Bishwanath Goldar

Do stock markets penalize environment-unfriendly behaviour? Evidence from India

A growing body of research points to the fact that capital markets react to environmental news and thus create incentives for pollution control in both developed and emerging market economies. In this paper we conduct an event study to examine the impact of environmental rating of large pulp and paper, auto and chlor alkali firms on their stock prices. We find that the market generally penalizes environmentally un-friendly behaviour in that announcement of weak environmental performance by firms leads to negative abnormal returns of up to 43 percent. A positive correlation is found between abnormal returns to a firms stock and the level of its environmental performance. These findings should be viewed as further evidence of the important role that capital markets could play in environmental management, particularly in developing countries where environmental monitoring and enforcement are weak.

FOREIGN DIRECT INVESTMENT AND TECHNOLOGY SPILLOVER: EVIDENCE ACROSS INDIAN MANUFACTURING INDUSTRIES

The paper attempts to analyze the spillover effect of Foreign Direct Investment (FDI) across Indian manufacturing industries. Foreign presence by way of FDI brings new channels of technology spillover to the domestic industrial firms in the form of enhanced efficiency and diffusion of knowledge in the long-run. By carrying out Pedroni cointegration tests, the analysis tries to provide a long-run relationship between endogenous variables and explanatory variables, pertaining to technology spillovers across Indian manufacturing industries. We find that technology spillovers are relatively higher in industries like food products, textiles, chemicals, drugs and pharmaceuticals and non-metallic mineral products.

R&D intensity and exports: a study of Indian pharmaceutical firms

The export intensity of Indian pharmaceutical firms has increased substantially in the period after 1995 when the new, more restrictive patent regime was introduced in India. The hike in export intensity has been accompanied by an increase in R&D intensity of Indian pharmaceutical firms. The results of the econometric analysis presented in the paper indicate that increased R&D efforts of Indian pharmaceutical firms were responsible in a major way for the observed increase in export intensity. The econometric results suggest that the impact of R&D intensity on exports depends on the level of productivity already reached by the firms.

Determinants of Import Intensity of India’s Manufactured Exports Under the New Policy Regime

This paper attempts to understand the factors behind the significant increase in import intensity of India’s manufactured exports that has taken place in the post-reform period. The industry-level analysis indicates that the increase in import intensity of manufactured exports is attributable partly to changes in product composition of exports and partly to growing export orientation of Indian manufacturing industries. A major contributing factor appears to be the liberalization of import policy in India. Firm-level econometric analysis reveals that exporting firms are more import intensive than non-exporting firms. A significant positive impact of export intensity on import intensity of firms is clearly indicated. The econometric results also show that firms’ decisions to import and export are interdependent. Both decisions may be rooted in firm heterogeneity.

Reduction in Carbon Emissions Intensity and Impact on Export Competitiveness: Evidence from Indian Manufacturing Firms

India’s organized manufacturing sector experienced a 11% fall in its carbon di oxide (CO2) emissions intensity during 2009–2012, while a majority of the manufacturing plants achieved over a 30% fall during the corresponding period. How did such a reduction in CO2 emissions intensity affect the export competitiveness of Indian manufacturing firms? Using firm-level data for 2009–2013, this paper attempts to empirically answer that question. It is found that large firms and capital intensive firms have achieved a relatively faster decline in CO2 emissions intensity and that containment of CO2 emissions in manufacturing firms did not cause any major loss in their export competitiveness. Rather, it is found to be positively associated with increases in exports.

Intangible Capital and Firm Productivity

An estimate of intangible capital stock is made for a sample of about 3,200 Indian corporate firms for 2012–2013, based on investments made by the firms in various intangible assets during the previous 10 years. For manufacturing and services firms of the sample, three alternate specifications of a production function are estimated in which intangible capital is taken as an input. This analysis clearly reveals that intangible capital has a significant positive impact on productivity of manufacturing and services firms in India. The rate of return to intangible capital is found to be much higher than that to tangible capital.

Structural Changes in Manufacturing Employment in India, 1999-2011

A study undertaken by Ghani and associates (2013) on the organized-unorganized sector breakup of India’s manufacturing employment has found persistence of the unorganized sector within manufacturing during 1989-90 to 2005-06. A similar analysis undertaken in the paper for a more recent period, 1999-2000 to 2011-12, reveals that the share of the unorganized sector in manufacturing employment has declined by about ten percentage points. A decomposition exercise drawing on the distribution of manufacturing employment by state, industry and organized-unorganized dichotomy brings out that the fall in the unorganized manufacturing employment share is mostly attributable to the within state-industry component, and the contribution of changes in employment composition, the between state-industry component and the covariance component, has been relatively small. Further examination of the issue reveals that the declining share of the unorganized sector in manufacturing employment may in part be explained by a noticeable structural shift that has taken place from own account enterprises to establishments within the unorganized manufacturing. Results of econometric analysis indicate that the fall in female labour force participation in India in the 2000s is one of the important factors explaining the declining share of the unorganized sector in manufacturing employment.

Labour, Employment and Economic Growth in India: Gender Discrimination in Manufacturing Employment in India, 1999-2009

Introduction There have been a number of studies on gender discrimination in India. A common finding of these studies is that after controlling for endowments and certain other factors, the wages received by women are relatively lower than those received by men (see, for instance, Reilly and Vasudeva-Dutta, 2005; Menon and Rodgers, 2007; Khanna, 2012; Krishna and Bino Paul, 2012; and Paul and Paul, 2013). In this chapter, a different dimension of discrimination is studied, namely discrimination in job tenure (regular wage jobs versus casual jobs). The analysis is confined to Indian manufacturing, as in the paper of Menon and Rodgers (2007). The main hypothesis tested econometrically is that after controlling for endowments and industry affiliation, the women tend to get discriminated in the matter of getting regular jobs. A related hypothesis is about the effect of economic reforms, particularly trade liberalization, on gender discrimination. There are reasons to believe that liberalization of trade and industrial policies, inasmuch as it leads to increased competition, will reduce gender discrimination in wages. This view is based on a theory of discrimination (see Becker, 1971). The argument is that gender discrimination is costly and the employers do discrimination despite it being costly because of the nature of their preferences. Hence, the employers will have to curb their preference for discrimination if competitive forces bring down their profit margin. A question of particular interest to this chapter is the inter-state differences in the extent of gender-based discrimination in manufacturing employment. The focus, as mentioned above, is on the tenure of employment i.e. how far women tend to be discriminated against in the matter of getting regular jobs. It would be interesting to find out which are the Indian states where the extent of gender discrimination in manufacturing employment is relatively high, and the states in which it is relatively low. What is more important is to look for an explanation of the observed inter-state differences.

Emission Reduction Commitments and International Carbon Trading: Assessment of Impact on India and China Based on GTAP-E Model

The paper investigates how serious will be the impact on India’s economy if India were to make a commitment for substantial reduction in CO2 emissions. Such investigation is done also for China. The analysis is undertaken through counter-factual simulations for the year 2001 by developing scenarios in which India and China cut CO2 emissions by a specified percentage and there exists international trading in carbon. The analysis is undertaken with the help of GTAP-E model. The analysis brings out that the cost of meeting emissions reduction commitments for Annex-I countries can be substantially reduced by engaging in block-level or global carbon trading. The simulation results, obtained under the assumptions that both China and India accept the obligation of cutting CO2 emissions between 5 and 15 percent and there is international carbon trading, indicate that emission cuts in China will reduce welfare both under block carbon trading and global carbon trading. For India, on the other hand, there is an increase in welfare by about 0.2 to 0.3 per cent. Going by the simulation results, China and India would voluntarily cut CO2 emissions if profitable international carbon trading possibilities exist. Therefore, besides negotiating for legally binding commitments for emissions reduction, efforts should be directed at developing international markets for carbon.

Small versus large manufacturing units: how efficient are they? 1

Keeping in mind the much discussed huge employment potential of small manufacturing units, this study examines the performance of enterprises across organised or formal and unorganised or informal sector enterprises. The analysis tends to offer little evidence in favour of positive links between sectors in terms of performance index, i.e. technical efficiency. The formal sector units obviously are better performers than their informal sector counterparts. The informal sector units are not able to benefit in the process of rapid overall growth, suggesting that growth is not inclusive. The demand side factor or agglomeration-specific factor also does not seem to impact on the performance of the informal sector enterprises favourably. On the other hand, the organized manufacturing sector, covered by ASI (annual survey of industries) is responsive to increases in income, which possibly can be explained in terms of the quality differences in the products manufactured by the formal and the informal sectors. The infrastructure variables also do not show a positive effect on the informal sector, while the formal sector efficiency improves with a rise in the availability of infrastructure. On the whole, the informal sector enterprises exist only to provide means of survival; they seem to lack all dynamism.