Essays on trade, multi-product plants, manufacturing performance and labor market

The evolution and impact of North-North and North-South trade have been among the main areas of research in the literature of international trade. But how trade shocks emanating from a low-wage southern country affect the manufacturing sector of other low-wage countries has been little researched. In particular, there is a lack of evidence on firm-level adjustment to low-wage trade shock in a low-wage developing country context. The main objective of the thesis is to fill this gap in the literature by empirically examining the impact of import competition shock from China on the evolution of manufacturing sector in India. This thesis combines plant level data from the Annual Survey of Industries (ASI) 1998-2009 with the product level trade data from UN Comtrade database. The thesis contains two main chapters –chapter 2, which explores the impact of a sharp rise in Chinese import exposure on overall plant performance and product reallocation dynamics within-plant, and chapter 3. The latter dwells on wage inequality and employment within-plant. Chapter 2 finds that increased import competition from China following its WTO accession leads to improvements in revenue productivity and a reduction of product scope at the plant-level. A 10 percentage point increase in Chinese import exposure leads to a 3.7 percent increase in large plants’ total-factor productivity. The same amount of increase in exposure to Chinese imports leads to a one percent decrease in the number of products produced by the plant. Plant product-level analysis suggests that the impact on selection of products is not symmetric. Plants drop the product in which Chinese import exposure is higher; however, the closer the product is to the core competence of the plant, the less likely it is to be dropped. Although import competition from high-wage countries has no statistically significant impact on plant performance or product scope, plant product-level adjustment shows that import competition shocks from both high-wage countries and China have a similar impact on the selection of products within a plant. Chapter 3 finds that the rise in import competition from China leads to a general increase in within-plant wage inequality between skilled and unskilled workers in large plants. But the overall pattern is driven by much greater adjustment in flexible labor markets or states that have employer friendly industrial relation regulation, while no significant adjustment is evident in the inflexible market. I find that a 10 percentage point increase in Chinese import exposure leads to a 1.35 percent increase in skill premium in the sample of large plants, whereas the same change leads to a 2.65 percent increase in skill premium in the flexible market. It is also observed that increase in import competition from China causes a downsizing of low-productivity plants through employment destruction, and an expansion of high-productivity plants via employment creation. Again, the reallocation of employment is only evident in the flexible labor market

Toward an efficient and sustainable Microinsurance market: The regulatory perspective

While both microcredit and microinsurance products in the developing world have essentially emerged in a regulatory vacuum, the general consensus appears to be that self-regulation may have thus far served the global microcredit industry adequately. The same premise is likely to be false when it comes to microinsurance since diffusion of the essence of insurance among the poor has proven non-trivial. The regulatory framework therefore has to target multiple goals such as to foster market innovations (in terms of product design and the institutional delivery mechanism), to protect the policy holder (i.e., achieving “cost efficiency” and “sustainability”) and at the same time to ensure that insurance services remain inclusive and compatible with the needs of the poor. Accomplishing these goals within a single regulatory framework requires a fine balance. This paper deliberates on how to craft a set of regulatory statutes that would be relevant for the microinsurance industry in consonance with these goals.Microinsurance, poverty & vulnerability, prudential regulation, reporting standards

Toward an efficient and sustainable Microinsurance market: The regulatory perspective

While both microcredit and microinsurance products in the developing world have essentially emerged in a regulatory vacuum, the general consensus appears to be that self-regulation may have thus far served the global microcredit industry adequately. The same premise is likely to be false when it comes to microinsurance since diffusion of the essence of insurance among the poor has proven non-trivial. The regulatory framework therefore has to target multiple goals such as to foster market innovations (in terms of product design and the institutional delivery mechanism), to protect the policy holder (i.e., achieving “cost efficiency” and “sustainability”) and at the same time to ensure that insurance services remain inclusive and compatible with the needs of the poor. Accomplishing these goals within a single regulatory framework requires a fine balance. This paper deliberates on how to craft a set of regulatory statutes that would be relevant for the microinsurance industry in consonance with these goals

Determinants of Workers’ Remittances in Bangladesh: An Empirical Study

The purpose of this paper is to identify macroeconomic determinants of inflow of workers’ remittances in the context of Bangladesh. We used a balanced panel dataset of bilateral remittance flows from 10 major host countries (of Bangladeshi migrants’) to Bangladesh over the 1993 to 2005 period. We found that income differential between host and home country is positively correlated with the inflow of remittances. We explained the above findings as an indication of altruistic motive to remit. On the other hand there are some indications of investment motive to remit in the dataset. Inflation differential between home and host country is also found to be negatively correlated with the inflow of remittances, indicating that higher inflation in home country relative to host country may have exerted some negative effect on workers’ remittances. Devaluation of domestic currency or (increase in exchange rate) appeared to be positively correlated with the flow of workers’ remittances in Bangladesh

The microinsurance market in Bangladesh : An analytical overview

This paper provides an analytical overview of the current state of the microinsurance market in Bangladesh comprising of products offered by commercial insurance companies, microfinance institutions (MFIs) and those by INAFI’s MIME programme. For the commercial life insurers, available products are characterised by a mix of inadequate risk coverage, excessively high premium rates unrelated to any plausible model of mortality of the insured, lengthy process of claim settlement and, above all, high costs of intermediation. Such products therefore appear unattractive to the vulnerable. The MFIs, on the other hand, mainly offer loan insurance thus minimising lenders’ risks and having a much quicker claim settlement process. Some MFIs also offer a variety of other products (notably, term life, health and livestock insurance). However, the health plans reviewed in the paper clarify that most of these are not examples of true insurance products since the bulk of the risk eventually remains with the insured. The requirement of cash transactions in each step of the way is a further drawback eroding popularity of the products. Finally, it is seen that, while INAFI has been implementing both term and endowment life policies, the premium structure appears rather steep vis-à-vis the cost of risks, presumably reflecting high costs of intermediation. In view of very limited competition in the market for commercial life coverage, regulatory directives may be targeted at improving competition in each segment of the market, thereby fostering innovation and fair play