Reforms, entry and productivity: some evidence from the Indian manufacturing sector

Arbeitspapier

It is now stylized that, while the impact of ownership on firm productivity is unclear, product market competition can be expected to have a positive impact on productivity, thereby making entry (or contestability of markets) desirable. Traditional research in the context of entry has explored the strategic reactions of incumbent firms when threatened by the possibility of entry. However, following De Soto (1989), there has been increasing emphasis on regulatory and institutional factors governing entry rates, especially in the context of developing countries. Using 3-digit industry level data from India, for the 1984-97 period, we examine the phenomenon of entry in the Indian context. Our empirical results suggest that during the 1980s industry level factors largely explained variations in entry rates, but that, following the economic federalism brought about by the post-1991 reforms, variations entry rates during the 1990s were explained largely by state level institutional and legacy factors. We also find evidence to suggest that, in India, entry rates were positively associated with growth in total factor productivity.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 2086

Classification and Topics

• Classification: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Industrial Policy; Sectoral Planning Methods ; Other Machinery; Business Equipment; Armaments ; Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment ; Industrialization; Manufacturing and Service Industries; Choice of Technology ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
• Subject: entry ; productivity ; institutions ; regulations ; India ; reforms ; Privatwirtschaft ; Produktivität ; Regulierung ; Markteintritt ; Verarbeitendes Gewerbe ; Indien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bhaumik, Sumon Kumar ; Gangopadhyay, Shubhashis ; Krishnan, Shagun
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/33227
• Last update: 10.03.2025, 11:42 AM CET