Manufacturing and Trade Liberalisation of India: Continuing the Debate

Sayantan Ghosh Dastidar

MPRA Paper from University Library of Munich, Germany

Abstract: The paper attempts to identify the reasons behind the differential performance of the registered and unregistered manufacturing sectors of India during the post-reform period. The motivation for this study comes from the econometric results of Ghosh Dastidar and Veeramani (2014) who find that trade liberalisation has positively affected the unregistered sector growth performance but not that of the registered segment. Besides discussing the probable reasons behind the absence of a trade-growth nexus in the case of the registered sector, the paper reviews the theoretical literature on the unregistered sector - trade liberalisation association with an aim to identify the channels through which trade liberalisation might have affected the performance of the unregistered segment. It seems that trade liberalisation benefitted the unregistered sector indirectly through the increase in sub-contracting activities from the registered sector. Absence of rigid labour regulations also helped the unregistered sector undergo restructuring during the post-reform period and achieve faster growth through elimination of inefficient firms, something which the registered segment failed to do.

Keywords: Registered Manufacturing; Unregistered Manufacturing; Trade Liberalisation; Growth; Employment; India (search for similar items in EconPapers)
JEL-codes: F10 L60 O14 O25 (search for similar items in EconPapers)
Date: 2015-02-05
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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