TY - JOUR
T1 - Trade liberalization, market discipline and productivity growth
T2 - new evidence from India
AU - Krishna, Pravin
AU - Mitra, Devashish
N1 - Funding Information:
We are extremely grateful to Hassan Arvin-Rad, Pranab Bardhan, Jagdish Bhagwati, Moshe Buchinsky, Phoebus Dhrymes, John Driscoll, Ronald Findlay, Ann Harrison, John McLaren, Ron Miller, Dani Rodrik, Bent Sorensen, Daniel Trefler, Bart Turtelboom, two anonymous referees and seminar participants at Columbia university's workshop on `Empirical Methods in International Trade' for very helpful comments. Thanks are also due to Mona Hadad and Helena Tang at the World Bank for their help with the data. Pravin Krishna gratefully acknowledges financial support for this research provided by Brown University in the form of a Solomon Faculty Research Grant.
PY - 1998
Y1 - 1998
N2 - This paper investigates the effects on competition and productivity of the dramatic 1991 trade liberalization in India. Using firm-level data from a variety of industries, we find strong evidence of an increase in competition (as reflected in the reductions in price-marginal cost markups) and some evidence of an increase in the growth rate of productivity. The methodological framework differs from earlier studies in that we 'allow' for returns to scale to change after the liberation, a relaxation of estimation restrictions that improves our estimates allowing more accurate (partial equilibrium) computation of welfare changes. Welfare analysis using the estimated parameters mostly suggests an increase in welfare, albeit quite small, in the sectors analyzed.
AB - This paper investigates the effects on competition and productivity of the dramatic 1991 trade liberalization in India. Using firm-level data from a variety of industries, we find strong evidence of an increase in competition (as reflected in the reductions in price-marginal cost markups) and some evidence of an increase in the growth rate of productivity. The methodological framework differs from earlier studies in that we 'allow' for returns to scale to change after the liberation, a relaxation of estimation restrictions that improves our estimates allowing more accurate (partial equilibrium) computation of welfare changes. Welfare analysis using the estimated parameters mostly suggests an increase in welfare, albeit quite small, in the sectors analyzed.
UR - http://www.scopus.com/inward/record.url?scp=0031756671&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0031756671&partnerID=8YFLogxK
U2 - 10.1016/S0304-3878(98)00074-1
DO - 10.1016/S0304-3878(98)00074-1
M3 - Article
AN - SCOPUS:0031756671
SN - 0304-3878
VL - 56
SP - 447
EP - 462
JO - Journal of Development of Economics
JF - Journal of Development of Economics
IS - 2
ER -