Does Structural Transformation Foster Economic Growth? Empirical Evidence from Indian States with Reference to Assam

This study examines the association between structural transformation and economic growth for a panel of 19 states and UTs focusing on Assam. Employing dynamic panel econometric models from 1977–1978 to 2017–2018, the study indicated that the association between economic growth and structural transformation among the 19 states/UTs panel seems to be random. However, parametric techniques such as DOLS suggest a significant long-term relationship between structural change in output and economic growth across Indian states. Assam, being a key player in north-east India’s economy, holds particular importance in India–South Asia trade dynamics. However, the state has been experiencing a simultaneous structural economic shift and adverse economic situation, evident from the existing literature. Thus, it is pertinent to examine the structural change-economic growth linkage for Assam, which will be helpful for policy-making to ensure sustained economic growth. For Assam, the vector auto regression and Granger causality test reveal significant results, showing a bi-directional causality between structural change and economic growth, supporting the Kaldor–Verdoorn’s law.