6.3.2

Trade liberalization and the clustering of services: Evidence from India

While there has been considerable research on India’s “services revolution”, there is little literature exploring the services phenomenon in India at the sub-national or state level. This project aims not only to fill the existing gap in research but also to add to the empirical literature on the impact of trade liberalization on intra-national economic geographies in the broader context of Work Package 6.

We shall analyse the growth of services sectors within India and examine the spatial dimensions of growth for the more liberalized sectors. We will first assess the tradability of services across Indian states and then look at whether growth in the more-traded services has led to spatial convergence. Significantly, India embarked on an extensive reform programme in 1991 under International Monetary Fund (IMF)/World Bank conditionalities, which provides a natural experiment for conducting this research. These reforms included dismantling the prevalent trade barriers.  

 

In addition, we propose to exploit a firm-level panel database on services in India to study how differences in regulation and degree of openness have impacted on the financial performance indicators of these firms over time, after controlling for the location of incorporation and for market structure.

internal linkage

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image 1: c.karlaganis