IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

The Liberalization of Retail Services in India

  • Lakatos, Csilla
  • Fukui, Tani

Despite the recent controversy about opening up the distribution sector to foreign retailers, there is political will that remains in favor of pushing through reforms in India. In this paper, we quantify the economic impact of the removal of barriers to foreign investment in multi-brand retailing on different stakeholders using a newly developed general equilibrium model. The model accounts explicitly for both foreign direct investment and the activities of foreign affiliates using heterogeneous production technologies. We find that the unilateral reduction of barriers to FDI in distribution services in India benefits the economy as a whole, consumers, and foreign producers but hurts domestic distributors. Nevertheless, when we consider the associated productivity improvements documented in the literature to downstream and upstream industries, we find that domestic producers are expected to benefit from the liberalization of the distribution sector as well.

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://www.sciencedirect.com/science/article/pii/S0305750X1400014X
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Elsevier in its journal World Development.

Volume (Year): 59 (2014)
Issue (Month): C ()
Pages: 327-340

as
in new window

Handle: RePEc:eee:wdevel:v:59:y:2014:i:c:p:327-340
DOI: 10.1016/j.worlddev.2014.01.013
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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. Beata Smarzynska Javorcik, 2004. "Does Foreign Direct Investment Increase the Productivity of Domestic Firms? In Search of Spillovers Through Backward Linkages," American Economic Review, American Economic Association, vol. 94(3), pages 605-627, June.
  2. Vinish Kathuria, 2002. "Liberalisation, FDI, and productivity spillovers--an analysis of Indian manufacturing firms," Oxford Economic Papers, Oxford University Press, vol. 54(4), pages 688-718, October.
  3. Mathew Joseph & Nirupama Soundararajan & Manisha Gupta & Sanghamitra Sahu, 2008. "Impact of Organized Retailing on the Unorganized Sector," Macroeconomics Working Papers 22167, East Asian Bureau of Economic Research.
  4. repec:dau:papers:123456789/6497 is not listed on IDEAS
  5. Javorcik, Beata S. & Li, Yue, 2013. "Do the biggest aisles serve a brighter future? Global retail chains and their implications for Romania," Journal of International Economics, Elsevier, vol. 90(2), pages 348-363.
  6. Wolfgang Keller & Stephen R. Yeaple, 2003. "Multinational Enterprises, International Trade, and Productivity Growth: Firm-Level Evidence from the United States," NBER Working Papers 9504, National Bureau of Economic Research, Inc.
  7. Rutherford, Thomas F. & Tarr, David G., 2008. "Poverty effects of Russia's WTO accession: Modeling "real" households with endogenous productivity effects," Journal of International Economics, Elsevier, vol. 75(1), pages 131-150, May.
  8. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
  9. Sjoerd Beugelsdijk & Jean-François Hennart & Arjen Slangen & Roger Smeets, 2010. "Why and how FDI stocks are a biased measure of MNE affiliate activity," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 41(9), pages 1444-1459, December.
  10. Mohamed Hedi Bchir & Yvan Decreux & Jean-Louis Guérin & Sébastien Jean, 2002. "MIRAGE, a Computable General Equilibrium Model for Trade Policy Analysis," Working Papers 2002-17, CEPII research center.
  11. Javorcik, Beata & Keller, Wolfgang & Tybout, James R, 2006. "Openness and Industrial Response in a Wal-Mart World: A Case Study of Mexican Soaps, Detergents and Surfactant Producers," CEPR Discussion Papers 5823, C.E.P.R. Discussion Papers.
  12. Jonathan E. Haskel & Sonia C. Pereira & Matthew J. Slaughter, 2002. "Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firms?," NBER Working Papers 8724, National Bureau of Economic Research, Inc.
  13. Hugo ROJAS-ROMAGOSA & Arjan LEJOUR & Gerard VERWEIJ, . "Opening Services Markets within Europe: Modelling Foreign Establishments in a CGE Framework," EcoMod2008 23800117, EcoMod.
  14. Brown, D.K. & Stern, R.M., 1999. "Measurement and Modeling of the Economic Effects of Trade and Investment Barriers in Services," Working Papers 453, Research Seminar in International Economics, University of Michigan.
  15. Javorcik, Beata Smarzynska & Spatareanu, Mariana, 2008. "To share or not to share: Does local participation matter for spillovers from foreign direct investment?," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 194-217, February.
  16. Bruce A. Blonigen & Miao Wang, 2004. "Inappropriate Pooling of Wealthy and Poor Countries in Empirical FDI Studies," Working Papers and Research 0903, Marquette University, Center for Global and Economic Studies and Department of Economics.
  17. Christophe Gouel & Houssein Guimbard & David Laborde, 2012. "A Foreign Direct Investment database for global CGE models," Working Papers 2012-08, CEPII research center.
  18. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
  19. Chakraborty, Chandana & Nunnenkamp, Peter, 2008. "Economic Reforms, FDI, and Economic Growth in India: A Sector Level Analysis," World Development, Elsevier, vol. 36(7), pages 1192-1212, July.
  20. Kaliappa Kalirajan & Kanhaiya Singh, 2013. "Corporate Retail Outlets are Blessings in Disguise for Unorganized Retail Outlets: An Empirical Analysis in the Indian Context," ASARC Working Papers 2013-04, The Australian National University, Australia South Asia Research Centre.
  21. Jesper Jensen & Thomas Rutherford & David Tarr, 2014. "The Impact of Liberalizing Barriers to Foreign Direct Investment in Services: The Case of Russian Accession to the World Trade Organization," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 6, pages 125-149 World Scientific Publishing Co. Pte. Ltd..
  22. Rajeev Kohli & Jagdish Bhagwati, 2011. "Organized Retailing In India: Issues And Outlook," Working Papers 6666, School of International and Public Affairs, Columbia University, revised Jan 2011.
  23. Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2010. "Does foreign direct investment promote growth? Exploring the role of financial markets on linkages," Journal of Development Economics, Elsevier, vol. 91(2), pages 242-256, March.
  24. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc.
  25. Fukui, Tani & Csilla Lakatos, 2012. "A Global Database of Foreign Affiliate Sales," GTAP Research Memoranda 4009, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  26. Blalock, Garrick & Gertler, Paul J., 2008. "Welfare gains from Foreign Direct Investment through technology transfer to local suppliers," Journal of International Economics, Elsevier, vol. 74(2), pages 402-421, March.
  27. S. Mahendra Dev, 2008. "India," Chapters, in: Handbook on the South Asian Economies, chapter 1 Edward Elgar Publishing.
  28. Anusha Chari & T. C. A. Madhav Raghavan, 2012. "Foreign Direct Investment in India’s Retail Bazaar: Opportunities and Challenges," The World Economy, Wiley Blackwell, vol. 35(1), pages 79-90, 01.
  29. Latorre, María C. & Bajo-Rubio, Oscar & Gómez-Plana, Antonio G., 2009. "The effects of multinationals on host economies: A CGE approach," Economic Modelling, Elsevier, vol. 26(5), pages 851-864, September.
  30. Arjan Lejour & Paul Veenendaal & Gerard Verweij & Nico van Leeuwen, 2006. "Worldscan; a model for international economic policy analysis," CPB Document 111, CPB Netherlands Bureau for Economic Policy Analysis.
Full references (including those not matched with items on IDEAS)

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

When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:59:y:2014:i:c:p:327-340. 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: (Shamier, Wendy)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.