Date of Degree
The Indian economy has received considerable interest in economic research in the last decade. Economic liberalization, greater participation in world trade and the availability of long panel of firm level data has encouraged empirical work on the Indian economy. My research adds to this growing empirical literature on the behavior and performance of Indian firms post liberalization.
This thesis comprises three chapters. In the first chapter, I provide a brief summary of reforms in India, review some of the papers analyzing firm behavior and performance and put it in the perspective of the liberalization process in India. The literature on Indian liberalization and on various aspects of firm behavior and performance is plentiful. I have limited my review to the papers which have influenced my research.
In the second chapter, I analyze the relationship between financial constraints faced by the Indian manufacturing firms and their export participation decision. I find that the firms that enter the export market are financially healthier than the firms that cater only to the domestic market. I also verify that financial health is the cause and not a consequence of exports.
In the last chapter, I address the relationship between firm size and its total factor productivity in the Indian manufacturing industries (co-authored with Prabal De). While small firms have the advantage of smaller and more flexible management and lower response time to market changes, larger firms have advantages of economies of scale, political clout and better access to government credits, contracts and licenses, particularly in developing countries. We find that small Indian firms are more productive than their larger counterparts.
Nagaraj, Priya, "Essays on Firm Behavior" (2012). CUNY Academic Works.