Has liberalization affected profit margins in Indian Industry?

In this article, we analyse the determinants of firm‐level profit margins in Indian manufacturing. The model we estimate is rich in its dynamic characterization allowing as it does for lagged terms, trend movements, business cycle effects and a structural break in 1991. We hypothesize that the reforms undertaken by the government in 1991 constitute a structural break that influences a firm's independence to react to other firms as well as the extent of competition faced by these firms. Inserting this into the standard industrial organization model of profits, we obtain a dynamic market model. Estimating this model for 1980–98, we find that the 1991 reforms did have a significant impact on profit margins in Indian industry. The reforms have worked through their impact on a firm's behavioural variables – advertising, Research and Development (R&D), capital–output ratios and managerial remuneration – though the precise variables that were significant varied from sector to sector. We find that relatively inefficient firms make significantly lower profits than others both before and after the liberalization as expected.     

The persistence of profit differentials in Indian industry

Theoritical considerations suggest that spillover forces equalize wages for similar jobs. Thus, it is expected that firm wages are cointegrated with the corresponding wage rates on an industrial level. In this paper we apply various unit root tests to a panel of wage data. We show that the familiar techniques can be adopted to this type of data allowing for unobserved heterogeneity and common time effects. Our results suggest that firm and industry wages both possess a unit root in the autoregressive representation. However, ther is only weak evidence for a cointegration realtionship.     

Multi-destination firms and the impact of exchange-rate risk on trade

Based on a French firm-level database that combines information on balance-sheet and destination-specific export information over the period 1995–2009, we document a new stylized fact related to the heterogeneous reaction of exporters to RER volatility: we show that strongly multi-destination firms tend to reduce significantly more their exports to a destination that faces higher exchange-rate volatility. We also show that, following an exchange-rate volatility shock in a given country, strongly multi-destination firms increase exports to all other destinations served. This specific behavior of multi-destination firms has significant aggregate implications. First, the bilateral aggregate impact is increasingly negative with the weight of multi-destination firms in total exports towards the considered destination. Second, the reallocation behavior of large, multi-destination firms ultimately translates into stable total French exports (summed over all destinations).     

The impact of improved highways on Indian firms

India's Golden Quadrilateral Program, a major highway project, aimed at improving the quality and width of existing highways connecting the four largest cities in India. It affected the quality of highways available to firms in cities that lay along the routes of the four upgraded highways, while leaving the quality of highways available to firms in other cities unaffected. This feature of the project allows for a difference-in-difference estimation strategy, where status on and off the improved highways, and distance from them, are used as treatment variables. This strategy is implemented using data from the 2002 and 2005 rounds of the World Bank Enterprise Surveys for India. Firms in cities affected by the Golden Quadrilateral highway project reduced their average stock of input inventories by between 6 and 12 days’ worth of production. Firms in cities where road quality did not improve showed no significant changes. The reduction in stocks of input inventories also varied inversely with the distance between the city in which a firm was located and the nearest city on an improved highway. Firms on the Golden Quadrilateral were also more likely to have switched the supplier who provided them with their primary input, suggesting that they saw reason to re-optimize their choice of supplier after the arrival of better highways. Consistent with these findings, firms on the improved highways reported decreased transportation obstacles to production, while firms in control cities reported no such change.     

An exploratory study on the impact of pro-market reforms on the Indian corporate sector

Pro-market reforms were expected to increase competition, improve efficiency and reduce agency costs by improving the institutional environment in emerging markets. In an attempt to establish the macro–micro linkages of these goals, this paper aims to analyse the impact of reforms on the performance of firms belonging to different ownership categories. We find that while state owned enterprises have shown signs of convergence, the performance of other domestic firms has stagnated. Meanwhile multinational subsidiaries have shown consistently better performance, raising questions on the motive and direction of reforms. We end by discussing the policy implications and avenues for future research.     

Measuring the impact of trade flows on employment in the Turkish manufacturing industry

This paper investigates the impact of export and import flows on the change in manufacturing employment using an accounting-identity based approach which enables the change in employment to be decomposed into the contribution made not only by trade but also by domestic consumption and productivity change. The analysis is carried over (i) four subperiods, two belonging to the period before 1980 when Turkey switched from a regime of import-substitution based growth to one of export-orientation, and the other two, to the period after 1980, and (ii) three tradebased categories; net exporting, import competing and noncompeting sectors. It is found (a) that trade has a more significant role to play in employment change in the post-1980 periods, (b) that this is observed more in the net exporting and noncompeting categories rather than the import competing category, and (c) that the switch to export-oriented growth in 1980 did not lead to export-based employment to be dominant in employment changes but has acted as a buffer in the sense that employment may either have grown much less or declined more severely if the post-1980 expansion of exports had not occurred.     

Infrastructure regulation and reallocations within industry: Theory and evidence from Indian firms

Many firms in developing countries adopt captive power generators to deal with expensive and unreliable supply of electricity. I present a model that combines upstream regulation with downstream heterogeneous firms in a monopolistic competition framework, where firms can pay a fixed cost to adopt this marginal cost-reducing device. The presence of captive power affects the market equilibrium by increasing the level of idiosyncratic productivity a firm needs to survive in the market and by re-allocating sales and profits towards the more productive, adopting firms. Additionally, the rate of adoption is shown to increase with the price of electricity, industries' electricity–intensity and with higher barriers to firm entry. The mechanisms I propose are present for a cross-section of Indian firms.     

论贸易自由化对澳大利亚制造业中的横向、纵向行业内交易的影响

一、前言 尽管有大量的有关行业内贸易（IIT，即同时出口和进口类似的产品）现象的文献，但经验的结果是不一致的。除了变量度量的问题外，未能把IIT分成横向差异产品交易和纵向差异产品交易或许也是个起作用的因素。最普遍的IIT指数——格拉贝-劳埃德（GL）指数确实没有分清横向差异产品和纵向差异产品；尽管事实上理论已表明这两类产品的决定因素是不同的。这已在近年来的大量经验研究中得到了再证实。横向的IIT指的是特征或属性不同的类似产品的交易，而纵向IIT则是涉及质量不同的类似产品的交易。克鲁格曼（1980，1988）和兰开斯特（1980）已证明了横向IIT是受规模经济和偏好多样化影响的，而法尔维（1981）则证明了具备的生产要素决定纵向IIT。因此，IIT必须被分成横向差异产品交易和纵向差异产品交易并被分别建模。将这两者混淆可能产生矛盾的结果。     

Price-cost margins and manufacturing industry structure: The case of a small economy with bilateral trade in manufactured goods

The majority of empirical tests of the structure-performance model have examined the relationship between performance and domestic industry structure, although in recent work aspects of foreign competition have been included. In the context of a Republic of Ireland study, this paper attempts to extend the model by redefining the demand growth and import share variables and by including a measure of the relative competitiveness of foreign suppliers vis-á-vis domestic firms.The empirical results lend support to the proposed extension and suggest that in a small economy foreign competition has a more important impact on industry performance than competition among domestic firms.     

Environmental impact of customs union agreement with EU on Turkey's trade in manufacturing industry

In this study, we analyse Turkey's manufacturing industry trade by estimating sectoral import and export demand equations for 1980–2000. The study aims to understand whether the trade in the manufacturing industry complies with pollution haven hypothesis, and whether the free trade environment provided by the customs union (CU) agreement altered the trade pattern of the clean and dirty industries. Results of our econometric models have shown that while CU positively affects the import demand, it does not have any significant impact on the export demand of Turkish manufacturing industry. In terms of the environmental impact, distinction between clean and dirty industries turns out to be significant for both import and export demand. In general, our findings suggest that both clean and dirty industries’ import demand increased during the study period. In terms of export demand, clean industries’ export demand declines whereas dirty industries’ export demand increases compared to the total demand.     

The effect of immigrants on the extensive and intensive margins of trade

This study examines the impact of immigrants on the extensive and intensive margins of South Korean exports. Since trade data contain excessive zero trade flows, we adopt recently suggested Poisson and Gamma pseudo maximum likelihoods. ???Our finding shows that immigrant stock in South Korea has significant effect on both the extensive and intensive margins of South Korean exports. Immigrants’ network seems to decrease variable as well as fixed costs of trade.     

The impact of financial development,income, energy and trade on carbon emissions: Evidence from the Indian economy

This paper examines the long-run equilibrium and the existence and direction of a causal relationship between carbon emissions, financial development, economic growth, energy consumption and trade openness for India. Our main contribution to the literature on Indian studies lies in the investigation of the causes of carbon emissions by taking into account the role of financial development and using single country data. The results suggest that there is evidence on the long-run and causal relationships between carbon emissions, financial development, income, energy use and trade openness. Financial development has a long-run positive impact on carbon emissions, implying that financial development improves environmental degradation. Moreover, Granger causality test indicates a long-run unidirectional causality running from financial development to carbon emissions and energy use. The evidence suggests that financial system should take into account the environment aspect in their current operations. The results of this study may be of great importance for policy and decision-makers in order to develop energy policies for India that contribute to the curbing of carbon emissions while preserving economic growth.     

Financial factors and the margins of trade: Evidence from cross-country firm-level data

Using a large cross-country, firm-level database containing 5000 firms in 9 developing and emerging economies, we study how financial factors affect both firms' export decisions and the amount exported by firms. First, our results highlight the importance of the impact of firms' access to finance on their entry decision into the export market. However, better financial health neither increases the probability of remaining an exporter once the firm has entered, nor the size of exports. Second, we find that financial constraints create a disconnection between firms' productivity and their export status: productivity is only a significant determinant of the export decision if the firm has a sufficient access to external finance. Finally, an increase in a country's financial development dampens this disconnection, thus acting both on the number of exporters and on the exporters' selection process. These results contribute to the literature documenting the role of fixed costs and of the extensive margin of trade in total trade adjustment, and provide micro-level evidence of the positive impact of financial development on trade found by previous literature.     

A spatial equilibrium analysis of trade policy reforms on the world wheat market

Since a few countries produce most of the world's wheat, and consumption is widespread across the world, wheat is one of the most commonly traded agricultural commodities. In recent years, the wheat market has been going through difficult phases as wheat prices are depressed. The fall in wheat prices is attributed to a supply glut and restrictive trade barriers. This study develops a large-scale spatial equilibrium trade model for wheat to analyse the effects of removing trade barriers (tariffs and subsidies) on each country's/region's price, supply, demand, trade, welfare, and bilateral trade flows. The results show that trade liberalization leads to an increase (decrease) in prices in the exporting (importing) countries. Production and exports increase in the exporting country, and consumption and imports increase in the importing country. Consequently, the volume of trade also increases. The welfare of most countries rises, and thus, world welfare also rises.     

Lawyers and politicians: the impact of organized legal professions on institutional reforms

Organized legal professions often play a central role in successful institutional development. The paper’s model examines how legal professions affect institutional reform. Professional review of reform proposals solves a politician’s informational problem in a way that makes democracy, political stability, and professional power substitutes. The model’s applicability is examined by showing that its predictions track the fortunes of lawyers in the USSR and early transition and are consistent with events in 1688 in England and 1789 in France, indicating why these two revolutions had different consequences. The model suggests why and when civil law and common law systems differ.

The impact of imports on price-cost margins: An empirical illustration

This article decomposes the impact of imports on domestic price-cost margins into separate price and cost effects. Using data from 24 food-processing industries, the empirical results show that although the direct impact of imports on prices is always negative, a positive net impact on price-cost margins occurs in industries characterized by low own-price elasticity of demand and diseconomies of scale. Further results show that the disciplining effect of imports is more preponderant the lower the degree of domestic competition. First version received: September 2000/Final version received: March 2002 RID="*" ID="*"  Professor and Associate Professor, respectively, in their respective departments. They can be reached at rigoberto.lopez@uconn.edu or elena.lopez@uah.es. The authors are grateful to two anonymous referees for their fruitful and helpful comments. Financial support provided by the USDA CSREES special grant No. 00-34178-9036 and by the Cátedras del Banco Santander Central Hispano-Universidad de Alcalá. This is Scientific Contribution No. 1794 of the Storrs Agricultural Experiment Station. RID="*" ID="*"  Professor and Associate Professor, respectively, in their respective departments. They can be reached at rigoberto.lopez@uconn.edu or elena.lopez@uah.es. The authors are grateful to two anonymous referees for their fruitful and helpful comments. Financial support provided by the USDA CSREES special grant No. 00-34178-9036 and by the Cátedras del Banco Santander Central Hispano-Universidad de Alcalá. This is Scientific Contribution No. 1794 of the Storrs Agricultural Experiment Station.     

Proxy issue proposals: impact of the 1992 SEC proxy reforms

This article assesses the impact of the 1992 SEC reforms thatenhanced the ability of shareholders to communicate during aproxy contest. Utilizing a sample of 361 shareholder-sponsoredcorporate governance issue proposals from 1991 to 1995, thearticle finds that the mean percentage of total outstandingvotes cast in favor of an issue proposal declined significantlypostreform. As explanation, the article furnishes evidence thatcertain sponsors interested in their own private agenda ratherthan general shareholder welfare exploited more fully the proxymechanism postreform; controlling for the composition of sponsors,the proxy reforms generated no significant change in the for-voteoutcome of issue proposals. The article concludes instead thatthe reforms resulted in a shift in the composition of issueproposal targets toward companies relatively less vulnerableto such proposals prereform.     

The impact of tax reforms on unemployment in a SMOPEC

This paper analyzes revenue-neutral tax reforms for a small open economy which is constrained to a balanced current account and whose producers have market power on the world market. We consider origin-based and destination-based commodity taxes as well as taxes on income, the payroll, and on an imported factor of production. Our main findings are the following. First, the strength, and for some parameter constellations, even the sign of the employment effect of tax reforms varies with the degree of openness of the economy. Second, the indeterminacy of the sign of the employment effect crucially hinges on the presence of an internationally mobile factor. The central mechanism underlying our results are adjustments of the real exchange rate which have repercussions on wage and price setting and therefore on employment.