Deregulation, Misallocation, and Size: Evidence from India
AbstractThis paper examines the impact of the deregulation of compulsory industrial licensing in India on firm-size dynamics and the reallocation of resources within industries over time. Following deregulation, we find that the extent of resource misallocation declines and a considerable thickening of the left-hand tail of the firm-size distribution suggesting a significant increase in the number of small firms. However, the dominance and growth of large incumbents remains unchallenged. Quantile regressions reveal that the distributional effects of deregulation on firm size are significantly non-linear. The size distribution we observe—namely, a large number of small firms and a small number of large firms—can be characterized as the “missing middle” in Indian manufacturing and suggests that small firms may continue to face constraints in their attempts to grow.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18650.
Date of creation: Dec 2012
Date of revision:
Note: EFG IFM PR
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Other versions of this item:
- Laura Alfaro & Anusha Chari, 2012. "Deregulation, Misallocation, and Size: Evidence from India," Harvard Business School Working Papers 13-056, Harvard Business School, revised Feb 2014.
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-07 (All new papers)
- NEP-BEC-2013-01-07 (Business Economics)
- NEP-DEV-2013-01-07 (Development)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Christine Greenhalgh, 2013.
"Science, Technology, Innovation and IP in India - New Directions and Prospects,"
Economics Series Working Papers
660, University of Oxford, Department of Economics.
- Christine Greenhalgh, 2013. "Science, Technology, Innovation and IP in India: New Directions and Prospects," Melbourne Institute Working Paper Series wp2013n37, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.