Can Modi’s ‘Make in India’ drive address India’s productivity challenge?
India's productivity growth has been led by a few capital-intensive sectors, and has witnessed a slowdown in recent years
In a speech earlier this year, the chairperson of the US Federal Reserve, Janet Yellen noted that one key reason behind the Fed’s dovish stance is the slow productivity growth in the US. Labour productivity, measured as the output of goods and services per worker or per hour of work has been increasing at a very slow pace in the US and other developed countries, especially since the global financial crash of 2008. Slow productivity growth implies slow long-run growth in potential output, and a lower neutral interest rate, which means there is no need for dramatic rate increases, Yellen argued.
Login to enjoy exclusive benefits!
- Unlocked premium articles
- Personalized news
- Market Watchlist
- Insightful Newsletters & more