Industry and Development
The IEG has been a major center of research on Indian industry since its inception. Industry research at IEG covered a wide range of themes – from small industry to multinational corporations, from employment & efficiency to environment & information technology, at different levels of aggregation – firm/industry level to regional/ national level. Some of the major areas that have been researched extensively at the Institute are: small industry, corporate investment, technology and research and development, employment and productivity. Research at the Institute has always been applied and policy-oriented and focus has on the issues of contemporary relevance.
Studies done in the early phases covered small-scale industries, petroleum, cotton and jute textiles, pricing policy for cement, sugar and cotton, location of sugar and fertilizer factories, and wages and productivity in major industries. In the next phase, the 1970s, the focus was mainly on corporate investment, and multinationals and conglomerates. In the 1980s, diverse aspects of Indian industry were covered, with industrial productivity/efficiency receiving prime attention. Industry research undertaken at the IEG in the 1990s and later has been far more varied than that in the 1980s. A large part of the industry research at the IEG in this period was undertaken in the context of economic reforms and globalization, and several studies were directed at assessing the effects of economic reforms and globalization on Indian industry.
Over the last five decades, there has been continuing research interest in small-scale industries at the IEG. The earliest publications (books) on small-scale industries were in 1958 and 1961, and the latest in 2006 and 2007 (forthcoming). A number of studies on small-scale industries were undertaken in the 1980s, which had a focus on efficiency, factor substitution and employment generation in small-scale industries and rural industrialization. More recent studies on small-scale industries have looked at employment, efficiency, exports and technology in the context of globalization. The interrelationship among size, efficiency and employment, determinants of export performance, importance of technology, its role and its effect on employment and competitiveness, subcontracting relationship between small and large scale industries, and factors constraining technology up-gradation and competitiveness in the small scale units are some of the issues addressed by the small scale industry research done at the IEG in the last ten years or so.
Industrial productivity and technical efficiency is another aspect that has received a good deal of attention. Some studies on productivity and efficiency were undertaken in the 1960s. The interest in this topic waned in the next decade, but revived in the 1980s when a number of studies were undertaken, and this continued in the subsequent period. Total factor productivity growth in Indian industries in the pre- and post-reform era, impact of trade liberalization on productivity, interrelationship among competitiveness, participation in trade and size of industrial units in organized industry, inter-regional variations in industrial productivity, impact of infrastructure on productivity and technical efficiency in industries, the effect of agglomeration economies and external economies of scale on industrial productivity performance and competitiveness, the role agglomeration economies can play in facing the challenges posed by globalization, productivity growth in public sector enterprises, and the relationship between productivity and wages are some of the topics covered by industry research in the IEG in the last ten years or so.
Research on R&D behavior of Indian industrial firms and technology imports made by them has been done at the IEG since the late 1980s. A set of studies in the 1990s had a focus on information technology. The basic issues investigated are: factors determining R&D activity and technology acquisition and the impact these have on firm’ performance particularly on exports. Another set of studies investigated various issues connected with technology transfer.
A good deal of research on corporate investment behavior was undertaken at the IEG in the 1970s, which was revived again in the 1990s and later. Attempts were made, in the later studies, to explain industrial firms’ investment behavior or growth of capital stock, particularly to link it to technology acquisition by the firms.
Closely related to the aspects of technology and investment is foreign direct investment. This aspect received a good deal of attention in the 1970s. There was renewed research interest in foreign direct investment in the 1990s as the industrial scene got radically transformed with the economic reforms. The role of Japanese investment in India, the differential behavior of Japanese and European affiliates in India, the differential impact of Japanese and American investment in India, the spillover effects of foreign investment and the interrelationship between foreign trade and foreign investment are some of the topics covered by the research done at the IEG in the last two decades.
In the 1960s through 1980s, several sector-specific or industry–specific studies were undertaken including those on petroleum, fertilizers and textiles. More recently, three industries i.e., automobiles, engineering and food processing have been the focus of the industry specific studies done at the IEG. The issues examined at the industry level include the effect of rate of return regulation on optimality of input use, different aspects of performance, effect of policy liberalization on the structure of industry including, scale economies, employment generation, and growth.
In keeping with the changing policy environment, the industry research at IEG in the last two decades has addressed several new questions. These include the effect of trade reforms and technological changes on employment, wages, competition related issues such as market structure and price-cost margins in the Indian industries, the impact of industrial performance on the incidence of poverty, and restructuring of public sector enterprises in China and India. Proposed research program includes corporate financing, corporate governance, and mergers and acquisitions in addition to the current themes.
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