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Trade Liberalization and Productivity Growth: Evidence from Indian Manufacturing

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Satish Chand ()
Kunal Sen

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Abstract

The impact of trade liberalisation on productivity growth is still an empirical issue; the theoretical literature is as yet unclear on the direction of any such association. This paper develops an analytical framework and employs it to empirically test if trade liberalisation in Indian manufacturing has raised total factor productivity (TFP) growth. The answer is in the affirmative. Our results also support a key postulate of the new growth theories that liberalisation of the intermediate good sectors has a larger favourable impact on TFP growth than that of the final good sectors.

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Paper provided by Australian National University, Economics RSPAS in its series Departmental Working Papers with number 1996-11.

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Length: 32 pages
Date of creation: 1996
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Handle: RePEc:pas:papers:1996-11

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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. Pritchett, Lant, 1996. "Measuring outward orientation in LDCs: Can it be done?," Journal of Development Economics, Elsevier, vol. 49(2), pages 307-335, May. [Downloadable!] (restricted)
  2. Levinsohn, James, 1993. "Testing the imports-as-market-discipline hypothesis," Journal of International Economics, Elsevier, vol. 35(1-2), pages 1-22, August. [Downloadable!] (restricted)
    Other versions:
  3. Havrylyshyn, Oli, 1990. "Trade Policy and Productivity Gains in Developing Countries: A Survey of the Literature," World Bank Research Observer, Oxford University Press, vol. 5(1), pages 1-24, January.
  4. Aksoy, M. Ataman, 1992. "The Indian trade regime," Policy Research Working Paper Series 989, The World Bank. [Downloadable!]
  5. Tybout, James R, 1992. "Linking Trade and Productivity: New Research Directions," World Bank Economic Review, Oxford University Press, vol. 6(2), pages 189-211, May.
  6. Rodrik, Dani, 1992. "The Limits of Trade Policy Reform in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 6(1), pages 87-105, Winter. [Downloadable!] (restricted)
  7. Edwards, Sebastian, 1993. "Openness, Trade Liberalization, and Growth in Developing Countries," Journal of Economic Literature, American Economic Association, vol. 31(3), pages 1358-93, September. [Downloadable!] (restricted)
  8. David K. Backus & Patrick J. Kehoe & Timothy J. Kehoe, 1992. "In search of scale effects in trade and growth," Staff Report 152, Federal Reserve Bank of Minneapolis. [Downloadable!]
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  9. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
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  10. Horn, Henrik & Lang, Harald & Lundgren, Stefan, 1995. "Managerial effort incentives, X-inefficiency and international trade," European Economic Review, Elsevier, vol. 39(1), pages 117-138, January. [Downloadable!] (restricted)
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  11. Romer, Paul M, 1987. "Growth Based on Increasing Returns Due to Specialization," American Economic Review, American Economic Association, vol. 77(2), pages 56-62, May. [Downloadable!] (restricted)
  12. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 1127-70, November. [Downloadable!] (restricted)
  13. Krueger, Anne O. & Tuncer, Baran, 1982. "Growth of factor productivity in Turkish manufacturing industries," Journal of Development Economics, Elsevier, vol. 11(3), pages 307-325, December. [Downloadable!] (restricted)
  14. Aggarwal Ashok K, 1991. "Estimates of Fixed Capital Stock in Registered Manufacturing Sector in India," IIMA Working Papers 937, Indian Institute of Management Ahmedabad, Research and Publication Department.
  15. Vousden, Neil, 1993. "Variable Specific Factors and the "X-Efficiency Cost" of Protection," Review of International Economics, Blackwell Publishing, vol. 1(3), pages 234-42, October.
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(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. Arvind Panagariya, 2004. "India in the 1980s and 1990s: A Triumph of Reforms," IMF Working Papers 04/43, International Monetary Fund. [Downloadable!]
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  2. Geoffrey N. Keim & Beth Anne Wilson, 2007. "India's future: it's about jobs," International Finance Discussion Papers 913, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  3. Arvind Panagariya, 2003. "India in the 1980s: Weak Reforms, Fragile Growth," International Trade 0309010, EconWPA. [Downloadable!]
  4. Mohammed I. Ansari & Ira. N Gang, 1999. "Liberalization Policy: ‘Fits & Starts' Or Gradual Change In India," Departmental Working Papers 199907, Rutgers University, Department of Economics. [Downloadable!]
  5. Sushanta K. Mallick, 2006. "Policy instruments to avoid output collapse: an optimal control model for India," Applied Financial Economics, Taylor and Francis Journals, vol. 16(10), pages 761-776, June. [Downloadable!] (restricted)
  6. Bhaumik, Sumon K. & Kumbhakar, Subal C., 2008. "Impact of Reforms on Plant-Level Productivity and Technical Efficiency: Evidence from the Indian Manufacturing Sector," IZA Discussion Papers 3347, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Bhaskara Rao & Maheshwar Rao, 2005. "Determinants Of Growth Rate: Some Methodological Issues With Data From Fiji," Macroeconomics 0509003, EconWPA. [Downloadable!]
  8. Brigitte Granville & Sushanta Mallick, 2005. "How best to link poverty reduction and debt sustainability in IMF--World Bank models?," International Review of Applied Economics, Taylor and Francis Journals, vol. 19(1), pages 67-85, January. [Downloadable!] (restricted)
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