IMPORT LIBERALIZATION AND PRODUCTIVITY GROWTH IN INDIAN MANUFACTURING INDUSTRIES IN THE 1990s

Total factor productivity growth in Indian manufacturing decelerated in the 1990s, a decade of major economic reforms in India. Econometric analysis presented in the paper indicates that the lowering of effective protection to industries favorably affected productivity growth. The results suggest that gestation lags in investment projects and slower agricultural growth in the 1990s had an adverse effect on productivity growth. The analysis reveals that underutilization of industrial capacity was an important cause of the productivity slowdown. With corrections for capacity utilization, the estimated productivity growth in the 1990s is found to be about the same as in the 1980s.     

The emergence of Third World multinationals: Indian joint ventures overseas

The more industrialized LDCs are emerging increasingly as exporters of capital (or of technology in several forms). This paper draws on the recent experience of Indian MNCs to reexamine the factors which give rise to Third World multinationals. The author summarizes the current state of research in the analysis of LDCs MNCs, drawing upon specific MNC literature and other related literature on trade and technology. He deals with the evidence on Indian capital exports, placing it in the broader context of technology exports, discussing some examples of interest and drawing comparisons with foreign investment by some other LDCs. He assesses the Indian experience, using the distinctions drawn by Dunning's ‘eclectic’ theory but concentrating on the processes of technical change that underline the growth of its MNCs. The final section draws some tentative conclusions.     

TRADE LIBERALIZATION AND PRICE‐COST MARGIN IN INDIAN INDUSTRIES

Using panel data for 137 three‐digit industries for 1980/81 to 1997/98, the paper examines the effect of trade liberalization on price‐cost margins in Indian industries. An econometric model is estimated to explain variations in price‐cost margins, taking tariff and nontariff barriers among the explanatory variables. The results indicate that the lowering of tariffs and removal of quantitative restrictions on imports of manufactures in the 1990s had a significant pro‐competitive effect on Indian industries, particularly concentrated industries, tending to reduce the price‐cost margins. The paper notes that despite the pro‐competitive effects of trade liberalization reinforced by domestic industrial deregulation, the price‐cost margin increased in the post‐reform period in most industries and aggregate manufacturing, which is attributed to a marked fall in the growth rate of real wages and a significant reduction in labor's income share in value added in the post‐reform period, reflecting perhaps a weakening of industrial labor's bargaining power.     

Creating manufacturing jobs in India: Has openness to trade really helped?

After following inward oriented economic policies for nearly four decades, India opened up to international trade in the early 1990s. Since then, the trade integration of the Indian economy in general and the manufacturing sector in particular has increased phenomenally. Against this backdrop, this paper analyses the direct as well as indirect impact of trade on jobs in the Indian manufacturing sector. Using the growth accounting approach, we find that the direct impact of trade on manufacturing jobs has been positive. However, trade induced decrease in labour demand has neutralized direct job gains to a great extent. Therefore, unlike other Asian economies, the overall employment gain from trade has been minimal. The paper argues that supply side constraints should be addressed urgently to enhance job gains from international trade.     

Explaining the Productivity Growth Gap Between China and India: The Role of Structural Transformation

Chinese and Indian aggregate productivity growth has been significantly different over the last 30 years. This paper studies the role of structural transformation in accounting for the aggregate productivity growth gap between two economies. We calibrate a neoclassical model of structural transformation for China and India. The model implies that higher productivity growth in China's manufacturing and agriculture accounts for most of the aggregate productivity growth gap between the two countries. According to the development strategy of China's government, China would start a new phase of structural transformation whereby employment is moving from manufacturing to services. Since the productivity growth gap in services is pretty small between China and India, if China wants to remain superior in relative productivity, it should improve the productivity growth rate of services. In contrast, the relative performance in India hinges on closing its productivity gap in agriculture and manufacturing relative to China.     

Capital inflows, financial repression, and macroeconomic policy in India since the reforms

Since the early 1990s the Indian economy has seen a considerablerelaxation of controls, as a consequence of which it has witnessedunprecedented growth. This is especially remarkable in the externalsector. In this paper I evaluate the progress made on the macroeconomicfront and address the possibility of opening up the capitalaccount of the balance of payments. I show that given the weaknessin the financial sector and the government finances, it maybe dangerous to speed up the process of opening up the capitalaccount further.     

Manufacturing in India and Indonesia: performance and policies

Since the global financial crisis of 2008, the world has been riveted by China's rapid growth and its contribution to the global recovery. But less attention has been paid to India and Indonesia – Asia's two other giants – which also displayed resilience during the crisis and show promise of sustaining this performance. Also remarkable are their geographical, historical and cultural proximity; notwithstanding their differences, these two countries are alike in many respects and face similar challenges, as reflected in their emerging policy priorities. China's large size and rapid growth may have absorbed the attention of Indian and Indonesian policy makers, but this paper argues that a comparative approach to the issues that both countries face can yield interesting insights and provide potential solutions to their development challenges.     

Mises's dynamics of interventionism: Lessons from Indian agriculture

Despite trade liberalization, industrial delicensing, and deregulation in other sectors of the Indian economy since 1991, the agricultural sector is stifled by arbitrary, complex, and ever-increasing regulation in both input and product markets. This article resolves this puzzle of the Indian economy and, using Mises's theory of interventionism, explains the growth of regulation and subsidies in Indian agriculture. I argue that each intervention in agriculture created distortions in the market, necessitating the subsequent intervention in agricultural inputs and/or outputs. Land ceiling policies led to a large number of farmers with small and marginal landholdings. Attempts to increase agricultural productivity and income on small holdings led to interventions, and consequent distortions, in factor markets for seeds, fertilizer, electricity, water, credit, insurance, as well as in output markets in the form of minimum support prices. Indian agriculture policy serves as a cautionary tale of interventionism and needs systematic and comprehensive reforms.     

PRODUCTIVITY IMPACT OF THE MODERN VARIETIES OF RICE IN INDIA

The present paper analyzed the long‐term yield growth and total factor productivity (TFP) growth by applying Tornqvist‐Theil index method for two periods, namely, 1970–85 (early Green Revolution) and 1986–2000 (late Green Revolution), for major rice‐growing states of India. The yield data shows an increasing long‐term growth trend throughout the Green Revolution period in irrigated states where modern variety (MV) adoption was nearly complete. However, yield advances started to slow down for intensive irrigated rice systems in the 1990s, whereas rainfed ecosystems have increased during the late Green Revolution period. The domestic spillovers of MV from irrigated to rainfed states is likely to be one of the contributing factors to increased TFP growth in ranifed areas after the 1980s. This implies that the MV of rice developed for irrigated ecosystems have also benefited substantially the rainfed‐dominant eastern Indian states in the long run where partial irrigation facilities such as shallow tube wells were created after the mid‐1980s.     

Special economic zones and growth in China and India: an empirical investigation

This paper investigates the role of special economic zones (SEZs) in liberalizing the Chinese and Indian economies and their impact on economic growth. The policy change to a more liberalized economy is identified using SEZ variables as instrumental variables. The results indicate that export and FDI growth have positive and statistically significant effects on economic growth in these countries. The presence of SEZs increases regional growth but increasing the number of SEZs has negligible effect on growth. The key to faster economic growth appears to be a greater pace of liberalization.     

Flourishing branches, wilting core: research in modern Indian economic history

The core theme in modern Indian economic history until recently was economic growth in colonial India and models explaining stylised facts about growth or stagnation. From the 1980s, research moved away from the general toward more specific and local issues, a trend that has allowed new questions to be asked, has approached other fields and introduced a healthy scepticism for overarching models. But it also made macro-questions somewhat outdated, thereby weakening the link between history and models of economic growth and development. This essay reviews scholarship on new themes and asks how problems of economic growth can be motivated anew.     

Does bank competition affect the transmission mechanism of monetary policy through bank lending channel? Evidence from India

This paper empirically investigates how intensified competition in the Indian banking affects the transmission of monetary policy through bank lending channel over the period 1997–2017. Additionally, this study examines the impact of deposit and loan market channels on bank’s credit growth. Results obtained through two-step system-GMM reveal that a higher degree of market power weakens the monetary policy transmission mechanism for the entire banking industry and across ownerships. Results show that higher market power in the deposit and loan markets weakens the impact of monetary policy on bank loan supply. The findings of this study extend important policy measures that can strengthen the transmission mechanism of monetary policy by reducing the adverse effects of changes in bank competition.     

Skills Development and Interfirm Learning Linkages under Globalization: Lessons from the Indian Automobile Industry

This paper empirically examines changes in the patterns of skills development for Indian workers in domestic firms, particularly in small firms, in the 1990s, when its economy became increasingly integrated into the global economy. A case study of 50 component suppliers of two leading auto assemblers in the Indian automobile industry reveals that dynamic industrial transformations in the 1990s significantly changed the nature, content and extent of skills development at domestic suppliers. The paper argues that various institutional mechanisms created by assembler firms played a critical role in upgrading skills at suppliers, transforming the supply chain into a learning chain.     

Occupational Mobility Pattern in Chonju,Korea

This paper investigates the existence of the inter‐dependence between the Indian stock market and Asia's emerging markets since 1990. This study analyzes whether the MSCI Asian Index has significantly influenced the Bombay Stock Exchange Index before, during, and after the Asian financial crisis. To address this issue, the author first uses a rolling correlation, and conduct uni‐directional and bi‐directional causality tests using the Granger causality test. He then examines the impulse response functions and variance decompositions of forecast errors based on a VAR (vector auto‐regression) model. These tests provide evidence that the influence of the Asian market on the Indian market has increased during and after the Asian financial crisis. These results can be interpreted as evidence that the Indian market has been moving toward integration with other Asian markets.     

Indian economic reforms and ASEAN-India economic relations

This paper provides a brief account of the history of ASEAN-India relations and the changes currently taking shape as a result of the Indian economic reforms and the country's look East Policy. The paper then argues that there are opportunities for both sides arising from the likely new growth scenario for India outlined in the paper.     

Contracting Out Solutions: Political Economy of Contract Farming in the Indian Punjab

This paper examines the rationale, practice, and problems of contract farming in vegetable crops in the agriculturally developed Indian Punjab which has faced the problem of sustainability of growth since the early 1980s. It is found that agribusiness firms deal with relatively large producers and their contracts, which are biased against the farmer, perpetuate the existing problems of the farm sector such as high chemical input intensity, and social differentiation. Contracting has however, led to higher farm incomes and more employment for labor. There seems to be an inherent contradiction in the objectives of the contracting parties and those of the local economy.     

论印度经济持续快速增长的可能性

本文指出,印度已经具有促进经济持续高速增长的发展概念、推动经济持续高速增长的巨大需求、保证经济持续高速增长的发展潜力、推动经济持续高速增长的诸多优势和保证经济持续高速增长的国际环境。作者认为,只要印度政府采取适当的社会经济政策,在一个较长的时期内,印度经济是能够保持持续高速增长的。     

服务业外包对印度产业结构影响的分析

本文考察了承接服务业外包对印度产业结构的影响，发现依据不同的产业结构理论的分析得到了不同的结论：在传统产业结构理论下，承接服务业外包对印度产业结构升级产生了积极的推动作用；在横向产业结构理论下，承接服务业外包对印度整体产业结构的升级没有产生根本性的促进作用。而产生这一结果的原因既有产业结构理论方面的因素也有印度经济现实的原因。本文最后探讨了印度的经验教训对中国政府和企业承接国际服务业转移的启示。     

后金融危机时代印度IT业发展战略研究

全球金融危机后印度IT产业发展战略发生了变化。危机前印度IT产业的发展模式具有明显的俘获型价值链的特征。这种发展模式的有利之处在于可以帮助发展中国家快速融入全球分工网络,从全球化的迅速发展中收益。然而,其不利之处在于,面临外部冲击时,由于居于价值链的低端环节,一方面容易受到较大的负面影响,另一方面很难通过产业转型实现价值链上的升级。本文通过对印度IT产业的研究发现,通过市场多元化和知识与专门技术等高端要素的积累,将有助于产业实现向研发和品牌营销等高端环节升级。     

Loan Loss Provisions,Earnings, Capital Management and Signalling: Evidence from Indian Banks1

Abstract

The debate on bank capital regulation has in recent years devoted specific attention to the role that bank loan loss provisions play as a part of the overall minimum capital regulatory framework. The paper examines this issue in the Indian context, exploring the available evidence about bank loan loss provisioning in the Indian context. Using data on Indian banks for 1997–2005, evidence is found in favour of both earnings and capital management by Indian banks.