--- canonical_url: "https://csls.ca/ipm-archive/ipm-issue-43/did-trade-liberalization-boost-total-factor-productivity-growth-in-manufacturing-in-india-in-the-1990s/" title: "Did Trade Liberalization Boost Total Factor Productivity Growth in Manufacturing in India in the 1990s?" author: name: "CSLS" url: "https://csls.ca/author/cslc/" date_published: "2026-07-13T08:14:52+00:00" date_modified: "2026-07-20T20:23:41+00:00" post_type: "ipm" summary: "" ipm_issue_period: - "Fall 2022" ipm_keyword: - "1990s" - "growth accounting" - "India" - "Institute of Economic Growth Delhi" - "manufacturing" - "plant-level" - "reforms" - "tariffs" - "TFP" - "trade liberalization" ipm_research_theme: - "Policy and institutions" - "Trade" ipm_country_focus: - "India" featured_image: "https://csls.ca/wp-content/uploads/2026/06/IPM_50_banner.webp" status: "publish" --- # Did Trade Liberalization Boost Total Factor Productivity Growth in Manufacturing in India in the 1990s? Canonical URL: https://csls.ca/ipm-archive/ipm-issue-43/did-trade-liberalization-boost-total-factor-productivity-growth-in-manufacturing-in-india-in-the-1990s/ # Did Trade Liberalization Boost Total Factor Productivity Growth in Manufacturing in India in the 1990s? [Download full PDF article](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-43-7-Goldar.pdf) Cite this article × Cite this article as: Goldar, Bishwanath. 2022. “Did Trade Liberalization Boost Total Factor Productivity Growth in Manufacturing in India in the 1990s?” International Productivity Monitor, No. 43 (Fall 2022): 110–139. https://www.csls.ca/ipm-archive/ipm-issue-43/did-trade-liberalization-boost-total-factor-productivity-growth-in-manufacturing-in-india-in-the-1990s/ ## Author: - Bishwanath Goldar Institute of Economic Growth, Delhi ## IPM Issue 43 Fall 2022 pp. 110–139 ## Related IPM articles [Efficiency Adjustment of Hours Worked: Two Possible Modifications of a Jorgensen Production Model Barbara Fraumeni Fall 2025 | IPM Issue 49 | pp. 103–115](https://csls.ca/ipm-archive/ipm-issue-49/efficiency-adjustment-of-hours-worked-two-possible-modifications-of-a-jorgensen-production-model/) [Labour Productivity as a Measure of Technological Change Ulrich Kohli Fall 2025 | IPM Issue 49 | pp. 64–81](https://csls.ca/ipm-archive/ipm-issue-49/labour-productivity-as-a-measure-of-technological-change/) [The Relationship between Efficiencies Defenses for Mergers and TFP Growth Robin Shaban Fall 2025 | IPM Issue 49 | pp. 82–102](https://csls.ca/ipm-archive/ipm-issue-49/the-relationship-between-efficiencies-defenses-for-mergers-and-tfp-growth/) [IPM Issue 49 Editors’ Overview Andrew Sharpe, Bart van Ark, Paul Schreyer Fall 2025 | IPM Issue 49 | pp. 1–2](https://csls.ca/ipm-archive/ipm-issue-49/) [De-industrialization and the Great Productivity Slowdown: What Comes Next? 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Several studies undertaken to date based on growth accounting have reported that total factor productivity (TFP) growth in Indian manufacturing in the initial seven to ten years of the post-reform period was lower than that in the decade before the reforms. This finding is in sharp conflict with the sizeable econometric literature that has unambiguously established a positive effect of trade reforms on productivity, backed by strong theoretical reasons to expect such an effect. This article asserts that certain corrections are required in the computation of TFP growth in Indian manufacturing for the 1980s and 1990s for making a valid comparison and presents the corrected TFP growth rates. Further, an argument is built theoretically with some preliminary empirical support that a downward estimation bias is likely to arise when the conventional growth-accounting approach to the measurement of TFP growth is applied to a situation when major trade reforms are underway, as was the case with Indian manufacturing in the 1990s. Based on the TFP growth estimates obtained, a supportive plant-level analysis of the impact of tariff reform on productivity of Indian manufacturing plants, and the identified possible downward bias in TFP estimation, it is argued that in all probability the productivity growth performance of Indian manufacturing was better in the 1990s following the reforms than the performance in the 1980s. L’Inde a entrepris de substantielles réformes commerciales à partir de 1991, accompagnées d’importantes réformes industrielles. Plusieurs études réalisées à ce jour fondées sur la comptabilité de la croissance ont rapporté que la croissance de la productivité multifactorielle (PMF) dans le secteur manufacturier indien au cours des sept à dix premières années de la période post-réforme était inférieure à celle de la décennie précédant les réformes. Ce constat est en contradiction flagrante avec la volumineuse littérature économétrique qui a établi sans ambiguïté un effet positif des réformes commerciales sur la productivité. Cet article soutient que certaines corrections sont nécessaires dans le calcul de la croissance de la PMF dans le secteur manufacturier indien pour les années 1980 et 1990, et présente les taux de croissance corrigés. [Download full PDF](https://csls.ca/wp-content/uploads/2026/07/IPM-Issue-43-7-Goldar.pdf)