The effects of economic reforms on manufacturing dualism: Evidence from India

Vinish Kathuria, Rajesh Raj and Kunal Sen

Journal of Comparative Economics, 2013, vol. 41, issue 4, 1240-1262

Abstract: Dualism is a pervasive feature of the manufacturing sectors of less-developed countries, with large differences in productivity between the informal and the formal sectors. Policy distortions are viewed as an important factor behind the prevalence of manufacturing dualism. We examine whether tariff reforms, industrial de-licensing and the withdrawal of reservation of products for small firms implemented since the mid-1980s have had any effects on efficiency differentials between informal and formal firms in Indian manufacturing. We find strong evidence that economic reforms have exacerbated dualism by increasing the productivity differentials between the more efficient formal firms and the less efficient informal firms.

Keywords: Reforms; Dualism; Efficiency; Formal; Informal (search for similar items in EconPapers)
JEL-codes: L25 O14 O40 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:41:y:2013:i:4:p:1240-1262

DOI: 10.1016/j.jce.2012.10.003

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