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The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India

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Author Info
Philippe Aghion
Robin Burgess
Stephen Redding
Fabrizio Zilibotti

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Abstract

This paper investigates whether the effects, on registered manufacturing out- put,employment, entry and investment, of dismantling the .license raja system of central controlsregulating entry and production activity in this sector .vary across Indian states with differentlabor market regulations. The effects are found to be unequal depending on the institutionalenvironment in which industries are embedded. In particular, following de-licensing,industries located in states with pro-employer labor market institutions grew more quicklythan those in pro-worker environments. Our results emphasize how local institutions matterfor whether industry in a region benefits or is harmed by the nationwide delicensing reform.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0728.

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Date of creation: Jun 2006
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Handle: RePEc:cep:cepdps:dp0728

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Related research
Keywords: delicensing; economic development; labour regulation;

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Find related papers by JEL classification:
O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses
O21 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Eric V. Edmonds & Nina Pavcnik & Petia Topalova, 2007. "Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform," NBER Working Papers 12884, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Basu, Kaushik & Maertens, Annemie, 2007. "The Pattern and Causes of Economic Growth in India," Working Papers 07-08, Cornell University, Center for Analytic Economics. [Downloadable!]
    Other versions:
  3. Poonam Gupta, 2008. "What Constrains Indian Manufacturing," Working Papers id:1597, esocialsciences.com. [Downloadable!]
    Other versions:
  4. Mathias Hoffmann & Thomas Nitschka, 2009. "Securitization of Mortgage Debt, Asset Prices and International Risk Sharing," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  5. Natalie Chen & Jean Imbs & Andrew Scott, 2006. "The dynamics of trade and competition," Research series 200610-3, National Bank of Belgium. [Downloadable!]
    Other versions:
  6. Susanne Prantl & Alexandra Spitz-Oener, 2009. "How does entry regulation influence entry into selfemployment and occupational mobility?," Discussion Papers 267, SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich. [Downloadable!]
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  7. Gupta, Poonam & Hasan, Rana & Kumar, Utsav, 2009. "Big Reforms but Small Payoffs: Explaining the Weak Record of Growth and Employment in Indian Manufacturing," MPRA Paper 13496, University Library of Munich, Germany. [Downloadable!]
  8. Jérôme Vandenbussche & Philippe Aghion & Costas Meghir, 2006. "Growth, distance to frontier and composition of human capital," Journal of Economic Growth, Springer, vol. 11(2), pages 97-127, June. [Downloadable!] (restricted)
  9. Amartya Lahiri & Kei-Mu Yi, 2009. "A Tale of Two States: Maharashtra and West Bengal," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(3), pages 523-542, July. [Downloadable!] (restricted)
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  10. Runli Xie, 2009. "Trade-Off Between Consumption Growth and Inequality: Theory and Evidence for Germany," SFB 649 Discussion Papers SFB649DP2009-034, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany. [Downloadable!]
  11. Eric Edmonds, 2007. "Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform," Working Papers id:999, esocialsciences.com. [Downloadable!]
  12. Simon Commander & Jan Svejnar, 2007. "Do Institutions, Ownership, Exporting and Competition Explain Firm Performance? Evidence from 26 Transition Countries," IZA Discussion Papers 2637, Institute for the Study of Labor (IZA). [Downloadable!]
  13. Pinelopi K. Goldberg & Amit Khandelwal & Nina Pavcnik & Petia Topalova, 2008. "Multi-product Firms and Product Turnover in the Developing World: Evidence from India," NBER Working Papers 14127, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  14. Philippe Aghion, 2009. "Some Thoughts on Industrial Policy and Growth," Documents de Travail de l'OFCE 2009-09, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
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