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Can Servicification Benefit Manufacturing Exports? Empirical Results for India

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  • Sonia Pant
  • Debashis Chakraborty

Abstract

To enhance manufacturing exports, India, a major player in the services segment, has recently created an enabling environment through the launch of several programmes, for example, the ‘Make-in-India’ and the production-linked incentive (PLI) schemes. As the firm-level evidence on the synergies between services input use (i.e., servicification) and manufacturing exports in the country is relatively scarce, the current analysis studies the relationship between them by using the CMIE-Prowess dataset over a period of 2000–2019, for both new and existing exporting firms. At the firm level, the article uses a two-step system generalized method of moments (GMM) estimator for studying the impact on export intensity, while a dynamic panel probit model is used to study the impacts on the decision to export. Apart from the analysis at the aggregate level, the influence of servicification is also judged for the low-tech and mid-to-hi-tech sectors separately and the disaggregated industry level. The observed positive relationship between servicification and manufacturing exports implies that the integration of competitiveness in the field of services with hi-tech manufacturing sectors can enhance India’s exports on the one hand and deepen firm-level global value chains participation on the other hand. JEL Codes: C23, F12, F14, F23, L25, L80

Suggested Citation

  • Sonia Pant & Debashis Chakraborty, 2024. "Can Servicification Benefit Manufacturing Exports? Empirical Results for India," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 25(2), pages 126-157, September.
    • Handle: RePEc:sae:soueco:v:25:y:2024:i:2:p:126-157
    DOI: 10.1177/13915614241274403
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    More about this item

    Keywords

    India; firm-level analysis; service input intensity; manufacturing exports; intensive and extensive margins; dynamic panel;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

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