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Mint
2 days ago
- Business
- Mint
Manufacturing versus services: Why privilege one over the other?
This column looks at the relative importance of the manufacturing industry and services in India's growth story and discusses our required policy priorities in that context. The origin of modern development theory can be traced to the regularities that Simon Kuznets and others observed in the 1950s and 1960s on how the structure of an economy evolves with growth. A key feature he observed is that as per capita GDP (a concept he invented) rises, the dominant sector of the economy shifts from agriculture to industry and then services. This regularity, combined with Arthur Lewis's foundational theory about how the transfer of labour and surplus from a traditional agricultural sector to a modern industrial sector constitutes the fundamental process of development, became the core of development economics. Also Read: Rahul Jacob: Manufacturing is crying out for a reality check These pillars were supplemented with seminal contributions by many others, but the main focus of enquiry was on the transfer of labour and savings from a traditional agricultural sector to a modern industrial sector, especially manufacturing, which was seen as representative of the entire capitalist non-agricultural sector. The key policy debate at this sectoral boundary between agriculture and the rest of the economy was about the desirability and appropriate scale of the surplus transfer out of agriculture. Theodore Shultz wrote about the importance of transforming traditional agriculture. Mellor and his school of economists at IFPRI developed models of agriculture-led growth. Ishikawa argued that growth in developing economies required a reverse transfer of resources into agriculture. My own doctoral thesis investigated the interaction between inter-sectoral resource transfers and patterns of long-term growth in India. Also Read: Manoj Pant: Let's prepare well for negotiations on trade in services Since then, the sectoral boundary of interest in India and policy debate have shifted. The boundary in focus now is between industry, especially manufacturing industry, and services. There is a broadly held view among economists that manufacturing has to lead development. However, on close questioning of why they think so, the response is usually a cursory reference to historical experience. Manufacturing industry indeed led the high growth phase of many countries in Europe after the Industrial Revolution. This is also true of East Asian countries in their high-growth phase. But how much of that growth in Europe is attributable to surplus transfers from colonies—and in East Asia to their strategic and economic alliance with America—remains an open question. Of the 30 most advanced countries in the world today (in per capita GDP terms, excluding some small island economies), manufacturing accounts for 10% or less of GDP in a third of these and 15% or less in another third. Ireland is the only outlier where manufacturing accounts for over 29% of GDP. Also Read: Services led exports are a mixed blessing for the Indian economy So, what is the evidence pointing to the special importance of manufacturing? The only evidence-based answers I have seen are those by Professors Veeramani and Nagesh Kumar. Both of them argue that strong backward and forward linkages unique to manufacturing industry make it an ideal sector to lead developing economies. Surprisingly, few remember the robust theory of manufacturing-led growth developed by Nicholas Kaldor 50 years ago. Building on the even earlier work of Allyn Young, Kaldor argued that manufacturing typically has the characteristic of increasing returns to scale, driving down costs but correspondingly increasing demand as multiple industries reinforce one another in an expanding process of cumulative causation. Keynesian demand management can greatly strengthen this process. Thus, there are compelling reasons for expecting manufacturing to play a leading role in an economy like India's. If so, why has the long-term record of industrial growth been relatively unimpressive? Industry has typically grown at around 5-6% annually during the past 70 years and its GDP share has risen from around 15% to 29% over this period (see data chart). Actually, much of our high industrial growth in recent decades is attributable to mining, utilities and especially construction. The share of manufacturing industry is only around 17%. In contrast, the share of services in GDP has grown from 20.6% at the outset to 53% today, its average decadal growth during the last 40 years being in the range of 7-8% annually. The more dynamic performance of services is also reflected in its rising share of employment and, significantly, in our growing trade surplus in services. This is in sharp contrast with our trade deficit in goods. It is sometimes argued that manufacturing has been hamstrung by dysfunctional regulations and undue interference by an overbearing state. But it is the same regulatory ecosystem in which the services sector has performed so much better. Also Read: Services offer a fast and reliable path to economic development Thus, from a policy perspective, we must ask: Why is the slogan of 'Make in India' and related policy incentives limited only to manufacturing industry, when, say, transport and trade services, financial services, hospitality, education, health and other services are just as important as tangible goods like textiles, steel, cars or pharmaceuticals? We should carefully study the only two decades when industry grew significantly faster than services, 1950-51 to 1960-61 and 2000-01 to 2010-11. What made the difference? Meanwhile, the government would do well to pursue at least an even-handed policy between industry and services, especially if it wishes to maximize employment growth and minimize or eliminate India's trade deficit. These are the author's personal views The author is chairman, Centre for Development Studies.
Yahoo
23-05-2025
- Business
- Yahoo
Dell unveils new AI servers powered by Nvidia chips to boost enterprise adoption
(Reuters) -Dell Technologies (DELL) on Monday unveiled new servers powered by Nvidia's (NVDA) Blackwell Ultra chips, aiming to capitalize on the booming demand for artificial intelligence systems. The servers, available in both air-cooled and liquid-cooled variations, support up to 192 Nvidia Blackwell Ultra chips but can be customized to include as many as 256 chips. These servers can train AI models up to four times faster than previous models, Dell said. The pricing of these products will be "competitive," Arthur Lewis, President of Dell's Infrastructure Solutions Group, told Reuters, adding that "there's a lot of interest on what's next." Dell and Super Micro Computer have benefited from the growing demand for servers designed to handle the computer-heavy AI tasks, but the high cost of producing the systems and tough competition have pressured their margins. Dell in February forecast a decline in adjusted gross margin rate for fiscal 2026, while Super Micro projected fourth-quarter revenue below estimates earlier this month as tariff-driven economic uncertainty pressures its performance. Dell will focus on increasing sales of networking and storage products to ensure the "right level of profitability," Lewis said. The company's new servers will also support Nvidia's upcoming Vera central processing units, which will succeed the chip designer's Grace server processor. The AI server maker plans to support Nvidia's Vera Rubin chips, set to follow the Blackwell series. Dell also introduced a 'Pro Max Plus' laptop designed for AI development on Monday, featuring a neural processing unit that allows engineers to process large AI models directly on the device without relying on cloud services.
Yahoo
22-05-2025
- Business
- Yahoo
Dell Joins Forces with Nvidia to Launch Faster AI Servers
On May 19, Dell Technologies (NYSE:DELL) announced plans to join hands with NVIDIA Corporation (NASDAQ:NVDA) to launch new and better AI servers powered by the latter's Blackwell Ultra chips. The collaboration aims to capitalize on the booming demand for AI systems. According to Dell Technologies (NYSE:DELL), these severs hold the potential to train AI models as much as four times faster than the previous models. A technician standing in front of a wall of servers, managing the public wireless network. The servers are available in two variants: liquid-cooled and air-cooled, and can support up to 192 Nvidia Blackwell Ultra chips. However, they can be customized to contain up to 256 chips. Reuters reported that Arthur Lewis, President of Dell's Infrastructure Solutions Group, expects the pricing of these products to be "competitive," saying that "there's a lot of interest on what's next". While we acknowledge the potential of DELL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than DELL and that has 100x upside potential, check out our report about the . READ NEXT: and . Disclosure: None. Sign in to access your portfolio
Yahoo
22-05-2025
- Business
- Yahoo
Dell Joins Forces with Nvidia to Launch Faster AI Servers
On May 19, Dell Technologies (NYSE:DELL) announced plans to join hands with NVIDIA Corporation (NASDAQ:NVDA) to launch new and better AI servers powered by the latter's Blackwell Ultra chips. The collaboration aims to capitalize on the booming demand for AI systems. According to Dell Technologies (NYSE:DELL), these severs hold the potential to train AI models as much as four times faster than the previous models. A technician standing in front of a wall of servers, managing the public wireless network. The servers are available in two variants: liquid-cooled and air-cooled, and can support up to 192 Nvidia Blackwell Ultra chips. However, they can be customized to contain up to 256 chips. Reuters reported that Arthur Lewis, President of Dell's Infrastructure Solutions Group, expects the pricing of these products to be "competitive," saying that "there's a lot of interest on what's next". While we acknowledge the potential of DELL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than DELL and that has 100x upside potential, check out our report about the . READ NEXT: and . Disclosure: None.
Yahoo
22-05-2025
- Business
- Yahoo
Dell Continues to Innovate the AI Factory
Arthur Lewis, president of Dell's Infrastructure Solutions Group, discusses how the company continues to innovate on the AI Factory and its partnership with Nvidia. Lewis speaks with Bloomberg's Ed Ludlow at Dell Technologies World.
