Trade Liberalization and Firm Productivity: The Case of India

WPIEA0282004 Image
Price:  $15.00

Author/Editor: Petia Topalova
Release Date: © February, 2004
ISBN : 978-1-45184-469-6
Stock #: WPIEA0282004
English
Stock Status: Available

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Description

Using a panel of firm-level data, this paper examines the effects of India's trade reforms in the early 1990s on firm productivity in the manufacturing sector, focusing on the interaction between this policy shock and firm and environment characteristics. The rapid and comprehensive tariff reductions-part of an IMF-supported adjustment program with India in 1991-allow us to establish a causal link between variations in inter-industry and intertemporal tariffs and consistently estimated firm productivity. Specifically, reductions in trade protectionism lead to higher levels and growth of firm productivity, with this effect strongest for private companies. Interestingly, state-level characteristics, such as labor regulations, investment climate, and financial development, do not appear to influence the effect of trade liberalization on firm productivity.

Taxonomy

International trade , Trade liberalization




More publications in this series: Working Papers


More publications by: Petia Topalova