Linkages and Spillovers from Foreign Ownership in the Indian Pharmaceutical Firms

The paper examines the spillover and linkage effects from the presence of foreign firms in the Indian pharmaceutical industry. A comprehensive panel data consisting of nearly 200 firms from 1989 to 2000 was used in the current study. The recent semi-parametric estimation methods as suggested by Olley and Pakes (1996) and Levinsohn and Petrin (2003) were adopted to account for the endogeneity in the input demand. Our results suggest the existence of positive and significant spillover from the foreign equity ownership in the Indian pharmaceutical industry. However, we also found negative and significant spillovers from the backward linkages with foreign firms. The negative spillovers from the backward linkages suggest the possibility of large technology and efficiency gap between local and foreign firms. The results also suggest that institutional arrangements that protect intellectual property rights such as product patents as opposed to process patents will be important for establishing positive linkages and spillovers between local and foreign firms in the Indian pharmaceutical industry.FDI, Backward and Horizontal Linkages, Olley-Pakes, Levinsohn-Petrin

Economic Reform and Productivity growth in Indian Manufacturing Industries: An interaction of technical change and scale economies

This paper studies the effects of the key economic reforms of 1991 on the Indian manufacturing industries using a panel of manufacturing industries. A Translog cost function is used to analyze the production structure in terms of biased technical change and economies of scale. A panel consisting of 121 Indian manufacturing industries from 1982 to 1998 was used in our estimation. The results of our paper support the evidence that there are economies of scale (only moderate) in the Indian manufacturing industries and it has been exploited after the key economic reforms in 1991. Most of the industries in our study revealed bias technology change and majority of the industries have experienced capital-using technical change. This suggests that the key economic reforms of liberalizing the capacity licensing regime that allows greater investment in capital goods will have a positive impact on productive performance of the industries if the price of capital does not substantially increase after the economic reforms. We observe TFP improvements for most of the industries after the 1991 reform initiatives, which support the evidence of improvements in economic efficiency after the key reform initiatives of the 1991.Total Factor Productivity, Bias Technical Change, Economies of Scale, Economic Reforms

Economic liberalization and Indian manufacturing industries: Productivity spillovers and linkages

Ph.DDOCTOR OF PHILOSOPH

Linkages and Spillovers from Foreign Ownership in the Indian Pharmaceutical Firms

The paper examines the spillover and linkage effects from the presence of foreign firms in the Indian pharmaceutical industry. A comprehensive panel data consisting of nearly 200 firms from 1989 to 2000 was used in the current study. The recent semi-parametric estimation methods as suggested by Olley and Pakes (1996) and Levinsohn and Petrin (2003) were adopted to account for the endogeneity in the input demand. Our results suggest the existence of positive and significant spillover from the foreign equity ownership in the Indian pharmaceutical industry. However, we also found negative and significant spillovers from the backward linkages with foreign firms. The negative spillovers from the backward linkages suggest the possibility of large technology and efficiency gap between local and foreign firms. The results also suggest that institutional arrangements that protect intellectual property rights such as product patents as opposed to process patents will be important for establishing positive linkages and spillovers between local and foreign firms in the Indian pharmaceutical industry.FDI, Backward and Horizontal Linkages, Olley-Pakes, Levinsohn-Petrin

Economic liberalization and productivity for selected Indian manufacturing industries: a panel cointegration approach

This article estimates the long-run production function for a panel of 13Indian manufacturing industries for the period 1981 to 1998. To account for nonstationarity and to avoid spurious regression problems, the panel unit-roots tests as suggested by Im et al. (2003) and the panel cointegration techniques as proposed by Pedroni (1999) were used. The generalized methods of moments (GMM) estimation methodology as suggested by Arellano and Bond (1991) and Blundell and Bond (2000), were used to deal with the simultaneity bias introduced by measurement errors. Based on the panel cointegration test, we found evidence of long-run production relationship for all the selected industries. We also observe increasing returns to scale in 3 out of 13 industries under study. However, comparing the pre- and post-liberalization periods, there are improvements in total factor productivity (TFP) in 9 out of 13 industries in the post-liberalization period of 1991 to 1998. This clearly supports the observations that there are significant economic improvements in the recent Indian economic reforms.