External Openness and Firm Productivity in China and India: Evidence from Business Enterprises Surveys
External Openness and Firm Productivity in China and India: Evidence from Business Enterprises Surveys

Author(s): Takahiro Sato
Subject(s): National Economy, Supranational / Global Economy
Published by: Hokkaido Slavic-Eurasian Reserarch Center
Summary/Abstract: China and India have experienced high economic growth over the last two decades after a long period of stagnation. During the period 1980-2007 India's annual growth rate of per capita income was 6.4 percent compared with that of China at 10.9 percent. While India's growth performance has been considerable, China's has been nothing short of a miracle. The main propose of this paper is to provide a comparative analysis of China's and India's economic growth pattern. This paper contributes to the literature on comparative studies on China and India in two ways. First, most of the existing literature is based on aggregate data. We focus on the determinant of firm-level productivity, which has been omitted by most of the existing studies. Second, the positive nexus between external openness and firm productivity is tested by using the comparable data set in China and India. We expect these two ways to allow us to examine the firm-level heterogeneity, which affects the divergent growth pattern in China and India The rest of this paper is organised as follows. In Section 2 we discuss the model and estimation strategy for analysing the relationship between external openness and productivity. In Section 3 we describe our data and main variables. In Section 4 we report our empirical evidence and in Section 5 we provide a summary of the main findings with some remarks.

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