Friend or Foe or Family? A Tale of Formal and Informal Plants in India
This paper examines the interaction between formal (organized) and informal (unorganized) plants in the manufacturing sector in India. How has the size and productivity of the plants in the organized sector affected the plants in the unorganized se...
| Main Authors: | , , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/09/18193294/friend-or-foe-or-family-tale-formal-informal-plants-india http://hdl.handle.net/10986/16039 |
| Summary: | This paper examines the interaction
between formal (organized) and informal (unorganized) plants
in the manufacturing sector in India. How has the size and
productivity of the plants in the organized sector affected
the plants in the unorganized sector? How have informal
plants affected formal plants? Are the magnitudes of the
effects symmetric in either direction? The evidence shows
that there are positive horizontal and vertical spillovers
in each direction. Informal firms are an important supplier
of inputs to formal firms. Employment and output in the
organized sector is greater in those states in India that
have a greater presence of unorganized suppliers of inputs.
Conversely, unorganized employment and output are greater in
states that have a greater presence of organized buyers of
inputs. But there are two important asymmetries in the
relationship between the organized and unorganized sectors.
First, the unorganized sector is much more dependent on and
responsive to organized sector presence than vice versa.
Second, unorganized sector productivity is dependent on and
responsive to organized sector productivity and presence but
the reverse is not true. |
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