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The great trade collapse and Indian firms

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  • Pavel Chakraborty

Abstract

The collapse in global trade during the 2008–09 crisis has been widely studied using the developed nation(s) data. I use firm†level data from Indian manufacturers to show that: (a) Indian firms experience strong negative demand shocks concerning their exports to the USA and the EU, the effect being significantly higher in case of the USA. Results assert that 1% increase in the exposure towards the crisis†affected zones (the USA and the EU combined) reduces an average Indian manufacturing firm's export earnings by 1.17%–1.36%; (b) trade in consumer non†durables and durables are the two most affected sectors, impact being higher for the latter; (c) evidence in support of similar effects throughout the size distribution of firms, with the effect being highest for small or the most vulnerable firms; (d) drop in demand, as a result of the 2008–09 crisis, only affects the high†exposure industries. My results are robust to IV analysis and a variety of checks.

Suggested Citation

  • Pavel Chakraborty, 2018. "The great trade collapse and Indian firms," The World Economy, Wiley Blackwell, vol. 41(1), pages 100-125, January.
    • Handle: RePEc:bla:worlde:v:41:y:2018:i:1:p:100-125
    DOI: 10.1111/twec.12517
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    Cited by:

    1. Pavel Chakraborty, 2024. "Bank ownership and firm performance," Economica, London School of Economics and Political Science, vol. 91(361), pages 238-267, January.

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