Bank Ownership and Margins of Trade:Evidence from a Firm-Bank Matched Dataset

Does a bank's ownership matter for a firm's performance (to which it is connected)? Especially, in the event of a crisis? I study this question through the effect of 2008-09 crisis to provide evidence on a new channel which matters significantly for a firm's export performance - bank ownership. In particular, I find: (a) firms connected to private and/or foreign banks earn around 7.7- 39% less in terms of their export earnings during the crisis as compared to firms' having banking relationships with public-sector banks. This happened as the public-sector banks were differentially treated by the Central Bank of India during the crisis due to a clause in the Indian Banking Act of 1969; (b) effect is concentrated only on the intensive margin of trade; (c) drop in exports is driven by firms' client to big domestic-private banks and banks of US origin; (d) firms not connected to public-sector banks also laid-o¤ workers (both managers and non-managers), employed less capital and imported less raw materials. In addition, I also find that firms with lower average product of capital (than the median) received about 50% more loans from the public-sector sources, suggesting a significant reinforcement of inefficiency in the Indian economy due to misallocation of credit

Input-trade Liberalization and the Demand for Managers:Evidence from India

Can input-trade liberalization increase the demand for managers? Imported inputs are an important source of technology ináows. Previous research on the implications of imported inputs overlooked their potential e§ect on the demand for managing the new incoming knowledge. Adopting the case of India, this paper presents a Örst empirical attempt to Öll this gap. Using detailed Örm-level data that uniquely distinguishes between the compensations of managers and non-managers, and exploiting the exogenous nature of Indiaís Eight-Plan trade reform, we investigate the potential causal link between input-trade liberalization and the demand for managers relative to non-managers. We Önd that a decrease in input tari§s increases the relative demand for managers, primarily in domestic Örms that use the imported inputs to produce intermediate goods. SpeciÖcally, a 10% drop in input tari§s induces, on average, a 1-1.5% increase in the compensation share of managers, manifested via increases in both their number as well as average wages and bonuses. These patterns are: (i) observed across the Örmsí size distribution; (ii) applicable for both exporting and non-exporting Örms; (iii) stronger in familyrun Örms that operate under áexible labor market regulations; (iv) relatively more dominant in the short-run. In addition, we show that unlike changes in input tari§s, import competition does not a§ect the relative demand for managers

Chinese Competition and Product Variety of Indian Firms

Using detailed firm-product-year data across manufacturing industries in India, and exploiting the exogenous nature of China's entry into the WTO in 2001, we investigate the link between the impact of import penetration from China on the product variety of Indian manufacturing firms. We find: (i) robust and significant effect of product drop, with the effect coming only from competitive pressure in the domestic market; (ii) evidence of product drop or 'creative destruction' is robust only for the lower-half of the size distribution; (iii) firms drop their peripheral/marginal products and concentrate on the core ones; and (iv) our result is most strong for firms producing intermediate goods. For an average Indian manufacturing firm, 10 percentage point increase in India's Chinese share of imports in the domestic market reduces the product scope of firms by 1.7-4.4%. In contrast, we find positive effects on product scope as when firms are importing intermediate goods. We also find evidence of significant productivity effects and within-firm factor reallocation. Our results are consistent to a battery of robustness checks and IV estimation

Import Competition, Formalization, and the Role of Contract Labor

Using the case of the Indian manufacturing sector and exploiting plausibly exogenous variation from Chinese imports, we provide causal evidence that higher import competition increases the share of the formal enterprise employment. We find an increase in the level of formal enterprise employment, driven by the high productivity firms, and in contrast, a fall in the informal enterprise employment. This labor reallocation is enabled by contract workers, who do not carry stringent ring costs. Our estimates imply that Chinese import competition led to an increase in the share of formal sector employment by 4.1 percentage points between 2000 and 2005. We calculate the labor productivity gap between the formal and informal sector, adjusting for differences in prices and worker characteristics and find them to be salient in explaining the observed gap. Our preferred estimate of the productivity gap implies an increase in labor productivity by 3.19% in response to Chinese import competition

Intellectual Property Regimes and Firm Structure

We use The Patents (Amendment) Act, 2002 in India as a quasi-natural experiment to identify the causal e¤ect of higher incentives for innovation on firm organizational features. We find that stronger intellectual property (IP) protection has a sharper impact on technologically advanced firms, i.e., firms that were a-priori above the industry median in terms of technology adoption. While there is an overall increase in managers' share of compensation, this increase is about 1.6-1.7% more for high-tech firms. This difference can be attributed to a larger increase in performance pay for high-tech firms. The reform also leads to a significant increase in number of managerial layers and number of divisions for high-tech firms relative to low-tech firms, but only the latter effect is correlated with the differential change in managerial compensation. Broadly, we demonstrate that stronger IP protection leads to an increase in both within-firm and between-firm wage inequality, with more robust evidence for between-firm inequality

Three Essays in Empirical Microeconomics

As the world's complexity grows, economists are increasingly challenged to answer fundamental questions of individual behavior and societal phenomena. While economic theory provides the grounding intuition, the recent availability of large-scale micro-data and advanced econometric techniques allows us to exploit the linkages across disciplines to identify and explain counter-intuitive outcomes. The present work addresses an empirical investigation of the connections between three well-established areas: political economy, industrial organization, and trade policy. In the first chapter, I investigate how political support may influence the provision of intellectual property recognition by the central government. In most countries, governments are responsible for regulating and administering the granting of intellectual property rights to firms and individuals, in order to promote and protect innovation. However, very little is known about the extent to which this decision-making process can be affected by political considerations. I address this question using newly collected historical data from the fascist period in Italy. In the analysis, I exploit the province-level variation in political activism before Mussolini's rise to power to identify the areas of greater dissent for Fascism and to estimate the subsequent response in terms of patents and trademarks released. I show that local support for Mussolini was critical to the approval of new patents, that have been disproportionately more granted to firms located in areas where the consensus for the regime was originally weaker. My findings suggest that the recognition of these rights, rather than being a reward for innovation, was manipulated by the regime for political purposes. These findings are of particular relevance. This work is the first to provide empirical evidence that political objectives can substantially affect the provision of intellectual property rights. By showing that the allocation of these private legal rights can be subjected to distortive criteria, I uncover an alternative channel of misallocation that governments can exploit to affect the innovation process. Nevertheless, the direction of this effect is quite counter-intuitive when compared to the more popular strategy of rewarding government-supportive areas. Within my interpretation, Mussolini deliberated to allocate resources based on aggregate political preferences, favoring more the less supportive areas in an attempt to mitigate potential sources of instability. Whether governments provide efficient and successful incentives for innovation is also one of the broad questions behind the second chapter. In this chapter, a joint work with my supervisor, Dr. Renaud Foucart, we investigate the effects of delivering a radical innovation in a variety of a product when a market is characterized by low differentiated goods. The standard approach predicts innovation to provide a temporary competitive advantage to the innovator, which expires once innovation becomes freely available, restoring the pre-existing competition level. We show that when the above conditions apply, competition in the catch-up phase can actually become much stronger than it was in the pre-innovation one. Using a simple model of differentiated Cournot competition with endogenous choice of product variety, we find that innovation in one variety may lead to a decrease in product diversity in the catch-up phase, eventually decreasing the profit of the innovator and of all other producers. This result happens when the cost reduction delivered by the innovation is high enough for all producers to switch to the low-cost variety, but not sufficiently high to compensate for the negative effect of the increase in competition. We provide supporting evidence for our theory by studying the case of the shrimp import competition between Asia and the US. In the late nineties, the US government financed the development of an innovative technique that allowed them to massively increase the production of their native species of shrimps. The advantage lasted very short. In order to be able to exploit the same technology, Asian countries abandoned their native shrimp cultivation to switch to the US variety. Product diversity decreased and competition became much stronger, leading the US producers to almost disappear from the market due to the Asian import penetration. Finally, the third chapter examines the impact of China's competition shock on the use of a very popular instrument to correct trade policy infringement: the World Trade Organization (WTO) disputes. Following its accession to WTO in 2001, China has been repeatedly brought before the court due to its alleged violations of the global trade rules. I analyze the determinants of the trade disputes involving China as a respondent country in order to identify the major concerns of its complainants. I show that the peculiarities of the Chinese economic structure, and the consequent trade distortions, have been reflected in the determinants of its complaints - which differ from the determinants of disputes addressed against other members, including other powerful economies such as the US and EU. First, I show that tensions are grounded on a bilateral basis and are significantly linked to import penetration and the relative asymmetries in the exporting activity. Second, strategic arguments significantly affect the decision to file a dispute against China, with countries more likely to act when their retaliatory power increases. Last, the inverse relationship between unilateral tariff adjustments and dispute initiation suggests that the use of multilateral solutions became secondary to the imposition of direct measures

Further Dimensions for Sensing in Biofluids: Distinguishing Bioorganic Analytes by the Salt-Induced Adaptation of a Cucurbit[7]uril-Based Chemosensor

Insufficient binding selectivity of chemosensors often renders biorelevant metabolites indistinguishable by the widely used indicator displacement assay. Array-based chemosensing methods are a common workaround but require additional effort for synthesizing a chemosensor library and setting up a sensing array. Moreover, it can be very challenging to tune the inherent binding preference of macrocyclic systems such as cucurbit[n]urils (CBn) by synthetic means. Using a novel cucurbit[7]uril-dye conjugate that undergoes salt-induced adaptation, we now succeeded in distinguishing 14 bioorganic analytes from each other through the facile stepwise addition of salts. The salt-specific concentration-resolved emission provides additional information about the system at a low synthetic effort. We present a data-driven approach to translate the human-visible curve differences into intuitive pairwise difference measures. Ion mobility experiments combined with density functional theory calculations gave further insights into the binding mechanism and uncovered an unprecedented ternary complex geometry for CB7. TThis work introduces the non-selectively binding, salt-adaptive cucurbit[n]uril system for sensing applications in biofluids such as urine, saliva, and blood serum

Coulomb dissociation of N 20,21

Neutron-rich light nuclei and their reactions play an important role in the creation of chemical elements. Here, data from a Coulomb dissociation experiment on N20,21 are reported. Relativistic N20,21 ions impinged on a lead target and the Coulomb dissociation cross section was determined in a kinematically complete experiment. Using the detailed balance theorem, the N19(n,γ)N20 and N20(n,γ)N21 excitation functions and thermonuclear reaction rates have been determined. The N19(n,γ)N20 rate is up to a factor of 5 higher at

Relationship Between Trade, Investment and Environment: A Review of Issues

The inter-linkage between economic openness and environmental repercussions is a widely researched area. The current study contributes in the existing pool of research by conducting a cross-country empirical analysis for the year 2008 by exploring the interrelationship between openness indicators (trade and investment) and environmental performance of a country. For this purpose, the analysis separately considers export orientation, import orientation, FDI inwardness and FDI outwardness of the countries in different variations of the proposed empirical model. The regression results do not provide strong support to the Pollution Haven Hypothesis (PHH). The findings also confirm a relationship between socio-economic and socio-political factors in a country and its environmental performance