Trade Liberalization and Firm Productivity: The Case of India

The Review of Economics and Statistics, Vol. 93, No. 3, pp. 995-1009, 2011

41 Pages Posted: 26 Oct 2011

See all articles by Amit Khandelwal

Amit Khandelwal

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER); Bureau for Research and Economic Analysis of Development (BREAD)

Petia B. Topalova

International Monetary Fund (IMF)

Multiple version iconThere are 2 versions of this paper

Date Written: 2011

Abstract

This paper exploits India's rapid, comprehensive and externally imposed trade reform to establish a causal link between changes in tariffs and firm productivity. Pro-competitive forces, resulting from lower tariffs on final goods, as well as access to better inputs, due to lower input tariffs, both appear to have increased firm-level productivity, with input tariffs having a larger impact. The effect was strongest in import-competing industries and industries not subject to excessive domestic regulation. While we find no evidence of a differential impact according to state-level characteristics, we observe complementarities between trade liberalization and additional industrial policy reforms.

Suggested Citation

Khandelwal, Amit Kumar and Topalova, Petia B., Trade Liberalization and Firm Productivity: The Case of India (2011). The Review of Economics and Statistics, Vol. 93, No. 3, pp. 995-1009, 2011. Available at SSRN: https://ssrn.com/abstract=1949292

Amit Kumar Khandelwal (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

HOME PAGE: http://www0.gsb.columbia.edu/faculty/akhandelwal/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/amit_khandelwal

Bureau for Research and Economic Analysis of Development (BREAD) ( email )

Duke University
Durham, NC 90097
United States

Petia B. Topalova

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

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