Maiti, D. (2012) Market imperfections, trade reform and total factor productivity growth: theory and practices from India. Journal of Productivity Analysis. pp. 1-12.
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Abstract
The study investigates how market imperfections distort the impact of trade reform on productivity growth. As the trade expands it influences both product and factor prices and if the distortions arise due to these market imperfections are not eliminated, the usual estimate of total factor productivity growth, using the growth accounting method, would be misleading. Theoretically, it shows that the usual estimate tends to be overestimated in the export competing sector and underestimated in the import competing sector. A modified approach of Olley–Pakes and Levinsohn–Petrin methods involving three-digits industries over the fifteen major Indian states during the period 1998–2005 has been used to deal with the simultaneity issue of factor choice and market distortions for the better estimate. A positive and significant impact of openness on the productivity growth has been observed only when the market imperfections are eliminated. Moreover, the modified productivity growth, after controlling market imperfections, has turned out to be lower than that of the usual estimate in India.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | Trade reform – Solow residual – TFPG – Union bargaining – Mark-up |
| Author Affiliation: | School of Economics, Faculty of Business and Economics, The University of the South Pacific, Suva, Fiji Institute of Economic Growth, University of Delhi, New Delhi, India |
| Subjects: | Plant Production Social Sciences |
| Divisions: | General |
| Depositing User: | Mr. SanatKumar Behera |
| Date Deposited: | 15 Sep 2012 08:07 |
| Last Modified: | 15 Sep 2012 08:07 |
| Official URL: | http://dx.doi.org/10.1007/s11123-012-0313-z |
| URI: | http://eprints.icrisat.ac.in/id/eprint/7907 |
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