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Competition, Openness and Inequality of Firm Size in the Indian Manufacturing

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  • Hariprasad Govinda

Abstract

This article is an attempt to study the impacts of trade openness and competition on inequality of firm size in the Indian manufacturing during 1990–2010. A number of empirical studies have observed a positive skewness in the size distribution of firms (log-normal distribution) and an increasing concern over raising inequality of firm sizes in the industry. I have attempted to study the direction of the causation between export openness and inequality of firm size distribution (FSD), which is not often studied so far, despite it being purely empirical. The empirical results clearly show that export openness is statistically significant (1 per cent) throughout all the models and has negative effects on inequality. This is one interesting and robust empirical finding that export openness has the capability to reduce inter-firm performance differences, and hence, reducing inequality in FSD.

Suggested Citation

  • Hariprasad Govinda, 2016. "Competition, Openness and Inequality of Firm Size in the Indian Manufacturing," Foreign Trade Review, , vol. 51(1), pages 81-97, February.
    • Handle: RePEc:sae:fortra:v:51:y:2016:i:1:p:81-97
    DOI: 10.1177/0015732515616546
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    References listed on IDEAS

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    More about this item

    Keywords

    Firm size distribution; openness; skewness; kurtosis; panel regression;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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