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Determinants of firm-level export performance: a case study of Indian textile garments and apparel industry

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  • T. A. Bhavani
  • Suresh Tendulkar

Abstract

Drawing on international trade and industrial organisation theories, this paper identifies variables affecting (a) the export decision function, i.e. to export or sell in domestic market, and (b) the export performance function, i.e. the share of exports in output. These functions are estimated for Garment and Apparel producing units in Delhi. The form of business organisation, reflecting access to capital, turns out to be a key determinant in both functions. The estimated marginal impact of identified variables (scale and share of sales expenses) on the probability of exporting in an estimated Probit model declines sharply when moving from single proprietorship to partnership and on to limited companies. On the other hand, every single determinant (scale, share of wages, share of sales expenses and technical efficiency) has been found to have an increasing marginal impact on export performance in an estimated Tobit model when moving across the three forms of business organisation. Empirical results suggest two policy changes to boost export performance. First, given the importance of scale for exports, the existing policy of reserving garments and apparel for exclusive production in small-scale units needs to be scrapped. Simultaneously, it is also necessary to amend current labour legislation applicable to large-scale factory units, as it introduces labour market inflexibility and hence serves as an impediment to the expansion of existing units and the entry of new units.

Suggested Citation

  • T. A. Bhavani & Suresh Tendulkar, 2001. "Determinants of firm-level export performance: a case study of Indian textile garments and apparel industry," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(1), pages 65-92.
    • Handle: RePEc:taf:jitecd:v:10:y:2001:i:1:p:65-92
    DOI: 10.1080/09638190122431
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    3. Mesa, Fernando & Perilla, Juan Ricardo, 2007. "Exportaciones y políticas comerciales óptimas para la industria textil y de confecciones. Casos de Colombia y México, 1990-2002," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(293), pages 195-221, enero-mar.
    4. Hanh Vu Thi, 2015. "Essays on the Export Performance of Vietnam/Essais sur la Performance à l'Exportation du Vietnam," ULB Institutional Repository 2013/216765, ULB -- Universite Libre de Bruxelles.
    5. Pradhan, Jaya Prakash, 2007. "How Do Indian Multinationals Affect Exports from Home Country?," MPRA Paper 19022, University Library of Munich, Germany.
    6. Güzin Bayar, 2018. "Estimating export equations: a survey of the literature," Empirical Economics, Springer, vol. 54(2), pages 629-672, March.
    7. Suresh Ramaiah & Gopal Krishna Roy, 2021. "Determinants of Exports Behaviour of India’s Agro-processing Firms: Role of Technology, Imported Raw Materials and Logistics Infrastructure," Vision, , vol. 25(2), pages 201-208, June.

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