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Deregulation and firm investment: evidence from the dismantling of the license system in India

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  • Ivan T. Kandilov
  • Aslı Leblebicioğlu
  • Ruchita Manghnani

Abstract

We analyse the impact of deregulatory reforms in India during the 1990s, which eliminated compulsory industrial licensing, on manufacturing firms’ investment decisions. We find an economically and statistically significant positive effect of delicensing on investment. We also show that firms in states with better credit conditions benefitted more from the removal of licences. Moreover, our analysis demonstrates that the increase in investment was predominantly driven by smaller firms.

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  • Ivan T. Kandilov & Aslı Leblebicioğlu & Ruchita Manghnani, 2017. "Deregulation and firm investment: evidence from the dismantling of the license system in India," Applied Economics Letters, Taylor & Francis Journals, vol. 24(14), pages 1031-1034, August.
    • Handle: RePEc:taf:apeclt:v:24:y:2017:i:14:p:1031-1034
    DOI: 10.1080/13504851.2016.1248282
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    Cited by:

    1. Aditya Bhattacharjea, 2022. "Industrial policy in India since independence," Indian Economic Review, Springer, vol. 57(2), pages 565-598, December.

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