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Trade liberalization, imported inputs and factor efficiencies: Evidence from the auto components industry in India

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  • Sanghamitra Das

    (Indian Statistical Institute, New Delhi)

  • Ch. Sambasiva Rao

    (National Council of Applied Economic Research)

Abstract

Firm-level data have been used to estimate changes in factor efficiencies_imported inputs being one of them-- over three sub-periods, 1977-84, 1985-91 and 1992-99 respectively denoting eras before liberalization, partial liberalization of the automotive industries and economy-wide liberalization. We see that the average size of firms has increased from that in the protected regime as the degree of liberalization has advanced. We find that the substitutability among inputs changed over the three sub-periods. We also find that the marginal products of all the inputs are very heterogeneous among firms in each period. The distributions of marginal product of labour and domestic materials and has moved to the left in the later periods while that of capital has moved to the right. The distribution of marginal product of imported materials first moved to the right and then to the left as compared to the first period. Overall the smaller firms benefited more in the earlier periods and bigger ones in the last period.

Suggested Citation

  • Sanghamitra Das & Ch. Sambasiva Rao, 2004. "Trade liberalization, imported inputs and factor efficiencies: Evidence from the auto components industry in India," Discussion Papers 04-05, Indian Statistical Institute, Delhi.
    • Handle: RePEc:alo:isipdp:04-05
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    References listed on IDEAS

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    Cited by:

    1. Mamata Parhi, 2008. "Impact of Changing Facets of Inter-firm Interactions on Manufacturing Excellence: A Social Network Perspective of Indian Automotive Industry," Working Papers of BETA 2008-08, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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