The typical process of structural transformation relies on industrialization as a source of growth, however, India’s service sector has been the main engine of growth. In this paper I document several features of the Indian development process. First, that labor productivity growth rates have been at least as high as in the manufacturing sector. Second, controlling for the stage of development, labor productivity in Indian services grew faster than a comparable country (also within Asia). Third, real value added share in services is higher in India while that of manufacturing is lower than in the rest of countries controlling for the stage of development. Fourth, the fastest growing service sector in India is the telecommunications sector, which is the main exported service. I construct a structural change model with trade to accommodate these facts together with the increasing net trade in services suggesting that other strategies for development may be behind the growth process of India and other developing countries.
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