TY - JOUR
T1 - Policy, economic federalism, and product market entry
T2 - the Indian experience
AU - Bhaumik, Sumon
AU - Gangopadhyay, Shubhashis
AU - Krishnan, Shagun
PY - 2008/3
Y1 - 2008/3
N2 - Productivity growth has long been associated with, among other things, contestability of markets which, in turn, is dependent on the ease with which potential competitors to the incumbent firms can enter the product market. There is a growing consensus that in emerging markets regulatory and institutional factors may have a greater influence on a firm's ability to enter a product market than strategic positions adopted by the incumbent firms. We examine this proposition in the context of India where the industrial policies of the 1980s and the 1990s are widely believed to be pro-incumbent and pro-competition, respectively, thereby providing the setting for a natural experiment with 1991 as the watershed year. In our analysis, we also take into consideration the possibility that the greater economic federalism associated with the reforms of the 1990s may have affected the distribution of industrial units across states after 1991. Our paper, which uses the experiences of the textiles and electrical machinery sectors during the two decades as the basis for the analysis, finds broad support for both these hypotheses.
AB - Productivity growth has long been associated with, among other things, contestability of markets which, in turn, is dependent on the ease with which potential competitors to the incumbent firms can enter the product market. There is a growing consensus that in emerging markets regulatory and institutional factors may have a greater influence on a firm's ability to enter a product market than strategic positions adopted by the incumbent firms. We examine this proposition in the context of India where the industrial policies of the 1980s and the 1990s are widely believed to be pro-incumbent and pro-competition, respectively, thereby providing the setting for a natural experiment with 1991 as the watershed year. In our analysis, we also take into consideration the possibility that the greater economic federalism associated with the reforms of the 1990s may have affected the distribution of industrial units across states after 1991. Our paper, which uses the experiences of the textiles and electrical machinery sectors during the two decades as the basis for the analysis, finds broad support for both these hypotheses.
UR - http://www.scopus.com/inward/record.url?scp=40149087038&partnerID=8YFLogxK
UR - http://www.palgrave-journals.com/ejdr/journal/v20/n1/full/ejdr20081a.html
U2 - 10.1080/09578810701853124
DO - 10.1080/09578810701853124
M3 - Article
SN - 0957-8811
VL - 20
SP - 1
EP - 30
JO - European Journal of Development Research
JF - European Journal of Development Research
IS - 1
ER -