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Innovation, Productivity, Export Performance and the Investment Climate: The case of the Indian Manufacturing Firms

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  • Marie-Ange Véganzonès-Varoudakis

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

  • Patrick Plane

Abstract

In this study, we use univariate instrumental estimations to study the interactions between firm-level innovation, exports and productivity in the Indian manufacturing sector. To differentiate incentives to innovate from the ability to innovate, we distinguish the inputs of innovation (R&D and training) from the outputs. Our findings highlight a virtuous circle between the three components of innovation, as well as between firms' R&D, innovation and exports. The productivity of Indian manufacturing firms is benefiting from this dynamics, as exports and innovation improve firms' TFP. With respect to the investment climate, our results suggest that differences in the environment of Indian companies contribute to their performance gaps. These results are all the more important in the context of the Make in India campaign and the weaknesses of India's business environment.

Suggested Citation

  • Marie-Ange Véganzonès-Varoudakis & Patrick Plane, 2018. "Innovation, Productivity, Export Performance and the Investment Climate: The case of the Indian Manufacturing Firms," Post-Print hal-03049328, HAL.
    • Handle: RePEc:hal:journl:hal-03049328
    as

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