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Services liberalization and product variety of manufacturing firms

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  • Mulyukova, Alina

Abstract

This paper investigates the impact of services sector liberalization on product innovation of downstream manufacturing firms. Leveraging firm-product panel data from India and employing a shift-share research design, I find that services liberalization significantly increases firms' product portfolio. Allowing foreign investments in the banking sector decreases firm's credit-constraint and increases the amount of interest payments on short-term loans. This shows that services liberalization reduces firms' fixed costs of product innovation. Firms diversify into input-similar industries which changes the distribution of sales across products with the core product experiencing the most pronounced decline in the sales share.

Suggested Citation

  • Mulyukova, Alina, 2025. "Services liberalization and product variety of manufacturing firms," Kiel Working Papers 2294, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:320414
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    More about this item

    Keywords

    Product mix; services liberalization; India;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L8 - Industrial Organization - - Industry Studies: Services

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