Domestic Competition Spurs Exports: The Indian Example
IMF Working Papers, September 1, 2004
Source details
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- Domestic Competition Spurs Exports: The Indian Example
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Bibliographic details
- Authors: Tushar Poddar
- Published: September 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451858662.001
Summary findings
- India's exports nearly tripled in the 1990s.
- Decomposing export growth shows that it has been driven by incumbent firms rather than the entry of new firms.
- Using a new panel on Indian firms and estimating a dynamic discrete-choice model of the firm's decision to export, the study finds evidence that economic liberalization led to greater domestic competition, spurring firm efficiency and increasing Indian firms' competitiveness and ability to export.
- Export growth is shown to have been an outcome of local firm innovation brought about by increased competitive pressure from FDI entry.
Methodology
- Data: a new panel on Indian firms (panel used to decompose export growth and estimate firm-level export decisions).
- Empirical approach: a dynamic discrete-choice model of the firm's decision to export.
Key implications and interpretations
- Greater domestic competition following economic liberalization improved firm efficiency.
- Increased competitive pressure from FDI entry induced local firm innovation.
- Improved firm efficiency and innovation increased incumbents' competitiveness and ability to export, explaining export growth during the 1990s.
Content in this bundle
- 1. India's Annual Exports, 1980–2001