Geography and exporting behavior : evidence from India

This paper examines locational factors that increase the odds of a firm's entry into export markets and affect the intensity of its participation. It differentiates between two different sources of spillovers: clustering of general economic activity and that of export-oriented activity. It also focuses on the effect of the business environment and that of institutions at the spatial unit of districts in India. The study disentangles the within-industry effect from the within-firm effect. A simple logit specification is used to model the probability of entry. The analysis is based on a panel of manufacturing firms in India, which allows for the introduction of firm-specific controls and a battery of fixed effects. The findings suggest that exporter-specific clustering, general economic agglomeration, and institutional factors affect firms'export behavior.Microfinance,Transport Economics Policy&Planning,Water and Industry,Economic Theory&Research,E-Business

Essays in trade and economic geography

This thesis tests the predictions of theoretical models of trade and economic geography using micro-data from India. As part of a large, poor and rapidly developing country, Indian households receive a disproportionate share of attention from development economists. However, there remain large gaps in the understanding of its other microentities – firms. In Chapter 1, I use detailed panel-level data on 8,253 manufacturing firms from 1990 to 2008 and demonstrate how firms that export differ from their counterparts who cater to the domestic market. After identifying the extent to which the act of exporting drives these differences, I provide evidence that Indian exporters performed better than nonexporters at the outset, and that exporting positively impacts further productivity increases. In Chapters 2, 3 and 4, I focus on how economic activity in India organises itself along economic geography factors. Chapter 2 studies firms in the Indian informal sector, who have largely escaped close scrutiny before. Using data from national sample surveys on over 4 million manufacturing and services enterprises, I find that firms choose to locate in particular districts across the country. I show that existing agglomeration within these locations, such as that of intermediate buyers and suppliers, is driving the location decisions of new firms. In Chapter 3, using previously inaccessible data on inward FDI, I find that foreign investors also show evidence of clustering and that existing agglomeration and the business environment jointly drive this behaviour. In Chapter 4, I collect data from the Indian Patent Office and my analysis concludes that regional innovation is largely a function of public research and development and economic clustering. In summary, this thesis uses new data and robust methodological approaches to provide important economic insights into the workings of firms in India and the factors affecting their productivity and their location decisions

Growth, Openness and the Socially Disadvantaged

We offer a comprehensive analysis of the evolution of poverty by social groups in India since 1983 and study the impact of growth and openness on the headcount ratio. We show that at the national level poverty has declined with every successive quinquennial survey in both rural and urban areas for the Scheduled Castes (SC), Scheduled Tribes (ST) and the non-Scheduled (NS) population. We conclude that there is no statistically significant evidence whatsoever that rising per-capita incomes and increased openness have hurt any of the three broad social groups. Beyond this bottom line, we find that per-capita income has a negative and statistically significant effect on poverty levels for the SC, non-Scheduled groups and all groups taken together. The effect on poverty levels for the SC is negative but statistically insignificant. We also find the effect of one or more measures of openness on poverty reduction to be positive and statistically significant in rural and urban areas and in both regions taken together for the SC and non-Scheduled groups, although for the ST the effect is statistically significant in urban areas only

Industry and the urge to cluster: a study of the informal sector in India

This paper studies the determinants of firm location choice at the district-level in India to gauge the relative importance of agglomeration economies vis-à-vis good business environment. A peculiar characteristic of the Indian economy is that the unorganised nonfarm sector accounts for 43.2% of NDP and employs 71.6% of the total workforce. I analyse National Sample Survey data that covers over 4.4 million firms, in both unorganised sectors – manufacturing and services. The empirical analysis is carried out using count models, and I instrument with land revenue institutions to deal with possible endogeneity bias. I find that buyer-suppler linkages and industrial diversity make a district more attractive to economic activity, whilst the quality and level of infrastructure are also important. I conclude that public policy may be limited in its ability to encourage relocation of informal firms

Geography and Exporting Behavior: Evidence from India

This paper examines locational factors that increase the odds of a firm's entry into export markets and affect the intensity of its participation. It differentiates between two different sources of spillovers: clustering of general economic activity and that of export-oriented activity. It also focuses on the effect of the business environment and that of institutions at the spatial unit of districts in India. The study disentangles the within-industry effect from the within-firm effect. A simple logit specification is used to model the probability of entry. The analysis is based on a panel of manufacturing firms in India, which allows for the introduction of firm-specific controls and a battery of fixed effects. The findings suggest that exporter-specific clustering, general economic agglomeration, and institutional factors affect firms' export behavior

Industry and the Urge to Cluster: A Study of the Informal Sector in India

This paper studies the determinants of firm location choice at the district-level in India to gauge the relative importance of agglomeration economies vis-à-vis good business environment. A peculiar characteristic of the Indian economy is that the unorganised nonfarm sector accounts for 43.2% of NDP and employs 71.6% of the total workforce. I analyse National Sample Survey data that covers over 4.4 million firms, in both unorganised sectors - manufacturing and services. The empirical analysis is carried out using count models, and I instrument with land revenue institutions to deal with possible endogeneity bias. I find that buyer-suppler linkages and industrial diversity make a district more attractive to economic activity, whilst the quality and level of infrastructure are also important. I conclude that public policy may be limited in its ability to encourage relocation of informal firms.Agglomeration economies, informal sector, location choice