Does services liberalization affect manufacturing firms’ export performance? Evidence from India

This paper investigates the relationship between the reform of energy, telecommunications and transport services in India in the mid-1990s and manufacturing firms’ export performance. The empirical analysis relies on exogenous indicators of regulation of Indian services sectors and detailed firm-level data from India in the 1994–2004 period. I find that the reform of upstream services sector has increased the probability of exporting and export sales shares of firms producing in downstream manufacturing industries. The results suggest that the effect of services liberalization on manufacturing firms’ export performance is stronger for initially more productive firms. These empirical findings are robust to alternative econometric specifications that control for other reforms, industry, firm characteristics and that deal with potential reverse causality concerns.     

Efficiency and productivity in the Indian unorganized manufacturing sector: did reforms matter?

This paper analyzes total factor productivity growth of the unorganized manufacturing sector in India using several rounds of the large scale national sample survey state level data for 15 major Indian states for the period 1978–1979 to 2000–2001. Data envelopment analysis is used to compute Malmquist total factor productivity index and its components. The impact of economic reforms on efficiency and productivity is examined. Evidence suggests that total factor productivity registered a positive growth during the period in the country as a whole. Most states in the country witnessed higher total factor productivity growth in the post 1990s reforms period than in the pre-reforms period. Decomposition of the Malmquist productivity index shows that improvement in technical efficiency rather than technical progress had contributed to the observed acceleration in the growth rate. Econometric analysis of the determinants of total factor productivity growth demonstrates that ownership, literacy, farm growth and infrastructure availability significantly influence total factor productivity growth in the sector.

Do more subsidies promote greater innovation? Evidence from the Chinese electronic manufacturing industry

Existing research provides contradictory insights about the effect of government subsidies on enterprise technology innovation. By explaining this mechanism with resource allocation, information efficiency and risk control channels, we systematically suggest three effects, leading to an inverted U-shaped relationship between the amount of subsidies and four indicators of technology innovation. Empirical evidence based on dataset of Chinese electronic manufacturing industry confirms that subsidies can promote enterprise technology innovation but it will inhibit innovation when there are too much or excessive amount of subsidies. Meanwhile, the impact of subsidies is more significant for non-state-owned enterprises than state-owned ones. Furthermore, the level of regional economic development moderates the impact of government subsidies. The government can take advantage of diverse subsidy policies to drive sustainable technology innovation.     

Does China really lose from RMB revaluation? Evidence from some export industries

This study attempts to examine the impacts of Real Exchange Rate (RER) misalignment on China's export performance. Using the SUR methodology coupled with disaggregate panel export data, it shows that China's export sector may not necessarily lose from the Central Government's decision to revalue its RMB against the US dollar because the negative impact of the RER appreciation on Chinese exports may be diluted by the positive impacts attributing to a reduction in the RER misalignment.     

New evidence on the sources of EU countries’ productivity growth—industry growth differences from R&D and competition

Recent studies on productivity growth show how competition affects innovation and TFP growth in OECD countries, but do not explicitly account for sectoral parameter heterogeneity. This paper examines whether competition and innovation have a direct effect on labor productivity growth in EU goods-producing industries separated by three different industry types. The results show that the effect of R&D on labor productivity growth is not equal across industries, but rather depends on the innovation activities of sectors. The same is true for competition and labor productivity growth. The empirical evidence indicates that in unleveled industries (i.e. industries characterized by technologically unequal firms) like Specialized Goods Suppliers and Science-Based Innovators strong labor productivity growth originates with decreased competition and increased R&D, thereby supporting Schumpeterian arguments. The findings suggest Schumpeterian effects in Supplier-Dominated Goods-Producing Industries, but reveal decreasing labor productivity growth in these sectors when competition is strongly restricted.     

Does legal system matter for directed technical change? Evidence from the auto industry

Does the effect of fuel taxes on clean innovations (e.g. hybrid technology) depend on the legal system’s rigidity? Using 1986–2005 data from more than 1900 firms, evidence suggests that auto-industry firms located in civil law (with more rigid laws) countries increase clean technology patenting more than common law (with more flexible laws) firms when the tax-inclusive fuel price rises. A rigid legal system appears to raise clean technology innovation.     

Does foreign direct investment increase exports’ productivity? Evidence from developing and emerging countries

Raising the productivity content of exports is an important issue for developing and emerging countries. What role do foreign firms play in this process? This question has not been adequately studied. We contribute to the literature by generalizing the role of foreign direct investment (FDI) in the host country’s export productivity level. Using panel data, we present new empirical evidence suggesting that FDI boosts the overall productivity level of the developing and emerging countries’ exports.     

Does productivity growth lower inflation in Korea?

We investigate Granger causality between productivity growth and inflation in Korea using quarterly data for the period 1985Q1–2002Q4. Our results indicate unidirectional Granger causality from productivity growth to inflation. In light of such causality, we estimate the effect of productivity and other variables on productivity. According to our regression results, a 1% increase in labour and Total Factor Productivity (TFP) reduces Consumer Price Index (CPI) inflation by 0.07–0.08% and 0.37–0.44%, respectively. Our results also suggest that the productivity-inflation nexus became stronger in Korea since the Asian financial crisis, and that this was largely due to structural reform and technological progress.     

Does Regional Financial Development Matter for Growth? Evidence from Indian States

The paper investigates finance–growth relationship across 26 Indian states over the period 1981–2012 in a panel setting. We use four indicators of financial development: credit-GSDP ratio, deposit-GSDP ratio, credit-deposit ratio and branch density and apply panel generalized method of moments (GMM) techniques. We observe positive and significant effect of financial development on economic growth and our findings are robust across alternate indicators of financial development and model specifications. Our findings highlight pivotal role played by financial intermediaries in fostering savings mobilization and financing investment activities across states through channels of deposit mobilization, expansion of credit and greater branch expansion in unbanked locations and consequent reduction of transactions costs. These findings are consistent with observations that much of India’s superior growth performance is attributed to high level of domestic savings. The paper also takes care of issues of bias and precision of various GMM estimators arising out of small sample typically prevalent in empirical growth models like ours.     

Does export variety determine economic growth in Pakistan?

This study explores the impact of export variety on economic growth in Pakistan. Export variety is decomposed into export related (within sector) and unrelated variety (between sectors) to examine the long run effect of export related variety and unrelated variety on economic growth. For this purpose, we incorporated export related variety and unrelated variety into the production function. The result of cointegration test shows that variables of the study are cointegrated in the long run. The result of fully modified ordinary least squares confirms the positive and significant effect of export related variety and unrelated variety on economic growth. Furthermore, the long run estimates show that the magnitude of export related variety is more than export unrelated variety. This study also finds the positive and significant effect of human capital on economic growth in the long run. It can be deduced from the results of the study that a specific sector shock will not disturb the economic pace of Pakistan.     

Does offshoring contribute to reducing domestic air emissions? Evidence from Belgian manufacturing

Since the mid-90s, production-related air emissions in Belgian manufacturing have fallen substantially and it can be shown that the pace of the fall has been fastest for domestic intermediates. It is widely debated whether offshoring has played a role in this fall by replacing domestic intermediates by imported intermediates. This paper develops a decomposition analysis to measure the contribution of offshoring – the share of imported intermediates in total intermediates – to the fall in air emissions for domestic intermediates. Based on the results from this decomposition analysis, it was possible to calculate that 17% of the fall in greenhouse gas emissions, 6% of the fall in acidifying emissions and 7% of the fall in tropospheric precursor emissions in Belgian manufacturing between 1995 and 2007 can be attributed to offshoring.     

Does the mixed-ownership reform improve the productivity of state-owned enterprises? Evidence from companies listed in Chinese stock

The Chinese government initiated a new round of state-owned enterprise (SOE) reform in 2015 to improve SOE's performance with a focus on introducing multiple ownership shareholders and strategic partners, known as the mixed-ownership reform (MOR). This paper examines the policy effectiveness of the current MOR, an ongoing quasi-experiment, for listed SOEs’ productivity from 2011 to 2019 using a time-varying difference-in-difference (DID) approach. Overall, the total factor productivity (TFP) of SOEs selected as pilots by the government improved significantly by 14.57% after the reform compared to other SOEs, providing evidence for the positive role of the current MOR. This positive impact is prolonged and tends to increase in the post-reform years. A series of robustness checks show that our empirical specification satisfies the basic assumptions of DID and our findings are robust. By comparing the two reform strategies in the MOR, we find that the restructuring and reorganization plan is the primary channel driving TFP growth, showing a 0.4% improvement after the reform, rather than the employee stock ownership plan. We also investigate the impact of MOR on other financial and non-financial indicators, but we only find a significant increase in the profitability of SOEs’ assets.     

Can producer services boost manufacturing growth? Evidence from China's de‐regulation

The impact of producer services on manufacturing growth has long been disputed. Using a unique dataset from the Catalogue for the Guidance of Foreign Investment Industries (CGFII), we construct a set of regulation indicators for each industry in the service sector. Then we explore the effect of upstream producer services, instrumented by regulation indicators, on manufacturing growth. The findings are as follows. First, the development of producer services can effectively promote the growth of manufacturing, and such an effect is stronger in more developed regions. Second, regulations are negatively related to the development of producer services, and among various kinds of regulations, prohibition is the one with the largest marginal effect. Third, consumer services fail to promote manufacturing growth, indicating the irreplaceability of producer services, which also suggests that we should pay more attention to the structure of the service sector.     

Does globalization affect growth? Evidence from a new index of globalization

The study develops an index of globalization covering its three main dimensions: economic integration, social integration, and political integration. Using panel data for 123 countries in 1970–2000 it is analysed empirically whether the overall index of globalization as well as sub-indexes constructed to measure the single dimensions affect economic growth. As the results show, globalization indeed promotes growth. The dimensions most robustly related with growth refer to actual economic flows and restrictions in developed countries. Although less robustly, information flows also promote growth whereas political integration has no effect.     

Does an intra-household flypaper effect exist? Evidence from the educational fee reduction reform in rural China

We test for evidence of an intra-household flypaper effect by evaluating the impact of an educational fee reduction reform in rural China on different categories of household expenditure, including spending on individual children. Using pre- and post-reform data, this study exploits cohort comparisons, variation in the extent of school fee reductions across different villages, and variation in the subsidies received by children enrolled in different grades within the same family to identify the impact of the reform. The results show that educational fee reductions are matched by increased voluntary educational spending on the same children who receive the fee reductions, providing strong evidence of an intra-household flypaper effect.     

Is productivity diverging in the EU? Evidence from 11 Member States

An argument that received a lot of attention in the political and economic discussion surrounding the recent crisis in the EU is that diverging trends in productivity across member countries will undermine the viability of the common currency. This article examines the issue of convergence in multifactor productivity using sector-level data from 11 EU Member States. A state-space model is developed, and formal Bayesian model comparisons are performed to infer whether productivity is diverging, both at the aggregate level and at a sector-by-sector basis. The data point toward diverging productivity at the aggregate level, but suggest the opposite for many individual sectors.     

What determines the productivity growth? Evidence from Chinese renewable energy firms by using Bayesian stochastic frontier approach

This paper examines the determinants of the total factor productivity (TFP) growth of Chinese renewable energy firms from 2011 to 2016, using a Bayesian stochastic frontier approach. Employing the “Bauer–Kumbhakar” decomposition method, the TFP growth is decomposed into the technology part and the market part. The empirical results reveal that the TFP improvement of Chinese renewable energy firms is mainly due to technical progress, followed by technical efficiency change. With regard to the market part, the misallocation of production factors has hindered the TFP growth. Our findings also indicate that only for large firms, the TFP growth can benefit from the scale economy effect. Compared with non‐state‐owned firms, state‐owned firms suffer much lower allocative efficiency.     

Does tax policy affect credit spreads? Evidence from the US and UK

This paper studies how exogenous tax changes affect credit market conditions in the US and UK. Using both structural VAR and structural factor-augmented VAR (FAVAR) model, we find that tax-policy shocks have significant effects on the credit spread. Specifically, the credit spread responds first positively and then negatively to an exogenous tax increase in the two countries. Moreover, the impulse responses of the credit spread to tax-policy shocks do not always accord well with the impulse responses of the output. This indicates that there are channels of tax policy transmission to the credit spread other than through its impact on the business cycle.     

Does a gender disparity exist in academic rank? Evidence from an Australian university

Employing a unique administrative data set on academics from the University of Wollongong (UOW), we investigate if women are under-represented in academic rank, taking into account information on personal characteristics, job characteristics, education and productivity. The results suggest that males have a significant advantage in rank attainment. The possession of a PhD, the number of years of experience and the number of journal articles, books, book chapters, competitive grants and ERA A* ranked articles appear to be important for academic rank attainment. A Blinder–Oaxaca decomposition test indicates that both supply side and demand side factors play a role; however, there is greater support for the endowments argument. Interviews were conducted in an attempt to explain the results. Interviews showed that men were more career-driven compared to women.     

Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing

We present the first comprehensive set of firm-level total factor productivity (TFP) estimates for China's manufacturing sector that spans China's entry into the WTO. For our preferred estimate, which adjusts for a number of potential sources of measurement error and bias, the weighted average annual productivity growth for incumbents is 2.85% for a gross output production function and 7.96% for a value added production function over the period 1998-2007. This is among the highest compared to other countries. Productivity growth at the industry level is even higher, reflecting the dynamic force of creative destruction. Over the entire period, net entry accounts for over two thirds of total TFP growth. In contrast to earlier studies looking at total non-agriculture including services, we find that TFP growth dominates input accumulation as a source of output growth.