IDEAS home Printed from https://ideas.repec.org/a/sae/fortra/v51y2016i1p81-97.html
   My bibliography  Save this article

Competition, Openness and Inequality of Firm Size in the Indian Manufacturing

Author

Listed:
  • Hariprasad Govinda

Abstract

This article is an attempt to study the impacts of trade openness and competition on inequality of firm size in the Indian manufacturing during 1990–2010. A number of empirical studies have observed a positive skewness in the size distribution of firms (log-normal distribution) and an increasing concern over raising inequality of firm sizes in the industry. I have attempted to study the direction of the causation between export openness and inequality of firm size distribution (FSD), which is not often studied so far, despite it being purely empirical. The empirical results clearly show that export openness is statistically significant (1 per cent) throughout all the models and has negative effects on inequality. This is one interesting and robust empirical finding that export openness has the capability to reduce inter-firm performance differences, and hence, reducing inequality in FSD.

Suggested Citation

  • Hariprasad Govinda, 2016. "Competition, Openness and Inequality of Firm Size in the Indian Manufacturing," Foreign Trade Review, , vol. 51(1), pages 81-97, February.
    • Handle: RePEc:sae:fortra:v:51:y:2016:i:1:p:81-97
    DOI: 10.1177/0015732515616546
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0015732515616546
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0015732515616546?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Nocke, Volker & Yeaple, Stephen, 2008. "Globalization and the Size Distribution of Multiproduct Firms," CEPR Discussion Papers 6948, C.E.P.R. Discussion Papers.
    2. Evans, David S, 1987. "The Relationship between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 567-581, June.
    3. Richard Ericson & Ariel Pakes, 1995. "Markov-Perfect Industry Dynamics: A Framework for Empirical Work," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(1), pages 53-82.
    4. Luís M B Cabral & José Mata, 2003. "On the Evolution of the Firm Size Distribution: Facts and Theory," American Economic Review, American Economic Association, vol. 93(4), pages 1075-1090, September.
    5. Manmohan Agarwal & Alokesh Barua, 2004. "Entry liberalization and export performance: a theoretical analysis in a multi-market oligopoly model," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 13(3), pages 287-303.
    6. Pant, Manoj & Pattanayak, Manoranjan, 2005. "Does Openness Promote Competition? A Case Study of Indian Manufacturing," MPRA Paper 2871, University Library of Munich, Germany.
    7. Patrizio Pagano & Fabiano Schivardi, 2003. "Firm Size Distribution and Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(2), pages 255-274, June.
    8. Peter Huber & Michael Pfaffermayr, 2007. "The Anatomy of the Firm Size Distribution: The Evolution of its Variance and Skewness," WIFO Working Papers 295, WIFO.
    9. Stephen Hymer & Peter Pashigian, 1962. "Firm Size and Rate of Growth," Journal of Political Economy, University of Chicago Press, vol. 70(6), pages 556-556.
    10. Alex Coad, 2010. "The Exponential Age Distribution and the Pareto Firm Size Distribution," Journal of Industry, Competition and Trade, Springer, vol. 10(3), pages 389-395, September.
    11. Pulapre Balakrishnan & K. Pushpangadan & M. Suresh Babu, 2002. "Trade liberalisation, market power abd scale efficiency in Indian industry," Centre for Development Studies, Trivendrum Working Papers 336, Centre for Development Studies, Trivendrum, India.
    12. Sun, Churen & Zhang, Tao, 2012. "Export, Productivity Pattern, and Firm Size Distribution," MPRA Paper 36742, University Library of Munich, Germany.
    13. Alokesh Barua & Debashis Chakraborty & Hariprasad CG, 2012. "Entry, Competitiveness and Exports: Evidence from the Indian Firm Data," Journal of Industry, Competition and Trade, Springer, vol. 12(3), pages 325-347, September.
    14. John R. Baldwin & Paul K. Gorecki, 1991. "Firm Entry and Exit in the Canadian Manufacturing Sector, 1970-1982," Canadian Journal of Economics, Canadian Economics Association, vol. 24(2), pages 300-323, May.
    15. Sandwip Kumar Das & Manoj Pant, 2006. "Measuring market imperfection in the manufacturing sector: Theory and evidence from India," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 15(1), pages 63-79.
    16. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    17. N. S. Siddharthan & B. L. Pandit, 1992. "Deregulations, Entry and Industrial Performance: The Impact of Recent Indian Policy Changes," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 27, pages 377-384.
    18. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
    19. Bloch, Harry, 1981. "Determinants of the Variance in Market Shares in Canadian Manufacturing," Journal of Industrial Economics, Wiley Blackwell, vol. 29(4), pages 385-393, June.
    20. Francesca Lotti & Enrico Santarelli, 2004. "Industry Dynamics and the Distribution of Firm Sizes: A Nonparametric Approach," Southern Economic Journal, John Wiley & Sons, vol. 70(3), pages 443-466, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(6), pages 1453-1495, December.
    2. Enrico Santarelli & Marco Vivarelli, 2007. "Entrepreneurship and the process of firms’ entry, survival and growth," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 16(3), pages 455-488, June.
    3. Luca Fontanelli, 2023. "Theories of Market Selection: A Survey," GREDEG Working Papers 2023-08, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    4. Meghana Ayyagari & Asli Demirguc-Kunt & Vojislav Maksimovic, 2021. "Are large firms born or made? Evidence from developing countries," Small Business Economics, Springer, vol. 57(1), pages 191-219, June.
    5. Qi Li & Patrick Paul Walsh, 2009. "The Firm Size Distribution in a Small Open Economy: Theory and Evidence," Working Papers 200920, Geary Institute, University College Dublin.
    6. Canarella, Giorgio & Miller, Stephen M., 2018. "The determinants of growth in the U.S. information and communication technology (ICT) industry: A firm-level analysis," Economic Modelling, Elsevier, vol. 70(C), pages 259-271.
    7. John Hutchinson & Jozef Konings & Patrick Walsh, 2010. "The Firm Size Distribution and Inter-Industry Diversification," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 37(2), pages 65-82, September.
    8. Farasat A. S. Bokhari & Franco Mariuzzo & Anna Rita Bennato, 2021. "Innovation and growth in the UK pharmaceuticals: the case of product and marketing introductions," Small Business Economics, Springer, vol. 57(1), pages 603-634, June.
    9. Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.
    10. Vivarelli, Marco, 2012. "Entrepreneurship in Advanced and Developing Countries: A Microeconomic Perspective," IZA Discussion Papers 6513, Institute of Labor Economics (IZA).
    11. Cristina Fernández & Roberta García & Paloma Lopez-Garcia & Benedicta Marzinotto & Roberta Serafini & Juuso Vanhala & Ladislav Wintr, 2017. "Firm growth in Europe: An overview based on the COMPNET labour module," BCL working papers 107, Central Bank of Luxembourg.
    12. Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2006. "Multi-Product Firms and Product Switching," NBER Working Papers 12293, National Bureau of Economic Research, Inc.
    13. Josep-Maria Arauzo-Carod & Agustí Segarra-Blasco, 2005. "The Determinants of Entry are not Independent of Start-up Size: Some Evidence from Spanish Manufacturing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 27(2), pages 147-165, September.
    14. Thomas Brenner & Matthias Duschl, 2018. "Modeling Firm and Market Dynamics: A Flexible Model Reproducing Existing Stylized Facts on Firm Growth," Computational Economics, Springer;Society for Computational Economics, vol. 52(3), pages 745-772, October.
    15. Coad, Alex & Segarra, Agustí & Teruel, Mercedes, 2013. "Like milk or wine: Does firm performance improve with age?," Structural Change and Economic Dynamics, Elsevier, vol. 24(C), pages 173-189.
    16. Geurts, Karen & Van Biesebroeck, Johannes, 2016. "Firm creation and post-entry dynamics of de novo entrants," International Journal of Industrial Organization, Elsevier, vol. 49(C), pages 59-104.
    17. Paulo Bastos & Daniel A. Dias & Olga A. Timoshenko, 2018. "Learning, prices and firm dynamics," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 51(4), pages 1257-1311, November.
    18. Giulio Bottazzi & Angelo Secchi, 2006. "Explaining the distribution of firm growth rates," RAND Journal of Economics, RAND Corporation, vol. 37(2), pages 235-256, June.
    19. Fontanelli, Luca & Guerini, Mattia & Napoletano, Mauro, 2023. "International trade and technological competition in markets with dynamic increasing returns," Journal of Economic Dynamics and Control, Elsevier, vol. 149(C).
    20. Alex Coad, 2007. "Firm Growth: a Survey," Post-Print halshs-00155762, HAL.

    More about this item

    Keywords

    Firm size distribution; openness; skewness; kurtosis; panel regression;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:fortra:v:51:y:2016:i:1:p:81-97. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.