IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Policy, economic federalism, and product market entry: the Indian experience

Listed author(s):
  • S. K. Bhaumik
  • S. Gangopadhyay
  • S. Krishnan

Productivity growth has long been associated with, among other things, contestability of markets which, in turn, is dependent on the ease with which potential competitors to the incumbent firms can enter the product market. There is a growing consensus that in emerging markets regulatory and institutional factors may have a greater influence on a firm's ability to enter a product market than strategic positions adopted by the incumbent firms. We examine this proposition in the context of India where the industrial policies of the 1980s and the 1990s are widely believed to be pro-incumbent and pro-competition, respectively, thereby providing the setting for a natural experiment with 1991 as the watershed year. In our analysis, we also take into consideration the possibility that the greater economic federalism associated with the reforms of the 1990s may have affected the distribution of industrial units across states after 1991. Our paper, which uses the experiences of the textiles and electrical machinery sectors during the two decades as the basis for the analysis, finds broad support for both these hypotheses. La croissance de la productivité a longtemps été associée, entre autres, avec la contestabilité des marchés, qui à son tour dépend de la facilité avec laquelle des concurrents potentiels pour les entreprises en place peuvent entrer sur le marché. Il existe un consensus croissant sur le fait que, sur les marchés émergents, les facteurs institutionnels et régulateurs peuvent avoir un meilleur impact sur la capacité des entreprises à pénétrer un marché que des stratégies adoptées à cet effet par les entreprises en place. Cette hypothèse est examinée dans le cas de l'Inde, où il est communément admis que les politiques industrielles des années 1980 avaient été favorables aux entreprises en place alors que celles des années 1990 se montrèrent plus ouvertes à la concurrence; cela fournit ainsi le cadre d'une expérience naturelle où 1991 est considéré comme l'année charnière. Notre analyse considère également que le fédéralisme économique plus important associé aux réformes des années 1990 pourrait avoir affecté la répartition géographique des activités industrielles entre les différents Etats. Notre article, en s'appuyant sur les cas des secteurs du textile et des équipements électriques au cours des deux décennies, fournit des arguments en faveur de ces deux hypothèses.

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:
Download Restriction: Access to full text is restricted to subscribers.

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 Taylor and Francis Journals in its journal The European Journal of Development Research.

Volume (Year): 20 (2008)
Issue (Month): 1 ()
Pages: 1-30

in new window

Handle: RePEc:taf:eurjdr:v:20:y:2008:i:1:p:1-30
DOI: 10.1080/09578810701853124
Contact details of provider: Web page:

Order Information: Web:

No references listed on IDEAS
You can help add them by filling out this form.

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:taf:eurjdr:v:20:y:2008:i:1:p:1-30. 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: (Michael McNulty)

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.