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Multiproduct Firms and Product Turnover in the Developing World: Evidence from India

Pinelopi K. Goldberg^1,2; Amit Khandelwal²; Nina Pavcnik^3,2; Petia Topalova⁴

¹ Princeton University · ² Bread for the World Institute · ³ Dartmouth College · ⁴ Institute of Materials Finishing

This paper provides evidence on the patterns of multiproduct firm production in a large developing country, India, during a period that spans market reforms. In the cross-section, multiproduct firms in India look remarkably similar to their U.S. counterparts. The time-series patterns, however, exhibit important differences. In contrast to evidence from the United States, product churning, particularly product rationalization, is far less common in India. We find no link between product rationalization and output tariff declines following India's 1991 trade liberalization. The lack of “creative destruction” is consistent with the role of industrial regulation in preventing an efficient allocation of resources.

DOI

10.1162/rest_a_00047

Volume

92 (4)

Pages

1042-1049

Language

en

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