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Trade Liberalization and Productivity Growth: Evidence from Indian Manufacturing

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  • Satish Chand
  • Kunal Sen

Abstract

The impact of trade liberalization on productivity growth is still an empirical issue; the theoretical literature is as yet unclear on the direction of any such association. This paper develops an analytical framework and employs it to empirically test whether trade liberalization in Indian manufacturing has raised total factor productivity (TFP) growth. The answer is in the affirmative. The results also support a key postulate of the new growth theories, that liberalization of the intermediate‐good sectors has a larger favorable impact on TFP growth than that of the final‐good sectors.

Suggested Citation

  • Satish Chand & Kunal Sen, 2002. "Trade Liberalization and Productivity Growth: Evidence from Indian Manufacturing," Review of Development Economics, Wiley Blackwell, vol. 6(1), pages 120-132, February.
    • Handle: RePEc:bla:rdevec:v:6:y:2002:i:1:p:120-132
    DOI: 10.1111/1467-9361.00145
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