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dc.contributor.authorSharma, Gunjaneng
dc.coverage.spatialIndiaeng
dc.date.issued2006eng
dc.description.abstractThis paper investigates the link between economic de-regulation-domestic as well as trade de-regulation-and firm-level productivity using two unique data sets. We use the industrial licensing regime in India (operating from the 1950s onwards) and its gradual relaxation during the 1980s and 1990s to test whether industrial de-regulation that leads to more competition domestically, affects firm-level productivity. To our knowledge, ours is the only detailed data set on Indian industrial policy. Our firm-level data for the period 1980-94 is a census of firms in India and has been rarely used in literature. We also use the interesting chronology of reforms in India (industrial de-regulation in the 1980s and trade reforms in 1991) to test whether industries that faced more competition domestically tend to perform better when facing foreign competition. Our identification strategy uses an important institutional feature of Indian policy. Firms with assets below a certain defined rupee threshold were exempt from licensing requirements. This institutional feature provides us within-industry variation that allows us to identify the interaction between de-licensing and exemption status. We find that industrial de-regulation during the 1980s led to a significant rise in firm productivity. Further preliminary results suggest that there exists a strategic complementarity relationship between industrial and trade policies-industries and firms that were de-licensed tend to perform better vis productivity after trade liberalization. Our results are robust to the inclusion of a wide variety of firm and industry fixed effects and controls for policies other than de-licensing that may affect productivity. This paper contributes to the literature by being the only detailed empirical analysis of the industrial licensing regime in India, especially the de-licensing that took place during the 1980s and by providing evidence of the crucial link between trade and industrial de-regulation.eng
dc.identifier.citationDepartment of Economics, 2006eng
dc.identifier.urihttp://hdl.handle.net/10355/2606eng
dc.publisherDepartment of Economicseng
dc.relation.ispartofEconomics publicationseng
dc.relation.ispartofcommunityUniversity of Missouri-Columbia. College of Arts and Sciences. Department of Economicseng
dc.relation.ispartofseriesWorking papers (Department of Economics);WP 06-10eng
dc.rightsOpenAccess.eng
dc.rights.licenseThis work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License.eng
dc.source.urihttp://economics.missouri.edu/seminars/files/2006/sharma_feb_06.pdfeng
dc.subject.lcshIndustrial policyeng
dc.subject.lcshIndustrial productivityeng
dc.subject.lcshFree tradeeng
dc.titleCompeting or Collaborating Siblings? Industrial and Trade Policies in Indiaeng
dc.typeWorking Papereng


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