Mumbai, India – Reserve Bank Deputy Governor MD Patra has emphasized the need for a comprehensive policy approach to revitalize and sustain productivity and growth amidst various economic factors at play.
In his keynote address at the Sixth Asia KLEMS Conference held in Lonavala on Sunday, Patra highlighted the importance of technological capital deepening and long-term investment in research and development to foster a competitive innovation ecosystem. He also emphasized the significance of skill development through continuous education and training, as well as the need to enhance physical infrastructure.
According to Patra, Emerging Markets and Developing Economies (EMDEs) should leverage the potential of the services sector to drive productivity growth. To achieve this, he suggested investing in information and communication technology (ICT) infrastructure and reducing trade costs associated with shipping, logistics, and regulations. Additionally, implementing business-enabling reforms can encourage private sector participation in this endeavor.
Patra further pointed out that raising labor force participation rates, particularly among women and older workers, could contribute to enhanced productivity. However, such an increase would require investments in improving workability, retraining, and acquiring new skills in alignment with evolving technologies.
Drawing on insights from the Organization for Economic Co-operation and Development (OECD), Patra emphasized the role of digitalization as a key driver of future productivity growth. By harnessing the power of rapid diffusion and replication of ideas, informational goods, and business processes at minimal costs, economies can witness significant advancements. Moreover, expanding access to finance for small and medium enterprises, especially in EMDEs, can lead to productivity bursts.
Patra acknowledged the crucial role of central banks as stakeholders in promoting macroeconomic and financial stability. He emphasized the importance of central banks gaining a deeper understanding of productivity trends to effectively assess the position of the economy in the business cycle. This understanding is crucial for formulating appropriate policy responses that ensure sustained economic growth without triggering inflation. By doing so, financial market confidence can be bolstered, facilitating a steady flow of finance within the economy.
In conclusion, Reserve Bank Deputy Governor MD Patra called for a multi-pronged policy response involving technological capital deepening, investment in research and development, skill development, and the enhancement of physical infrastructure. Leveraging the services sector’s potential, reducing trade costs, and encouraging private sector participation are key components of this response. Additionally, raising labor force participation rates and embracing digitalization can significantly boost productivity. Central banks play a vital role in understanding productivity trends and formulating appropriate policies to ensure sustained economic growth and financial stability.
Source of this News: NDTV
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