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Trade Liberalization, Technology Transfer and Firms’ Productive Performance. The case of Indian Manufacturing

Author

Listed:
  • Arup Mitra

    (University of Delhi)

  • Chandan Sharma

    (IIM Lucknow - Indian Institute of Management Lucknow)

  • Marie-Ange Véganzonès-Varoudakis

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

Abstract
India's economic liberalization in the 1990s provides scope for research on the effects of policy reforms on economic performance. This paper examines some of these policy changes and their impact on firms’ productivity and efficiency. We assess, specifically, the role of export and import (total, intermediate, and capital goods) as an outcome of trade liberalization, R&D, technology transfer, and infrastructure endowment over the period 1994–2008. Although our analysis may involve certain biases in capturing the causal relationships, results suggest that infrastructure is a crucial determinant of manufacturing performance in India. This is true for a wide range of variables, such as transport, energy, and information and communication technology (ICT). This finding has important policy implications in the Indian context, as several parts of the country are constrained by severe infrastructure shortages. Other empirical results concern knowledge transfers, which seem to materialize more through exports than imports. Our findings also suggest that R&D is not a productivity-enhancing activity in India and that firms rely more on purchase of foreign technology. This outcome does not come as a surprise because Indian firms are known for low in-house research and limited innovation-oriented activities.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Arup Mitra & Chandan Sharma & Marie-Ange Véganzonès-Varoudakis, 2014. "Trade Liberalization, Technology Transfer and Firms’ Productive Performance. The case of Indian Manufacturing," Post-Print hal-02004594, HAL.
    • Handle: RePEc:hal:journl:hal-02004594
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    as
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    Cited by:

    1. Santosh Kumar Sahu & Sunder Ramaswamy & Abishek Choutagunta, "undated". "Export Performance, Innovation, and Productivity in Indian Manufacturing Firms," Working Papers 2017-159, Madras School of Economics,Chennai,India.
    2. Chandan Sharma & Debdatta Pal, 2019. "Does Exchange Rate Volatility Dampen Imports? Commodity-Level Evidence From India," International Economic Journal, Taylor & Francis Journals, vol. 33(4), pages 696-718, October.
    3. Hiroyuki Nishiyama & Azusa Fujimori & Takahiro Sato, 2022. "Regional disparities, firm heterogeneity, and the activity of Japanese manufacturing multinationals in India," Pacific Economic Review, Wiley Blackwell, vol. 27(5), pages 462-488, December.
    4. Mitra, Arup & Sharma, Chandan & Véganzonès-Varoudakis, Marie-Ange, 2016. "Infrastructure, information & communication technology and firms’ productive performance of the Indian manufacturing," Journal of Policy Modeling, Elsevier, vol. 38(2), pages 353-371.
    5. Patrick Plane & Marie-Ange Véganzonès-Varoudakis, 2019. "Innovation, productivity, exports and the investment climate: A study based on Indian manufacturing firm-level data," Post-Print halshs-02137297, HAL.
    6. Sahoo, Pradipta Kumar & Rath, Badri Narayan & Le, Viet, 2022. "Nexus between export, productivity, and competitiveness in the Indian manufacturing sector," Journal of Asian Economics, Elsevier, vol. 79(C).
    7. Kadijat Adeleke, Oluwayemisi & Abamba Osakede, Uche & Monisola Ajeigbe, Omowunmi, 2021. "Trade Liberalization And Infrastructure Development: Evidence From The Economic Community Of West African States," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 8(3), pages 1-20, June.
    8. Sharma, Chandan, 2018. "Exporting, access of foreign technology, and firms’ performance: Searching the link in Indian manufacturing," The Quarterly Review of Economics and Finance, Elsevier, vol. 68(C), pages 46-62.
    9. Emmanuel Mensaklo & Chukiat Chaiboonsri & Kanchana Chokethaworn & Songsak Sriboonchitta, 2023. "Comparing Classical and Bayesian Panel Kink Regression Frameworks in Estimating the Impact of Economic Freedom on Economic Growth," Economies, MDPI, vol. 11(10), pages 1-24, October.
    10. Piyali Majumder & Aparna Sawhney, 2020. "Manufacturing agglomeration and export dynamics across Indian states," Indian Economic Review, Springer, vol. 55(1), pages 3-26, June.
    11. Turgut Ozkan & Gozde Yanginlar & Salih Kalayci, 2016. "Railway Transport Liberalization: A Case Study of Various Countries in the World," Journal of Management and Sustainability, Canadian Center of Science and Education, vol. 6(4), pages 140-148, December.
    12. Arup Mitra & Chandan Sharma, 2020. "Employment and TFP Impact of Technologies in the Developing World: Domestic versus Imported Expertise," IEG Working Papers 410, Institute of Economic Growth.
    13. Sharma, Chandan & Mishra, Ritesh Kumar, 2015. "International trade and performance of firms: Unraveling export, import and productivity puzzle," The Quarterly Review of Economics and Finance, Elsevier, vol. 57(C), pages 61-74.
    14. Hallonsten, Jan Simon & Ziesemer, Thomas, 2016. "A semi-endogenous growth model for developing countries with public factors, imported capital goods, and limited export demand," MERIT Working Papers 2016-004, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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