Arbeitspapier

Services Liberalization and Product Variety of Manufacturing Firms

Autoren

  • Mulyukova
  • A.
Erscheinungsdatum

This paper investigates the impact of services sector liberalization on product innovation of downstream manufacturing firms. Leveraging firm-product panel data from India and employing a shift-share research design, I find that services liberalization significantly increases firms’ product portfolio. Allowing foreign investments in the banking sector decreases firm’s credit-constraint and increases the amount of interest payments on short-term loans. This shows that services liberalization reduces firms’ fixed costs of product innovation. Firms diversify into input-similar industries which changes the distribution of sales across products with the core product experiencing the most pronounced decline in the sales share.

Experte IfW Kiel

Info

JEL Classification
F10, F61, D22, L8

Schlagworte

  • Product mix
  • services liberalization
  • India