Labour productivity and export performance: Firm-level evidence from Indian manufacturing industries since 1991

Abstract

This paper examines the productivity of firms and their ability to enter the export market, i.e., the self-selection hypothesis and the determinants of labour productivity at the firm level for India's major exporting manufacturing industries during 1991-2009. The paper also examines whether export intensity at the firm level differs between domestic-controlled and foreign-controlled firms, and between private and public firms. Applying a 2SLS model, the authors find evidence in favour of the self-selection hypothesis. The authors also find found that domestic firms are more export-intensive than foreign firms, and that private firms are more export intensive than public firms. Regarding the determinants of labour productivity at firm level, firm size and raw material intensity are found to be two significant determinants in this regard while the ownership status of the firms has no role here.

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