Reforms, entry and productivity: Some evidence from the Indian manufacturing sector

It is now stylized that, while the impact of ownership on firm productivity is unclear, product market competition can be expected to have a positive impact on productivity, thereby making entry (or contestability of markets) desirable. Traditional research in the context of entry has explored the strategic reactions of incumbent firms when threatened by the possibility of entry. However, following De Soto (1989), there has been increasing emphasis on regulatory and institutional factors governing entry rates, especially in the context of developing countries. Using 3-digit industry level data from India, for the 1984-97 period, we examine the phenomenon of entry in the Indian context. Our empirical results suggest that during the 1980s industry level factors largely explained variations in entry rates, but that, following the economic federalism brought about by the post-1991 reforms, variations entry rates during the 1990s were explained largely by state level institutional and legacy factors. We also find evidence to suggest that, in India, entry rates were positively associated with growth in total factor productivity

Economic Convergence in Seven Asian Economies

The impressive economic growth in a select group of Asian economies in the last several decades prompts some to argue that authoritarianism helps rapid economic growth while democracy hampers it. In this paper, we used the panel data approach to test this hypothesis for seven Asian economies, including South Korea, Singapore, and China. Our results reject the strong version of this hypothesis but fail to reject the weak version of it. Specifically, we found insignificant impacts of political freedom but significant effects of economic freedom on advancing economic convergence in these economies. Copyright � 2007 The Authors; Journal compilation � 2007 Blackwell Publishing Ltd.