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Manufacturing and Trade Liberalisation of India: Continuing the Debate

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  • Ghosh Dastidar, Sayantan

Abstract

The paper attempts to identify the reasons behind the differential performance of the registered and unregistered manufacturing sectors of India during the post-reform period. The motivation for this study comes from the econometric results of Ghosh Dastidar and Veeramani (2014) who find that trade liberalisation has positively affected the unregistered sector growth performance but not that of the registered segment. Besides discussing the probable reasons behind the absence of a trade-growth nexus in the case of the registered sector, the paper reviews the theoretical literature on the unregistered sector - trade liberalisation association with an aim to identify the channels through which trade liberalisation might have affected the performance of the unregistered segment. It seems that trade liberalisation benefitted the unregistered sector indirectly through the increase in sub-contracting activities from the registered sector. Absence of rigid labour regulations also helped the unregistered sector undergo restructuring during the post-reform period and achieve faster growth through elimination of inefficient firms, something which the registered segment failed to do.

Suggested Citation

  • Ghosh Dastidar, Sayantan, 2015. "Manufacturing and Trade Liberalisation of India: Continuing the Debate," MPRA Paper 61907, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:61907
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    File URL: https://mpra.ub.uni-muenchen.de/61907/1/MPRA_paper_61907.pdf
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    References listed on IDEAS

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    1. Mohamed A.M. Sallam, 2021. "Determinants of Growth in Manufacturing Industries: Empirical Evidence from Egypt Using the ARDL Approach," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(3), pages 137-153.

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    More about this item

    Keywords

    Registered Manufacturing; Unregistered Manufacturing; Trade Liberalisation; Growth; Employment; India;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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