Economic reforms and entry barriers in Indian manufacturing

Institutional regulations by way of licensing and capacity restrictions have often been considered as barriers to competition in Indian industry. As most of these regulations have given way for market signals an increase in the number of entrants and alterations in the conditions of entry, mainly the barriers to entry are expected. In this paper I attempt to analyse the extent of barriers to entry in Indian manufacturing by empirically quantifying the height of these barriers. Econometric estimation of the height of the barriers for 1991 and 1996 shows that the height of barriers increased in 1996 at the aggregate level. An examination at the disaggregate level reveals that in almost all the industries examined from a sample of firms drawn from the CMIE the height of the barriers have increased in 1996 compared to 1991. The dilution and dismantling of commands and controls intended to ease entry have thus paved the way for the erection and strengthening of market barriers which have grown over time. JEL Classification : L1, L11, L13 Key words : economic reforms, entry barriers, height of barriers, market barrier

Racial Discrimination and Competition

This paper assesses the impact of competition on racial discrimination. The dismantling of inter- and intrastate bank restrictions by U.S. states from the mid-1970s to the mid-1990s reduced financial market imperfections, lowered entry barriers facing nonfinancial firms, and boosted the rate of new firm formation. We use bank deregulation to identify an exogenous intensification of competition in the nonfinancial sector, and evaluate its impact on the racial wage gap, which is that component of the black-white wage differential unexplained by Mincerian characteristics. We find that bank deregulation reduced the racial wage gap by spurring the entry of non- financial firms. Consistent with taste-based theories, competition reduced both the racial wage gap and racial segregation in the workplace, particularly in states with a comparatively high degree of racial prejudice, where competition-enhancing bank deregulation eliminated about one-quarter of the racial wage gap after five years.

Trade,Tariffs and Total Factor Productivity: The Case of Spanish Firms

The aim of this paper is to examine the sensitivity of total factor productivity (TFP) to foreign competition in the case of a European country. Using the Olley and Pakes (1996) method, we calculate the TFP of Spanish manufacturing firms and study the impact of EU tariffs, foreign competition and imports on TFP at the firm level. Applying the System-GMM method, we find that TFP is negatively impacted by European tariffs, whereas the competition, in the form of increased presence of foreign products in the domestic market and firms' imports, leads to improvements of the TFP. Moreover, these two effects are complementary. We also find evidence of important asymmetries among firms depending on their involvement in foreign markets. El objetivo de este artículo es estudiar la sensibilidad de la productividad total de los factores (PTF) a la competencia extranjera en el caso de un país europeo. Calculamos la PTF de las empresas manufactureras españolas con el método de Olley y Pakes (1996) y estudiamos el impacto de los aranceles europeos, de la competencia extranjera y de las importaciones sobre la PTF de las empresas. Utilizando el método System-GMM, obtenemos que la PTF se ve negativamente afectada por los aranceles europeos, mientras la competencia, bajo la forma de una presencia mayor de productos extranjeros en el mercado domestico o en términos de importaciones de las empresas, contribuye a mejorar la PTF. Además, estos dos efectos son complementarios. Encontramos también pruebas de importantes asimetrías entre las empresas, dependiendo de su grado de implicación en los mercados internacionales.productividad total de los factores, España, comercio, aranceles, heterogeneidad de las empresas. Total factor productivity, Spain, trade, tariffs, heterogeneity of firms.

Breaking the Logjam: Proposals for Moving Beyond the Equals Approach

Over the last decade, the structure and performance of Canadian financial institutions has undergone a profound transformation. Propelled by both regulatory changes and market innovations, Canadian financial institutions have found their historically protected markets opened to intense competition from a variety of different sources. The most significant regulatory change has been the piecemeal dismantling of the pillars that have traditionally separated the core activities of banks, insurance companies, loan and trust companies, and securities dealers from encroachment by one another. With lower entry barriers, institutions have scrambled to penetrate each other\u27s markets. This entry has spurred a narrowing of differences in the structure and conduct of Canadian financial institutions. Another regulatory change that has spurred increased competition is the reduction, (or, in the case of American owned Schedule II banks, outright elimination) of the constraints that have traditionally limited the operations of foreign financial institutions in Canada. Not surprisingly, the reduction of these restrictions has spawned the growth of a highly dynamic foreign financial industry in Canada

The Unequal Effects of Liberalization: Evidence fromDismantling the License Raj in India

This paper investigates whether the effects, on registered manufacturing out-put,employment, entry and investment, of dismantling the 'license raj' - a system of centralcontrols regulating entry and production activity in this sector - vary across Indian stateswith different labor market regulations. The effects are found to be unequal depending onthe institutional environment in which industries are embedded. In particular, followingdelicensing, industries located in states with pro-employer labor market institutions grewmore quickly than those in pro-worker environments. Our results emphasize how localinstitutions matter for whether industry in a region benefits or is harmed by thenationwide delicensing reform.

The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India

This paper investigates whether the effects, on registered manufacturing out- put, employment, entry and investment, of dismantling the .license raja system of central controls regulating entry and production activity in this sector .vary across Indian states with different labor market regulations. The effects are found to be unequal depending on the institutional environment in which industries are embedded. In particular, following de-licensing, industries located in states with pro-employer labor market institutions grew more quickly than those in pro-worker environments. Our results emphasize how local institutions matter for whether industry in a region benefits or is harmed by the nationwide delicensing reform.delicensing, economic development, labour regulation

Barriers and Bridges: An Action Plan for Overcoming Obstacles and Unlocking Opportunities for African American Men in Pittsburgh

Among the region's residents, Pittsburgh's African American men have historically and disproportionately faced unprecedented barriers to economic opportunities. This study, supported by The Heinz Endowments, focuses on structural barriers that contribute to persistent racial disparities in the Pittsburgh region. Structural barriers are obstacles that collectively affect a group disproportionately and perpetuate or maintain stark disparities in outcomes. Structural barriers can be policies, practices, and other norms that favor an advantaged group while systematically disadvantaging a marginalized group. A community touched by racebased structural barriers can be identified by the racial and economic stratification of its residents; Pittsburgh, like many large cities in the United States, fits that description

Productivity and Firm Selection: Quantifying the “New” Gains from Trade

We discuss how standard computable equilibrium models of trade policy can be enriched with selection effects without missing other important channels of adjustment. This is achieved by estimating and simulating a partial equilibrium model that accounts for a number of real world effects of trade liberalisation: richer availability of product varieties; tougher competition and weaker market power of firms; better exploitation of economies of scale; and, of course, efficiency gains via the selection of the most efficient firms. The model is estimated on E.U. data and simulated in counterfactual scenarios that capture several dimensions of European integration. Simulations suggest that the gains from trade are much larger in the presence of selection effects. Even in a relatively integrated economy as the E.U., dismantling residual trade barriers would deliver relevant welfare gains stemming from lower production costs, smaller markups, lower prices, larger firm scale and richer product variety. We believe our analysis provides enough ground to support the inclusion of firm heterogeneity and selection effects in the standard toolkit of trade policy evaluation.European Integration, Firm-level Data, Firm Selection, Gains from Trade, Total Factor Productivity

The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India

We study the effects of the progressive elimination of the system of industrial regulations on entry and production, known as the "license raj," on registered manufacturing output, employment, entry and investment across Indian states with different labor market regulations. The effects are found to be unequal depending on the institutional environment in which industries are embedded. In particular, following delicensing, industries located in states with pro-employer labor market institutions grew more quickly than those in pro-worker environments.