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Testing
the Contestable Market Hypothesis for the Mauritian Banking
Sector
-- Kheswar
Jankee
The
objective of this paper is to analyze the banking market
structure and its implications for competition policy using
the contestable markethypothesis. In addition to providing
empirical evidence on the contestable market theory for
a developing country in Africa, this paper provides a basis
for an informed financial policy in the context of the financial
sector. Using the reduced form Rosse-Panzar methodology,
we find empirical evidence that the banking industry is
not contestable which reinforces the view of its monopolistic
nature. Hence, the empirical results vindicates the rationale
for diversification of the financial system in order to
increase competition, reduce concentration and enhance consumer
welfare.
©
2005 IUP. All Rights Reserved.
Measurement
of Technical Efficiency in Indian Industry: An Overview
-- Praveen Kulshreshtha and Tapan
Kumar Nayak
This
paper overviews an important aspect of economic efficiency
of a firm, namely, Technical Efficiency (TE), and outlines
two major approaches towards measurement of Technical Efficiency,
viz., the Frontier Production Function and Data Envelopment
Analysis (DEA) approach. The frontier production function
can be defined as the maximum possible or potential output
that a firm can produce from a specified level of inputs,
according to the existing technology. The ratio of the actual
output and potential or frontier output of a firm during
a given period is defined as the measure of TE of the firm
during the given period. Analogous to frontier production
function, DEA estimates the potential output of a firm for
a given set of inputs and is used extensively to measure
TE of firms in various industries. It is found that TE varies
widely across firms in Indian industries and there is ample
scope for Indian firms to increase their output by using
better techniques of applying inputs, via improved application
of existing technology, without employing additional inputs.
©
2005 IUP. All Rights Reserved.
Financial
Liberalization and Determinants of Investment: An
Enquiry into Indian Private Corporate Manufacturing Sector
-- V R Prabhakaran Nair
This
paper analyses the determinants of fixed investment in the
Indian Private Corporate Manufacturing sector for the period
1973-2002, using Annual Survey of Industries Data. It is
argued that economic policy of a nation is crucial in determining
the investment behavior in developing countries rather than
the traditional factors like output and profit. Against
the background of the financial sector deregulation initiated
in India since 1991, this study makes an attempt to analyze
whether the traditional factors or the economic policy variables
plays a major role in determining investment behavior. A
reduced form equation derived from the neoclassical investment
theory is used for the empirical analysis. Financial Liberalization
Index is constructed for India for the analysis. The results
show that, the traditional determinants like output and
profit still plays a major role in determining corporate
investment rather than the policy variables. Though aggregate
financial liberalization and more prominently domestic financial
liberalization produced an environment conducive for investment,
it could not succeed in creating a sustained increase in
capital formation in the post-reform period. In other words,
firms consider the demand factor, internal liquidity position
and pastinvestment decisions etc., as the major indicators
for future investment. The only index which shows strong
positive association with corporate investment is index
of money market liberalization. It is also found that there
is significant negative association between index of capital
account liberalization and corporate investment. The negative
and significant relationship with index of capital account
liberalization and investment raises many concerns over
the credibility of external (international) financial reforms.
©
2005 IUP. All Rights Reserved.
Determinants
of Foreign Direct Investment in India: An Industry-wise
Analysis
-- Partha Basu, Narayan
C Nayak and Vani Archana
In
this era of globalization, the FDI flows faster than ever
into the developing countries, particularly the fastest
growing ones. FDI acts as a major stimuli to economic growth
in developing countries by creation of wealth and employment
in the host country and improvement in the balance of payments
via exports. This paper examines empirically, on the basis
of an inter-industry analysis, the time effects of the variables
influencing the FDI inflows to India during the post-reforms
period with special reference to temporal variations in
the effects of these determinants using time dummies for
both intercept and elasticity. The present study finds that
at the initial factor-driven stage of the development, resource-seeking
FDI was strongly influenced by such determinants as marketing-intensity,
gross fixed assets and to some extent by export-import ratio.
However, the elasticity or the response of FDI to these
stimuli started declining as early as in 1997. The situation
started improving by 2000. It remains to be seen if this
improvement has become stable.
©
2005 IUP. All Rights Reserved.
Foreign
Direct Investment: The Best Driver for Economic Growth
--
Srinivasulu
Bayineni
To
develop and flourish, a modern economy requires a massive
amount of capital goods. So that developing countries actively
look for foreign direct investment to strengthen industrial
competitiveness and improve their growth prospects. Developing
countries, emerging economies and countries in transition
increasingly search for foreign direct investment as a source
of economic growth and development, modernization and employment
generation. Foreign investment can also do much for productivity by
providing access to new technologies, management expertise
and export markets. This paper explores the performance
of foreign direct investment in selected Asian countries
and evaluates the contribution of foreign direct investment
in economic growth. Issues likewhy foreign direct investment
need investment climate and foreign direct investment inflows
in India are also discussed in the paper.
©
2005 IUP. All Rights Reserved.
Structure
Conduct Performance (SCP) Paradigm and the Indian Steel
Industry: An
Analysis
--
Saptarshi
Purkayastha
The
Structure Conduct Performance (SCP) Model is an effective
tool for industry analysis. The objective of this study
is to analyze the Indian Steel Industry with respect to
the SCP model and find out the parameters, which significantly
affect its structure, conduct and performance over a period
of 14 years across the industry. Regression Analysis is
used as a tool to extract the above information. The study
attempts to combine industry level aggregate data with firm
level information from the CMIE (Centre for Monitoring Indian
Economy) database to test specified hypothesis. The paper
concludes that in order to obtain higher profitability in
the Indian Steel Industry, firms must either lower their
cost of production and/or government regulation must decrease.
©
2005 IUP. All Rights Reserved.
Book
Review
Corporate
Governance, Economic Reforms, and Development: The Indian
Experience
--
Darryl Reed and Sanjoy Mukherjee
©
2004 Oxford University Press. All Rights Reserved. The IUP holds the copyright for the review. |
