Trade Liberalization and Firm Productivity: The Case of India

By P. Topalova, Amit K. Khandelwal. Review of Economics and Statistics, 2004

1,310 citations recorded by the source corpus.

Abstract This paper exploits India's rapid, comprehensive, and externally imposed trade reform to establish a causal link between changes in tariffs and firm productivity. Pro-competitive forces, resulting from lower tariffs on final goods, as well as access to better inputs, due to lower input tariffs, both appear to have increased firm-level productivity, with input tariffs having a larger impact. The effect was strongest in import-competing industries and industries not subject to excessive domestic regulation. While we find no evidence of a differential impact according to state-level characteristics, we observe complementarities between trade liberalization and additional industrial policy reforms.

Subfields: Economics and Econometrics, Health Information Management

View Paper: https://www.semanticscholar.org/paper/907496ea21042f678018e9b5d1051e335d39726d

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Citations in the corpus

The Relationship Between Global Value Chains and Productivity (2017, background): “A large literature finds that productivity gains in firms that directly import these inputs (Amiti and Konings, 2007; Goldberg et al., 2010; Topalova and Khandelwal, 2011; Bas and Strauss-Kahn, 2015; Halpern et al., 2015).”
Trade, Foreign Investment, and Industrial Policy for Developing Countries* (2009, background): “Van Biesebroeck (2005) uses as instruments the location of the firm, ethnicity of the owner, foreign ownership, and state ownership, although the validity of these instruments is not completely clear.”
Heterogeneous MNC subsidiaries and technological spillovers: Explaining positive and negative effects in India (2010, neutral): “The number of sample firms used in the final analysis is similar to earlier studies (Balakrishnan et al., 2000; Topalova 2004) pertaining to Indian manufacturing using the PROWESS.”
Industry Dynamics and Competition from Low-Wage Countries: Evidence on Italy (2014, neutral): “(Amiti and Konings, 2007, Amiti and Davis, 2008, Topalova and Khandelwal, 2011).”
WTO Accession and Performance of Chinese Manufacturing Firms (2017, methodology): “To investigate more formally whether industry variation in trade liberalization is related to past performance, we regress changes in tariffs between 1998 and 2007 on initial productivity, similar to Topalova and Khandelwal (2011).”
Prices, Markups and Trade Reform (2016, neutral): “We follow the procedure suggested by Wooldridge (2009) that forms moments on the joint error term (ξft + ft).”
The Impact of Brexit on UK Firms (2019, neutral): “…trade reforms, including for example papers like Harrison (1994), Pavcnik (2002), Melitz (2003), Amiti and Konings (2007), Goldberg et al. (2009), Topalova and Khandelwal (2011), Bloom et al. (2016), Limão and Maggi (2015), De Loecker et al (2016), Goldberg and Pavcnik (2016), Handley and Limão…”
Does importing more inputs raise exports? Firm-level evidence from France (2013, neutral): “A number of recent pieces of work (e.g., Fernandes 2007; Kasahara and Rodrigue 2008; Topalova and Khandelwal 2011) have shown the positive effect of intermediate goods trade on firm productivity.”