Reforms and Entry: Some Evidence from the Indian Manufacturing Sector

15 Pages Posted: 14 Oct 2009

See all articles by Sumon K. Bhaumik

Sumon K. Bhaumik

Aston University - Aston Business School; Institute for the Study of Labor (IZA); University of Michigan at Ann Arbor - Stephen M. Ross School of Business, William Davidson Institute

Shubhashis Gangopadhyay

India Development Foundation; University of Gothenburg; University of Groningen, Faculty of Economics and Business, Students; Indian School of Public Policy

Shagun Krishnan

Indian Statistical Institute, New Delhi - India Development Foundation

Abstract

Traditional research in the context of product market entry has explored the strategic reactions of incumbent firms when threatened by the possibility of entry, and have identified industry-specific factors that affect entry rates. 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 three-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 in entry rates during the 1990s were explained largely by state-level institutional and legacy factors. Past productivity growth affects net entry rates as well.

Suggested Citation

Bhaumik, Sumon K. and Bhaumik, Sumon K. and Gangopadhyay, Shubhashis and Krishnan, Shagun, Reforms and Entry: Some Evidence from the Indian Manufacturing Sector. Review of Development Economics, Vol. 13, Issue 4, pp. 658-672, November 2009, Available at SSRN: https://ssrn.com/abstract=1488517 or http://dx.doi.org/10.1111/j.1467-9361.2009.00519.x

Sumon K. Bhaumik (Contact Author)

Institute for the Study of Labor (IZA) ( email )

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Aston University - Aston Business School ( email )

Aston Triangle
Birmingham, West Midlands B47ET
United Kingdom

University of Michigan at Ann Arbor - Stephen M. Ross School of Business, William Davidson Institute

724 E. University Ave.
Wyly Hall
Ann Arbor, MI 48109-1234
United States

Shubhashis Gangopadhyay

India Development Foundation ( email )

4101 DLF Phase IV
Gurugram, Haryana 122002
India
+91 9910991221 (Phone)

University of Gothenburg

Gothenburg
Sweden

University of Groningen, Faculty of Economics and Business, Students

Postbus 72
9700 AB Groningen
Netherlands

Indian School of Public Policy

Delhi
India

Shagun Krishnan

Indian Statistical Institute, New Delhi - India Development Foundation ( email )

249 F, Sector 18
Udyog Vihar Phase IV
Gurgaon, Haryana 122015
India

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