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Domestic Competition Spurs Exports: The Indian Example

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Author Info
Tushar Poddar
Abstract

India's exports nearly tripled in the 1990s. Decomposing export growth shows that it has been driven by incumbent firms rather than the entry of new firms. By using a new panel on Indian firms and estimating a dynamic discrete-choice model of the firm's decision to export, we find evidence that economic liberalization has led to greater domestic competition, spurring firm efficiency and increasing Indian firms' competitiveness and ability to export. We show that export growth has been an outcome of local firm innovation which has come about due to increased competitive pressure from FDI entry.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/173.

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Length: 28 pages
Date of creation: 27 Sep 2004
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Handle: RePEc:imf:imfwpa:04/173

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Keywords: Competition ; Exports ; India ; Trade ; Economic models ;

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References listed on IDEAS
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  6. Andrew Bernard & Joachim Wagner, 1997. "Exports and success in German manufacturing," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 133(1), pages 134-157, March. [Downloadable!] (restricted)
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  7. F. Zilibotti & P. Aghion & R. Burgess, 2004. "The Unequal Effects of Trade Liberalization: Theory and Evidence from India," 2004 Meeting Papers 40, Society for Economic Dynamics.
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  14. Fernandes, Ana M., 2003. "Trade policy, trade volumes, and plant-level productivity in Colombian manufacturing industries," Policy Research Working Paper Series 3064, The World Bank. [Downloadable!]
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  1. Bank for International Settlements, 2006. "Monetary policy in Asia: approaches and implementation," BIS Papers, Bank for International Settlements, number 31, Janvier-M. [Downloadable!]
  2. Kaushik Bhattacharya, 2006. "Monetary policy approaches in India," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy in Asia: approaches and implementation, volume 31, pages 74-102 Bank for International Settlements. [Downloadable!]
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