Corporate governance and Competition: A Case Study of India.

The aim of this paper is to show the interaction effect of product market competition and corporate governance variables on firm performance. While the linkage between internal governance mechanism and firm performance is well established in several studies, the interaction between internal and external governance mechanism has received very little attention in emerging market economies. Here we have shown the independent and interaction effect of ownership and competition variable on firm level productivity. Contrary to conventional wisdom, we document that competition has in reality become a discernible force in developing economies. The econometric modeling result confirms while the standalone effect of ownership variable on productivity is mostly insignificant, there is a strong positive interaction effect with competition variables.

Does Openness Promote Competition? A Case Study of Indian Manufacturing

This paper uses firm level data for the period 1989-2001 to analyse the working of competition in India’s manufacturing sector. It examines the impact of greater competition on profit mark-up over the last decade. The econometric analysis of the factors determining markup indicates that, contrary to received wisdom, trade openness by itself does not act to reduce the profit mark-up. The paper also investigates the degree of competitiveness defined as the Lerner price-cost margin. The analysis indicates that the estimated margins are in general high over the 1990s across all industries and in most of the industries considered these margins have been increasing over the second-half of the 1990s. The market by itself does not bring about competitive outcomes. The regulatory agencies probably have a crucial role to ensure a level playing field.Competition; Indian Manufacturing

Why the economic case for a multilateral agreement on investment is weak.

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FDI, Technology Transfer and Spillover —A Case Study of India

As developing countries increasingly open their economies to foreign direct investment (FDI) one of their principal objective has been to achieve technology transfer from foreign firms to host country firms. This study for India shows that this technology transfer is more likely to be achieved by the presence of foreign firms rather than by simple purchase of foreign technology. It is also seen that technology transfer is dependent on the absorptive capacity of firms and the competitive nature of the industry. Finally, this study finds that institutional factors like the degree of competition positively impact the effects of traditional factors like absorptive capacity in determining technology transfer.

Why the case for a multilateral agreement on investment is weak

The demand of industrialized countries for a multilateral agreement on investment to be negotiated under the roof of the WTO is meeting with considerable resistance on the part of developing countries. The proponents of such a multilateral agreement argue that binding disciplines of capital-importing countries would help reduce uncertainty and, hence, result in more foreign direct investment (FDI) in developing countries. By contrast, the opponents consider such an agreement to be biased in favor of business interests and against the development objectives of Third World economies. It is for various reasons that the case for a multilateral agreement on investment is not compelling: Investment regulations have been liberalized progressively by unilateral measures without multilateral obligations to do so. Moreover, the protection of foreign investors against political risk is fairly advanced given the large number of bilateral and plurilateral investment treaties. A multilateral agreement could reduce FDI-related transaction costs significantly only in the unlikely event that the complex net of existing arrangements would be replaced. A “WTO plus”-type framework appears to be the more realistic outcome of negotiations, with a multilateral agreement defining the smallest common denominator of WTO members and more substantive agreements with limited membership remaining in place. Empirical evidence suggests that WTO negotiations on investment are neither sufficient nor necessary to induce higher FDI flows to developing countries. Transaction-cost-related impediments to FDI have played a minor role in driving FDI, and the absence of a multilateral agreement has not prevented the recent boom of FDI in developing countries. Wishful thinking prevails on the part of developing countries, which insist on preferential treatment with regard to their own obligations as host countries and on binding obligations for foreign investors and their home countries. It is highly questionable whether developing countries could derive more benefits from FDI if a multilateral agreement were to include “development clauses” allowing for flexible and selective approval procedures and performance requirements such as local-content rules. The call for binding rules on the behavior of foreign investors may discourage multinational enterprises from investing in developing countries altogether, instead of fostering transfers of technology and improving the quality of FDI. By insisting on preferential treatment with regard to FDI incentives, developing countries tend to ignore that incentives- based competition for FDI is mainly between themselves. Unless developing countries are prepared to tie their own hands, they cannot reasonably expect significant concessions from industrialized countries. Developing countries will become relevant negotiation partners in the WTO only by offering something on their own. Rather than engaging in a futile attempt to block multilateral negotiations on investment altogether, developing countries should commit themselves to rulebased FDI policies as a negotiating chip. The pressure on industrialized countries to engage in negotiations on labor mobility would mount if developing countries refrained from performance requirements and granted national treatment to foreign investors. --

Does Regionalism Hinder Multilateralism: A Case Study of India.

Today many developing countries fear that regional movements in other parts of the world will adversely impact their trade as regionalism overtakes multilateralism. The response has been that most of them are trying to get into one regional bloc or the other via regional trade arrangements (RTAs). In this paper we have investigated how India as a non-member country is affected by formation of RTAs like ASEAN, EU, NAFTA, and MERCOSUR..Controlling for non-RTA factors that influence exports, we find thatIndia?s exports to these RTAs seem to be affected not by the formation of these RTAs pese but by demand side factors.

Economic Development: Do Governments matter?

Since the Washington Consensus of the early nineties, there has been an attempt to define the role of governments in development. After the laissez faire market solution of the Consensus there was view that the success of the dirigiste economies of East Asian economies suggested that the government should play an activist role. The east Asian crisis of the late nineties once again turned attention to the role of the government with attention turning to India and China and the Beijing Consensus. In this paper, the development experience of India, China and east Asia is explored in detail over the last fifty years. The paper concludes that the experience suggests that governments do no better than the markets particularly as much of the development of these countries was based on exogenous ?shocks? which no government could have anticipated. The paper concludes that the traditional neoclassical view that governments should restrict their role to providing basic public goods like health and education is probably well founded.

Financial intermediation and employment

This paper explores the relationship between financial intermediation and employment. We explain why some economies have low financial intermediation even when financial intermediation is safe. Moreover, we seek to explain why these economies tend to be poor and vulnerable, and also have large self-employment even when the latter has low productivity. We model safe but unsound banks and show that the effects of bad banking can be overcome only partially by corrective taxes. The model is extended to incorporate the illegal sector of the economy as well as the labor laws.Financial intermediation, self-employment, tax, labor laws

Corporate Governance, Competition and Firm Performance: Evidence from India.

The aim of this paper is to show the interaction effect of product market competition and corporate governance variables on firm performance. While the linkage between internal governance mechanism and firm performance is well established in several studies, the interaction between internal and external governance mechanism has received scanty attention in emerging market economies. Here we have shown the independent and interaction effect of ownership and competition variable on firm productivity. Contrary to conventional wisdom, we document that competition has in reality become a discernible force in developing economies. The econometric modelling result shows while the standalone effect of ownership variable on productivity is mostly insignificant, there is a strong positive interaction effect with competition variables.

Desktop publishing

Information centres (ICs) cater to a multitude of needs of their users. For quite some time now, ICs are depending heavily on information technology to serve their clientele better, faster and in a professional way. Like CD-ROM and video disc technologies, which are being widely accepted as a part of modem information centres, desktop publishing (DTP) also entered the scene with a bang to provide a professional image to the information services. ICs with their diverse nature of functions can make use of DTP as a tool to enhance the efficiency and effectiveness of document production in information services. This article briefly overviews various aspects of DTP to provide the user an idea about what it is and where the technology can be used