Services Reform and Manufacturing Performance: Evidence from India

39 Pages Posted: 11 Feb 2016

See all articles by Jens Matthias Arnold

Jens Matthias Arnold

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO)

Beata Smarzynska Javorcik

University of Oxford - Department of Economics; World Bank - Development Research Group (DECRG); Centre for Economic Policy Research (CEPR)

Molly Lipscomb

Batten School of Public Policy

Aaditya Mattoo

World Bank - Development Research Group (DECRG)

Date Written: February 2016

Abstract

Conventional explanations for the post‐1991 growth of India's manufacturing sector focus on goods trade liberalisation and industrial delicensing. We demonstrate the powerful contribution of a neglected factor: India's policy reforms in services. The link between these reforms and the productivity of manufacturing firms is examined using panel data for about 4,000 Indian firms for the period 1993–2005. We find that banking, telecommunications, insurance and transport reforms all had significant positive effects on the productivity of manufacturing firms. Services reforms benefited both foreign and locally owned manufacturing firms, but the effects on foreign firms tended to be stronger.

Suggested Citation

Arnold, Jens Matthias and Javorcik, Beata Smarzynska and Lipscomb, Molly and Mattoo, Aaditya, Services Reform and Manufacturing Performance: Evidence from India (February 2016). The Economic Journal, Vol. 126, Issue 590, pp. 1-39, 2016. Available at SSRN: https://ssrn.com/abstract=2730939 or http://dx.doi.org/10.1111/ecoj.12206

Jens Matthias Arnold

Organization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) ( email )

2 rue Andre Pascal
Paris Cedex 16, 75775
France

Beata Smarzynska Javorcik (Contact Author)

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford
United Kingdom

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-458-8485 (Phone)
202-522-1159 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/bjavorcik

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Molly Lipscomb

Batten School of Public Policy ( email )

235 McCormick Rd.
P.O. Box 400893
Charlottesville, VA 22904-4893
United States

Aaditya Mattoo

World Bank - Development Research Group (DECRG) ( email )

1818 H Street, N.W.
Room MC 3-327
Washington, DC 20433
United States
202-458-8047 (Phone)
202-676-9810 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/amattoo

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