Advanced Search
MyIDEAS: Login to save this paper or follow this series

State business relations and manufacturing productivity growth in India

Contents:

Author Info

  • Kathuria, Vinish
  • Seethamma Natarajan, Rajesh Raj
  • Sen, Kunal

Abstract

Empirical studies on total factor productivity growth (TFPG) in developing countries highlight trade open-ness, research and development and market structure as being the most important determinants of TFPG. The role of institutions remains overlooked in the literature on the determinants of TFPG. In this paper, we look into the role of institutional quality as captured by effective state-business relationships (SBRs) in influencing TFPG, using Indian manufacturing as a case-study. By SBRs we mean a set of highly institutionalised, responsive and public interactions between the state and the business sector. To compute TFPG, we use firm level data for both the formal and informal manufacturing sector. We correct for the simultaneity bias associated with the production function approach for TFPG estimation by employing a method developed by Levinsohn and Petrin. We propose measures of effective SBRs for 15 Indian States over the period 1994-2005, and then use them in TFP growth equations to estimate the effect of SBR on TFPG. The results indicate that SBR has positively affected the TFP growth of Indian industry. The effect however is primarily for the formal sector.

Download Info

If 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.
File URL: http://mpra.ub.uni-muenchen.de/20314/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 20314.

as in new window
Length:
Date of creation: 21 Jan 2010
Date of revision:
Handle: RePEc:pra:mprapa:20314

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: State-business relations; Indian Manufacturing; Total Factor Productivity Growth;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 70(2), pages 317-341, 04.
  2. Aghion, Philippe & Burgess, Robin & Redding, Stephen J & Zilibotti, Fabrizio, 2006. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5492, C.E.P.R. Discussion Papers.
  3. Dollar, David & Hallward-Driemeier, Mary & Mengistae, Taye, 2005. "Investment Climate and Firm Performance in Developing Economies," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 54(1), pages 1-31, October.
  4. Harrigan, James, 1999. "Estimation of cross-country differences in industry production functions," Journal of International Economics, Elsevier, Elsevier, vol. 47(2), pages 267-293, April.
  5. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, Econometric Society, vol. 64(6), pages 1263-97, November.
  6. Kunal Sen & Dirk Te Velde, 2009. "State Business Relations and Economic Growth in Sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, Taylor & Francis Journals, vol. 45(8), pages 1267-1283.
  7. William Easterly & Ross Levine, 2002. "It´s Not Factor Accumulation: Stylized Facts and Growth Models," Central Banking, Analysis, and Economic Policies Book Series, Central Bank of Chile, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.), Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 3, pages 061-114 Central Bank of Chile.
  8. Devashish Mitra & Beyza Ural, 2008. "Indian manufacturing: A slow sector in a rapidly growing economy," The Journal of International Trade & Economic Development, Taylor & Francis Journals, Taylor & Francis Journals, vol. 17(4), pages 525-559.
  9. Blalock, Garrick & Gertler, Paul J., 2004. "Learning from exporting revisited in a less developed setting," Journal of Development Economics, Elsevier, Elsevier, vol. 75(2), pages 397-416, December.
  10. Arnold, Jens & Smarzynska Javorcik, Beata, 2005. "Gifted Kids or Pushy Parents? Foreign Acquisitions and Plant Performance in Indonesia," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5065, C.E.P.R. Discussion Papers.
  11. Satish Chand & Kunal Sen, 1996. "Trade Liberalization and Productivity Growth: Evidence from Indian Manufacturing," Departmental Working Papers, The Australian National University, Arndt-Corden Department of Economics 1996-11, The Australian National University, Arndt-Corden Department of Economics.
  12. Wagner, Joachim, 2005. "Exports and Productivity : A survey of the evidence from firm level data," HWWA Discussion Papers, Hamburg Institute of International Economics (HWWA) 319, Hamburg Institute of International Economics (HWWA).
  13. Timothy Besley & Robin Burgess, 2000. "Land Reform, Poverty Reduction, And Growth: Evidence From India," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(2), pages 389-430, May.
  14. James Tybout, 1998. "Manufacturing Firms In Developing Countries: How Well Do They Do, And Why?," Development and Comp Systems, EconWPA 9805004, EconWPA.
  15. Centre for the Study of Living Standards, 2003. "Productivity Growth and Poverty Reduction in Developing Countries," CSLS Research Reports, Centre for the Study of Living Standards 2003-06, Centre for the Study of Living Standards.
  16. Amsden, Alice H., 1992. "Asia's Next Giant: South Korea and Late Industrialization," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780195076035, October.
  17. Rodrik, Dani & Subramanian, Arvind, 2004. "From "Hindu Growth" to Productivity Surge: The Mystery of the Indian Growth Transition," Working Paper Series, Harvard University, John F. Kennedy School of Government rwp04-013, Harvard University, John F. Kennedy School of Government.
  18. Mukherjee, Dipa, 2004. "Productivity in the Small Manufacturing Enterprises: Determinants and Policy Issues," MPRA Paper 4867, University Library of Munich, Germany.
  19. Sendhil Mullainathan & Marianne Bertrand, 2001. "Do People Mean What They Say? Implications for Subjective Survey Data," American Economic Review, American Economic Association, American Economic Association, vol. 91(2), pages 67-72, May.
  20. World Bank, 2007. "India : Land Policies for Growth and Poverty Reduction," World Bank Publications, The World Bank, number 15791, August.
  21. Isgut, Alberto & Fernandes, Ana, 2007. "Learning-by-Exporting Effects: Are They for Real?," MPRA Paper 3121, University Library of Munich, Germany.
  22. Devarajan, Shantayanan & Rodrik, Dani, 1991. "Pro-competitive effects of trade reform : Results from a CGE model of Cameroon," European Economic Review, Elsevier, Elsevier, vol. 35(5), pages 1157-1184, July.
  23. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3381, C.E.P.R. Discussion Papers.
  24. de la Grandville,Olivier, 2009. "Economic Growth," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521725200.
  25. de la Grandville,Olivier, 2009. "Economic Growth," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521898010.
  26. Bee Yan Aw & Mark J. Roberts & Tor Winston, 2005. "The Complementary Role of Exports and R&D Investments as Sources of Productivity Growth," NBER Working Papers 11774, National Bureau of Economic Research, Inc.
  27. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 38(3), pages 569-594, September.
  28. Douglass C. North, 1994. "Institutions And Productivity In History," Economic History, EconWPA 9411003, EconWPA.
  29. Hallward-Driemeier, Mary & Wallsten, Scott & Lixin Colin Xu, 2003. "The investment climate and the firm : firm-level evidence from China," Policy Research Working Paper Series, The World Bank 3003, The World Bank.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:20314. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.