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Rain, rain, go away? The investment climate, state–business relations and firm performance in India

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  • Vinish Kathuria
  • S.N. Rajesh Raj
  • Kunal Sen

Abstract

It is commonly argued that a better investment climate reform – i.e., lower distortions in the institutional, policy and regulatory environment in which firms operate – lead to discernible improvements in firm performance. In this paper, we argue that effective State–Business Relations (SBRs) condition better investment climate outcomes and that the deeper institutional determinants of firm performance are the former. We examine the effect of effective SBRs of Total Factor Productivity (TFP) for formal sector firms in India for the years 2000–2001 and 2004–2005 and find support for this hypothesis.

Suggested Citation

  • Vinish Kathuria & S.N. Rajesh Raj & Kunal Sen, 2011. "Rain, rain, go away? The investment climate, state–business relations and firm performance in India," International Journal of Trade and Global Markets, Inderscience Enterprises Ltd, vol. 4(2), pages 172-186.
    • Handle: RePEc:ids:ijtrgm:v:4:y:2011:i:2:p:172-186
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    Cited by:

    1. Ghosh, Saibal, 2013. "Do economic reforms matter for manufacturing productivity? Evidence from the Indian experience," Economic Modelling, Elsevier, vol. 31(C), pages 723-733.
    2. Ramachandran, Renjith & Sasidharan, Subash & Doytch, Nadia, 2020. "Foreign direct investment and industrial agglomeration: Evidence from India," Economic Systems, Elsevier, vol. 44(4).

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