Structural Change, Productivity Growth and Climbing Technological Ladder: Exploring the Manufacturing Industry of the Indian State of Punjab

This study investigates how Punjab’s organised manufacturing sector has evolved across different technology-intensive industrial categories and examines whether these structural changes have influenced labour productivity (LP) growth. Using shift–share decomposition analysis, the study observes a gradual movement from traditional low-technology (LT) industries towards more advanced technology-intensive sectors. The present analysis, using the Theil index, confirms that this transformation follows a rational pattern. However, findings reveal that these structural shifts contribute minimally to overall LP improvements. Instead, productivity gains primarily stem from advancements within existing industries through technical progress, skill developments and learning-by-doing processes. This study makes a distinctive contribution by examining structural change through three complementary perspectives: shifts in industry composition, rationalisation of manufacturing structure and advancement towards higher-technology production.