Food prices and the development of manufacturing in India

Structural change associated with rapid growth has not occurred in labour-intensive manufacturing in India. It is argued in the present paper that this is at least partly due to the rise in the relative cost of labour, which is the result of the rising cost of food stemming from rapid overall growth and sluggish growth in agricultural productivity. A theoretical model has been developed and the experience of India is used to illustrate the model and its implications.