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Firm Dynamics and Productivity Growth in Indian Manufacturing: Evidence from Plant Level Panel Dataset

Author

Listed:
  • Aradhna Aggarwal

    (RIEB, Kobe University (Japan) and Department of Business Economics, University of Delhi (India))

  • Takahiro Sato

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This paper examines the effects of firms dynamics on industry level productivity growth in India during the period 2000-01 to 2005-06 using plant level panel data of 22 manufacturing industries. The empirical analysis is based on decomposition techniques of aggregate productivity growth. The analysis is confined to large sector plants. Results suggest that the contribution of entry of new plants to aggregate productivity growth is positive in most industries. While newly established plants have rather small entry effect, small plants that grow and enter the large size class have substantial effects on industry level productivity growth. In low tech matured industries entry effects are supported by the productivity growth of the continuing firms. In medium tech industries entry effects are modest; productivity growth of the continuing firms is supported by reallocation effects. In high tech industries all the three effects seem to reinforce productivity growth.

Suggested Citation

  • Aradhna Aggarwal & Takahiro Sato, 2011. "Firm Dynamics and Productivity Growth in Indian Manufacturing: Evidence from Plant Level Panel Dataset," Discussion Paper Series DP2011-07, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:dp2011-07
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    File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2011-07.pdf
    File Function: First version, 2011
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    References listed on IDEAS

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    Cited by:

    1. Aradhna Aggarwal & Takahiro Sato, 2015. "Identifying High Growth Firms in India: An Alternative Approach," Discussion Paper Series DP2015-14, Research Institute for Economics & Business Administration, Kobe University.

    More about this item

    JEL classification:

    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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