Indian Jute Manufactures : Adaptation and Survival in a 'Sunset' Industry

The primary motivation of this paper is an inquiry into short-run efficiency, with factory level data, that can throw light on the reasons for survival of the jute industry in India. After briefly recapitulating the history of the rise of the Indian jute industry, and its stagnation in later years, we have tried to figure out the ways in which technical helped the revival or growth of the industry, but could not prevent its stagnation in recent years. The structural change took place in favour of capital that increased profit rate by increasing workload per worker significantly. Structural breaks took place in skilled-unskilled employment growth and in wage differentials. In many cases, workers were increasingly displaced by capital without affecting output growth of the industry. The study of the post-independence performance of the Indian jute industry only partially supports the hypothesis that technical advance is the major driver of creative destruction in industries