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Trade Liberalization and the Efficiency of Firms in Indian Manufacturing

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  • Nigel L. Driffield
  • Uma S. Kambhampati

Abstract

Has the efficiency of firms in India improved since its liberalization in 1991? The authors attempt to answer this question by analyzing the determinants of firm‐level efficiency in six manufacturing sectors in India while focusing on the effects of liberalization and domestic competition. They find that there was an increase in overall efficiency in the post‐reform period in India in five out of the six sectors. While imports do not seem to improve efficiency, liberalization did increase efficiency in four of the sectors.

Suggested Citation

  • Nigel L. Driffield & Uma S. Kambhampati, 2003. "Trade Liberalization and the Efficiency of Firms in Indian Manufacturing," Review of Development Economics, Wiley Blackwell, vol. 7(3), pages 419-430, August.
    • Handle: RePEc:bla:rdevec:v:7:y:2003:i:3:p:419-430
    DOI: 10.1111/1467-9361.00200
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    Cited by:

    1. José Contreras & Andrés Santeliz & Oscar Carvallo, 2012. "Patterns of technical efficiency in the Venezuelan manufacturing sector (2007)," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 37(34), pages 121-137, july-dece.
    2. Marion Dovis & Juliette Milgram‐Baleix, 2009. "Trade, Tariffs and Total Factor Productivity: The Case of Spanish Firms," The World Economy, Wiley Blackwell, vol. 32(4), pages 575-605, April.
    3. Ghosh, Saibal, 2013. "Do economic reforms matter for manufacturing productivity? Evidence from the Indian experience," Economic Modelling, Elsevier, vol. 31(C), pages 723-733.
    4. Kashika Arora & Areej A. Siddiqui & Biswajit Nag, 2020. "Devevloping Linkages Between Export Guarantees And Technical Efficiency Of Indian Firms," Working Papers 2045, Indian Institute of Foreign Trade.
    5. 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 of Labor Economics (IZA).
    6. Uma Kambhampati & Ashok Parikh, 2003. "Disciplining firms: the impact of trade reforms on profit margins in Indian industry," Applied Economics, Taylor & Francis Journals, vol. 35(4), pages 461-470.
    7. Bhaumik, Sumon Kumar & Kumbhakar, Subal C., 2010. "Is the post-reform growth of the Indian manufacturing sector efficiency driven? Empirical evidence from plant-level data," Journal of Asian Economics, Elsevier, vol. 21(2), pages 219-232, April.
    8. Vidya Mahambare & V. N. Balasubramanyam, 2005. "Trade Liberalisation and India’s Manufacturing Sector," Development and Comp Systems 0505010, University Library of Munich, Germany.
    9. S K Mishra, 2007. "Globalization and Structural Changes in the Indian Industrial Sector: An Analysis of Production Functions," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(4), pages 56-81, November.
    10. Juliette Milgram-Baleix, 2009. "Do Spanish firms learn from firms located nearby?," Economic Working Papers at Centro de Estudios Andaluces E2009/09, Centro de Estudios Andaluces.
    11. Kambhampati, Uma S., 2006. "Financial liberalisation, corporate governance and the efficiency of firms in Indian manufacturing," Structural Change and Economic Dynamics, Elsevier, vol. 17(1), pages 46-69, January.
    12. Dipa Mukherjee & Rajarshi Majumder, 2007. "Efficiency, technological progress and regional comparative advantage: a study of the organized manufacturing sector in India," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 14(2), pages 23-54, December.
    13. Arpita Ghose & Chandrima Chakraborti, 2013. "The Relative Role of Imports and Exports in Explaining Productivity of Indian Bio-Pharmaceutical Firms: Evidence from Non Parametric Data Envelopment Analysis," Foreign Trade Review, , vol. 48(2), pages 165-201, May.

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