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Does Services Liberalization Affect Manufacturing Firms' Export Performance? Evidence from India

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  • Maria Bas
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    Abstract

    This paper investigates the relationship between the reform of energy, telecommunications and transport services in India in the mid-1990s and manufacturing firms’ export performance. The empirical analysis relies on exogenous indicators of regulation of Indian services sectors and detailed firm-level data from India in the 1994-2004 period. I find that the reform of upstream services sector has increased the probability of exporting and export sales shares of firms producing in downstream manufacturing industries. The results suggest that the effect of services liberalization on manufacturing firms’ export performance is stronger for initially more productive firms. These empirical findings are robust to alternative econometric specifications that control for other reforms, industry, firm characteristics and that deal with potential reverse causality concerns.

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    Bibliographic Info

    Paper provided by CEPII research center in its series Working Papers with number 2013-17.

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    Date of creation: Jun 2013
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    Handle: RePEc:cii:cepidt:2013-17

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    Keywords: Services liberalization; manufacturing firms’ export performance; firm heterogeneity; firm level data;

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    13. Maria Bas & Vanessa Strauss-Kahn, 2011. "Does Importing more Inputs Raise Exports? Firm Level Evidence from France," Working Papers, CEPII research center 2011-15, CEPII research center.
    14. Arnold, Jens Matthias & Javorcik, Beata & Lipscomb, Molly & Mattoo, Aaditya, 2012. "Services reform and manufacturing performance : evidence from India," Policy Research Working Paper Series 5948, The World Bank.
    15. Maria Bas & Antoine Berthou, 2012. "The Decision to Import Capital Goods in India: Firms' Financial Factors Matter," World Bank Economic Review, World Bank Group, World Bank Group, vol. 26(3), pages 486-513.
    16. Bas, Maria & Causa, Orsetta, 2013. "Trade and product market policies in upstream sectors and productivity in downstream sectors: Firm-level evidence from China," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 843-862.
    17. Chari, Anusha & Gupta, Nandini, 2008. "Incumbents and protectionism: The political economy of foreign entry liberalization," Journal of Financial Economics, Elsevier, Elsevier, vol. 88(3), pages 633-656, June.
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    19. Abdul Abiad & Enrica Detragiache & Thierry Tressel, 2010. "A New Database of Financial Reforms," IMF Staff Papers, Palgrave Macmillan, vol. 57(2), pages 281-302, June.
    20. Steve Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    21. Fernandes, Ana M. & Paunov, Caroline, 2012. "Foreign direct investment in services and manufacturing productivity: Evidence for Chile," Journal of Development Economics, Elsevier, Elsevier, vol. 97(2), pages 305-321.
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