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Learning Versus Stealing: How Important are Market-Share Reallocations to India's Productivity Growth?

Ann Harrison (), Leslie Martin () and Shanthi Nataraj

No 16733, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The new trade theory emphasizes the role of market-share reallocations across firms ("stealing") in driving productivity growth, while the older literature focused on average productivity improvements ("learning"). We use comprehensive, firm-level data from India's organized manufacturing sector to show that market-share reallocations did play an important role in aggregate productivity gains immediately following the start of India's trade reforms in 1991. However, aggregate productivity gains during the overall 20-year period from 1985 to 2004 were driven largely by improvements in average productivity. By exploiting the variation in reforms across industries, we document that the average productivity increases can be attributed to India's trade liberalization and FDI reforms. Finally, we construct a panel dataset that allows us to track firms during this time period; our results suggest that while within-firm productivity improvements were important, much of the increase in average productivity also occured because of firm entry and exit.

JEL-codes: F13 F14 F23 (search for similar items in EconPapers)
Date: 2011-01
Note: EEE ITI
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Published as Ann E. Harrison & Leslie A. Martin & Shanthi Nataraj, 2013. "Learning versus Stealing: How Important Are Market-Share Reallocations to India's Productivity Growth?," World Bank Economic Review, World Bank Group, vol. 27(2), pages 202-228.

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Journal Article: Learning versus Stealing: How Important Are Market-Share Reallocations to India's Productivity Growth? (2013) Downloads
Working Paper: Learning versus Stealing How Important are Market-Share Reallocations to India's Productivity Growth (2011)
Working Paper: Learning versus stealing: how Important are market-share -- reallocations to India's productivity growth? (2011) Downloads
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