tag:blogger.com,1999:blog-9846624.post3054910533520908260..comments2024-01-06T15:17:55.083+05:30Comments on Restaurant at the End of the Universe: What is India's trendline GDP growth rate?Gauravhttp://www.blogger.com/profile/08259512251834679825noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-9846624.post-10800751059407180222013-01-16T01:28:08.562+05:302013-01-16T01:28:08.562+05:30That was one thats very one outstanding post.That was one thats very one outstanding post.QUALITY STOCKS UNDER 5 DOLLARShttp://www.zipleaf.us/Companies/The-Manhattan-Calumet-Value-Stock-Hotlinenoreply@blogger.comtag:blogger.com,1999:blog-9846624.post-40724120059266128592008-12-21T03:04:00.000+05:302008-12-21T03:04:00.000+05:30I agree with you about India's growth prospects ov...I agree with you about India's growth prospects over the next couple of years, but not with your observations about trend growth.<BR/><BR/>Potential output of a labor constrained economy is determined by growth of labor force and growth of labor productivity. If the economy tries to accumulate capital at a faster rate, diminishing returns to factor set in as labor acts like the fixed factor. <BR/><BR/>That is certainly not the case for India. Save skilled labor, given the huge under-employment and disguised unemployment, supply of labor is almost infinite on the margin. The economy can grow as fast as it can accumulate capital. Constant returns to scale production is possible for a long time. <BR/><BR/>Capital is the constraining factor. Trend growth therefore is determined by the savings rate and sustainable current account deficit. If you look at India's growth experience, each capex boom enhances the economy's trend growth by raising the savings rate.Econlogichttps://www.blogger.com/profile/04798447625726133342noreply@blogger.com