Learning versus Stealing : How Important Are Market-Share Reallocations to India's Productivity Growth?

Harrison, Ann E. ; Martin, Leslie A. ; Nataraj, Shanthi

Oxford University Press on behalf of the World Bank

关键词: comparative advantage;    deflators;    economic research;    economics;    economies of scale;   

DOI  :  10.1093/wber/lhs029

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Recent trade theory emphasizes the role of market-share reallocations across firms(“stealing”) in driving productivity growth, whereas previous literature focused onaverage productivity improvements (“learning”). We use comprehensive, firm-level datafrom India’s organized manufacturing sector to show that market-share reallocationswere briefly relevant to explain aggregate productivity gains following the beginning ofIndia’s trade reforms in 1991. However, aggregate productivity gains during the periodfrom 1985 to 2004 were largely driven by improvements in average productivity. Weshow that India’s trade, FDI, and licensing reforms are not associated with productivitygains stemming from market share reallocations. Instead, we find that most of the productivity improvements in Indian manufacturing occurred through “learning” and thatthis learning was linked to the reforms. In the Indian case, the evidence rejects thenotion that market share reallocations are the mechanism through which trade reformincreases aggregate productivity. Although a plausible response would be that India’slabor laws do not easily permit market share reallocations, we show that restrictions onlabor mobility cannot explain our results.