of a transfer such as remittance and aid on country’s competitiveness. This article is an attempt to investigate the impact of workers’ remittances and some selected macro-variables on REER of India using annual data from 1980–2015. The study conducted autoregressive distributive lag (ARDL) bound test co-integration approach to explore this long-run relationship. The ARDL bound test approach confirms significant long-run relationships among the selected variables at 1 per cent level of significance. In addition to this, the ARDL short-run error correction model implies that while REER may temporarily deviate from its long-run equilibrium, the deviations adjust towards the equilibrium level in the long run. JEL: F31, F35, F41
{"title":"Remittances and Real Effective Exchange Rate","authors":"Ujjal Protim Dutta, P. Sengupta","doi":"10.1177/1391561418761077","DOIUrl":"https://doi.org/10.1177/1391561418761077","url":null,"abstract":"Remittances in India have been growing rapidly since 1991. Most of the studies find that remittance has had a significant impact on real effective exchange rate (REER). It is imperative to evaluate the impact of a transfer such as remittance and aid on country’s competitiveness. This article is an attempt to investigate the impact of workers’ remittances and some selected macro-variables on REER of India using annual data from 1980–2015. The study conducted autoregressive distributive lag (ARDL) bound test co-integration approach to explore this long-run relationship. The ARDL bound test approach confirms significant long-run relationships among the selected variables at 1 per cent level of significance. In addition to this, the ARDL short-run error correction model implies that while REER may temporarily deviate from its long-run equilibrium, the deviations adjust towards the equilibrium level in the long run. JEL: F31, F35, F41","PeriodicalId":39966,"journal":{"name":"South Asia Economic Journal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88578490","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-03-01DOI: 10.1177/1391561418761074
A. Aggarwal
This article presents a quantitative analysis of growth, structural change and employment linkages at the aggregate level and by sector under the state- and market-led regimes in India. The underlying objectives are: (a) to understand how economic liberalization has affected the economic and labour market structures, and linkages thereof; and (b) to analyse how these dynamics have affected the generation of productive employment in the economy. The analysis is based on Shapley decompositions. Our results suggest that the contribution of structural change in employment to growth declined drastically and secularly as the country transitioned to a high-growth regime driven by globalization. The sector-level analysis indicates that employment opportunities are not being created in high-productivity sectors and segments. Thus, despite a high-growth rate in GDP per capita and productivity-enhancing structural transformation in GDP, a vast population is still trapped in employment that cannot be qualified as productive employment. The study attributes it to trade-induced economic specialization accompanied with weakening of internal inter-sectoral linkages. The article makes a strong case for strategic government intervention to broad base structural change for generating productive employment, which is at the core of poverty reduction. JEL codes: E24, O14, O4
{"title":"Economic Growth, Structural Change and Productive Employment Linkages in India","authors":"A. Aggarwal","doi":"10.1177/1391561418761074","DOIUrl":"https://doi.org/10.1177/1391561418761074","url":null,"abstract":"This article presents a quantitative analysis of growth, structural change and employment linkages at the aggregate level and by sector under the state- and market-led regimes in India. The underlying objectives are: (a) to understand how economic liberalization has affected the economic and labour market structures, and linkages thereof; and (b) to analyse how these dynamics have affected the generation of productive employment in the economy. The analysis is based on Shapley decompositions. Our results suggest that the contribution of structural change in employment to growth declined drastically and secularly as the country transitioned to a high-growth regime driven by globalization. The sector-level analysis indicates that employment opportunities are not being created in high-productivity sectors and segments. Thus, despite a high-growth rate in GDP per capita and productivity-enhancing structural transformation in GDP, a vast population is still trapped in employment that cannot be qualified as productive employment. The study attributes it to trade-induced economic specialization accompanied with weakening of internal inter-sectoral linkages. The article makes a strong case for strategic government intervention to broad base structural change for generating productive employment, which is at the core of poverty reduction. JEL codes: E24, O14, O4","PeriodicalId":39966,"journal":{"name":"South Asia Economic Journal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89644457","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-03-01DOI: 10.1177/1391561418767444
Durairaj Kumarasamy
The book, however, prefers instead to argue that Modi ‘introduced a new foreign policy language’ by offering a detailed discourse analysis and a focus on some more trivial issues such as the prime minister’s efforts to promote ‘brand India’ through his foreign visits and diaspora policy. Describing him as a ‘policy entrepreneur’ with ‘charismatic and persuasive manner of discourse’, the deeper questions remain. Even if we witnessed a break with the past, is it all due to one individual’s vision and ‘oratorical brilliance’? More importantly, does this betray a dependence on personality and leadership for the country to achieve foreign policy successes? Tremblay and Kapur discuss this as an interesting hypothesis, suggesting that the alleged ‘break’ with the past, in 2014, was paradoxically possible because of the lack of institutionalized policymaking in India. As a corollary of their focus on individual primacy as the single cause of change, however, one should worry: Modi, the individual, will eventually become legacy but will he leave an institutional legacy? Has he adopted economic and administrative reforms that have strengthened the state’s internal capacity and its ability to pursue its interests abroad, whether during a refugee crises in Myanmar, a multilateral trade negotiation, or in face of a new development in artificial intelligence? Has he strengthened the bureaucratic apparatus, in particularly the Ministry of External Affairs, to carry on his vision and implement it? Until we have evidence-based answers to these questions, the book’s suggestion that India will benefit from ‘Modi’s legacy’ remains both premature and unfounded.
{"title":"Book Review: Jayant Menon and T. N. Srinivasan (eds), Integrating South and East Asia: Economics of Regional Cooperation and Development","authors":"Durairaj Kumarasamy","doi":"10.1177/1391561418767444","DOIUrl":"https://doi.org/10.1177/1391561418767444","url":null,"abstract":"The book, however, prefers instead to argue that Modi ‘introduced a new foreign policy language’ by offering a detailed discourse analysis and a focus on some more trivial issues such as the prime minister’s efforts to promote ‘brand India’ through his foreign visits and diaspora policy. Describing him as a ‘policy entrepreneur’ with ‘charismatic and persuasive manner of discourse’, the deeper questions remain. Even if we witnessed a break with the past, is it all due to one individual’s vision and ‘oratorical brilliance’? More importantly, does this betray a dependence on personality and leadership for the country to achieve foreign policy successes? Tremblay and Kapur discuss this as an interesting hypothesis, suggesting that the alleged ‘break’ with the past, in 2014, was paradoxically possible because of the lack of institutionalized policymaking in India. As a corollary of their focus on individual primacy as the single cause of change, however, one should worry: Modi, the individual, will eventually become legacy but will he leave an institutional legacy? Has he adopted economic and administrative reforms that have strengthened the state’s internal capacity and its ability to pursue its interests abroad, whether during a refugee crises in Myanmar, a multilateral trade negotiation, or in face of a new development in artificial intelligence? Has he strengthened the bureaucratic apparatus, in particularly the Ministry of External Affairs, to carry on his vision and implement it? Until we have evidence-based answers to these questions, the book’s suggestion that India will benefit from ‘Modi’s legacy’ remains both premature and unfounded.","PeriodicalId":39966,"journal":{"name":"South Asia Economic Journal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77961215","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-03-01DOI: 10.1177/1391561418761064
Shruti Shastri, A. K. Giri, Geetilaxmi Mohapatra
The study assesses the sustainability of current accounts for the panel of five major South Asian economies, namely, India, Pakistan, Bangladesh, Sri Lanka and Nepal for the period 1985–2016. Towards this end, the intertemporal solvency model of Hakkio and Rush (1991) and Husted (1992) has been employed. The panel co-integration test by Westerlund (2007) confirms the long-run relationship between exports and imports but the estimates of the slope coefficient based on GM-FMOLS, GM-DOLS and CCEMG turn out to be less than one indicating the weak sustainability. The weak form of sustainability implies that current account inflows are not equally matched by the outflows underscoring the need for policy interventions. An analysis of the other fundamentals, however, reveals that the non-consumption-dominated import structure, increasing export diversification and broadly declining external debt stocks are welcome signs for the external sustainability of the region. JEL: F30, F32
{"title":"Testing the Sustainability of Current Accounts for Major South Asian Economies","authors":"Shruti Shastri, A. K. Giri, Geetilaxmi Mohapatra","doi":"10.1177/1391561418761064","DOIUrl":"https://doi.org/10.1177/1391561418761064","url":null,"abstract":"The study assesses the sustainability of current accounts for the panel of five major South Asian economies, namely, India, Pakistan, Bangladesh, Sri Lanka and Nepal for the period 1985–2016. Towards this end, the intertemporal solvency model of Hakkio and Rush (1991) and Husted (1992) has been employed. The panel co-integration test by Westerlund (2007) confirms the long-run relationship between exports and imports but the estimates of the slope coefficient based on GM-FMOLS, GM-DOLS and CCEMG turn out to be less than one indicating the weak sustainability. The weak form of sustainability implies that current account inflows are not equally matched by the outflows underscoring the need for policy interventions. An analysis of the other fundamentals, however, reveals that the non-consumption-dominated import structure, increasing export diversification and broadly declining external debt stocks are welcome signs for the external sustainability of the region. JEL: F30, F32","PeriodicalId":39966,"journal":{"name":"South Asia Economic Journal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73344493","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-03-01DOI: 10.1177/1391561418776843
Rajeev Ranjan Chaturvedy
{"title":"Book Review: Prabir De (Ed.), Twenty Years of BIMSTEC: Promoting Regional Cooperation and Integration in the Bay of Bengal","authors":"Rajeev Ranjan Chaturvedy","doi":"10.1177/1391561418776843","DOIUrl":"https://doi.org/10.1177/1391561418776843","url":null,"abstract":"","PeriodicalId":39966,"journal":{"name":"South Asia Economic Journal","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2018-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82536014","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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