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Liberalization, Market Power, and Productivity Growth in Indian Industry

Author

Listed:
  • Pulapre Balakrishnan
  • M. Parameswaran
  • K. Pushpangadan
  • M. Suresh Babu

Abstract

Using firm-level panel data we investigate whether reform of the trade and industrial policy regimes in India introduced in 1991 resulted in a reduction in market power and/or an acceleration in productivity growth, consequences that have been predicted in theory. Econometric testing of the theory for every industry group at the two-digit level in India yielded limited evidence of acceleration in productivity growth and no evidence of a reduction in market power. This is interpreted as suggesting that in the case of Indian industry trade liberalization has not exhibited the potential often attributed to it.

Suggested Citation

  • Pulapre Balakrishnan & M. Parameswaran & K. Pushpangadan & M. Suresh Babu, 2006. "Liberalization, Market Power, and Productivity Growth in Indian Industry," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 9(1), pages 55-73.
  • Handle: RePEc:taf:jpolrf:v:9:y:2006:i:1:p:55-73 DOI: 10.1080/13841280500513076
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    References listed on IDEAS

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    1. Deb Kusum Das, 2003. "Quantifing trade barriers: Has protection declined substantially in Indian manufacturing?," Indian Council for Research on International Economic Relations, New Delhi Working Papers 105, Indian Council for Research on International Economic Relations, New Delhi, India.
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    6. Krishna, Pravin & Mitra, Devashish, 1998. "Trade liberalization, market discipline and productivity growth: new evidence from India," Journal of Development Economics, Elsevier, pages 447-462.
    7. Richard Blundell & Stephen Bond, 2000. "GMM Estimation with persistent panel data: an application to production functions," Econometric Reviews, Taylor & Francis Journals, vol. 19(3), pages 321-340.
    8. Zvi Griliches & Jacques Mairesse, 1995. "Production Functions: The Search for Identification," Harvard Institute of Economic Research Working Papers 1719, Harvard - Institute of Economic Research.
    9. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, December.
    10. Harrison, Ann E., 1994. "Productivity, imperfect competition and trade reform : Theory and evidence," Journal of International Economics, Elsevier, pages 53-73.
    11. Alwyn Young, 1991. "Learning by Doing and the Dynamic Effects of International Trade," NBER Working Papers 3577, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Alexander Coad & Jagannadha Pawan Tamvada, 2008. "The Growth and Decline of Small firms In Developing Countries," Papers on Economics and Evolution 2008-08, Philipps University Marburg, Department of Geography.
    2. Mukherjee, Subhadip & Chanda, Rupa, 2017. "Differential effects of trade openness on Indian manufacturing firms," Economic Modelling, Elsevier, vol. 61(C), pages 273-292.
    3. Runu Bhatka & A. Ganesh Kumar, 2014. "Does Parental Education Affect the Impact of Provision of Health Care on Health Status of Children? - Evidence from India," Working Papers id:6128, eSocialSciences.
    4. Ghosh, Saibal, 2013. "Do economic reforms matter for manufacturing productivity? Evidence from the Indian experience," Economic Modelling, Elsevier, vol. 31(C), pages 723-733.
    5. Dibyendu Maiti, 2013. "Market imperfections, trade reform and total factor productivity growth: theory and practices from India," Journal of Productivity Analysis, Springer, pages 207-218.
    6. Pal, Rupayan & Rathore, Udayan, 2016. "Estimating workers’ bargaining power and firms’ markup in India: Implications of reforms and labour regulations," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1118-1135.
    7. Alex Coad & Jaganaddha Tamvada, 2012. "Firm growth and barriers to growth among small firms in India," Small Business Economics, Springer, pages 383-400.

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