Work

Learning Versus Stealing: How Important are Market-Share Reallocations to India's Productivity Growth?

Year: 2011

Type: report

Abstract: The new trade theory emphasizes the role of market-share reallocations across firms ("stealing") in driving productivity growth, while the older literature focused on average productivity improvements ("learning").We use comprehensive, firm-level data from India's organized manufacturing sector to show that market-share reallocations did play an important role in aggregate productivity gains immediately following the start of India's trade reforms in 1991.However, aggregate productivity gains during the overall 20-year period from 1985 to 2004 were driven largely by improvements in average productivity.By exploiting the variation in reforms across industries, we document that the average productivity increases can be attributed to India's trade liberalization and FDI reforms.Finally, we construct a panel dataset that allows us to track firms during this time period; our results suggest that while within-firm productivity improvements were important, much of the increase in average productivity also occured because of firm entry and exit.

Source: National Bureau of Economic Research

DOI: 10.3386/w16733

Authors: Ann Harrison, Leslie Martin, Shanthi Nataraj

Institutions: National Bureau of Economic Research, University of California, Berkeley, RAND Corporation

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: green

Funder: National Science Foundation