Open AccessServices Reform and Manufacturing Performance: Evidence from India
Author(s) -
Arnold Jens Matthias,
Javorcik Beata,
Lipscomb Molly,
Mattoo Aaditya
Publication year - 2016
Publication title -
the economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.683
H-Index - 160
eISSN - 1468-0297
pISSN - 0013-0133
DOI - 10.1111/ecoj.12206
Subject(s) - library science , political science , media studies , history , economic history , management , sociology , economics , computer science
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.