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...

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Main Authors:	Ghani, Ejaz, O'Connell, Stephen D., Sharma, Gunjan
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	ACCOUNTING AGGLOMERATION EFFECTS BUSINESSES BUYER BUYERS COMMERCE COMPETITIVE PRESSURE COMPETITORS DEVELOPMENT ECONOMICS E-MAIL ECONOMIC ACTIVITY ECONOMIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH EMPLOYMENT EMPLOYMENT GENERATION EMPLOYMENT GROWTH EMPLOYMENT SHARE ENTRY BARRIERS FIRM PRODUCTIVITY FIRM SIZE FOREIGN DIRECT INVESTMENT FOREIGN INPUTS GENERAL EQUILIBRIUM GLOBALIZATION HOUSEHOLD ENTERPRISES INCOME INDUSTRIAL CLASSIFICATION INDUSTRIAL POLICY INDUSTRY CHARACTERISTICS INFORMAL ECONOMY INFORMAL SECTOR INNOVATION JOB CREATION JOBLESS GROWTH JOBS LABOR INTENSITY LABOR INTENSIVE INDUSTRIES LABOR MARKET LABOR REGULATIONS LABOUR LABOUR MARKET LICENSING MANUFACTURING MATERIAL MODERNIZATION MOTIVATION MULTIFACTOR PRODUCTIVITY NETWORKS OPEN ACCESS OUTSOURCING PLANT PRODUCTIVITY PLANT SIZE PRODUCT MARKET PRODUCT MARKETS PRODUCT MIX PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH RESULT RESULTS SEARCH SKILL UPGRADING SKILLED WORKER SUPPLIERS SUPPLY NETWORKS TIME PERIOD TOTAL EMPLOYMENT TOTAL FACTOR PRODUCTIVITY TOTAL WAGE TRADE LIBERALIZATION TRADE REFORMS UNEMPLOYMENT USES WAGE BILL WAGES WEB WORK FORCE WORKER WORKERS
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

id	okr-10986-16039
recordtype	oai_dc
spelling	okr-10986-160392021-04-23T14:03:27Z Friend or Foe or Family? A Tale of Formal and Informal Plants in India Ghani, Ejaz O'Connell, Stephen D. Sharma, Gunjan ACCOUNTING AGGLOMERATION EFFECTS BUSINESSES BUYER BUYERS COMMERCE COMPETITIVE PRESSURE COMPETITORS DEVELOPMENT ECONOMICS E-MAIL ECONOMIC ACTIVITY ECONOMIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH EMPLOYMENT EMPLOYMENT GENERATION EMPLOYMENT GROWTH EMPLOYMENT SHARE ENTRY BARRIERS FIRM PRODUCTIVITY FIRM SIZE FOREIGN DIRECT INVESTMENT FOREIGN INPUTS GENERAL EQUILIBRIUM GLOBALIZATION HOUSEHOLD ENTERPRISES INCOME INDUSTRIAL CLASSIFICATION INDUSTRIAL POLICY INDUSTRY CHARACTERISTICS INFORMAL ECONOMY INFORMAL SECTOR INNOVATION JOB CREATION JOBLESS GROWTH JOBS LABOR INTENSITY LABOR INTENSIVE INDUSTRIES LABOR MARKET LABOR REGULATIONS LABOUR LABOUR MARKET LICENSING MANUFACTURING MATERIAL MODERNIZATION MOTIVATION MULTIFACTOR PRODUCTIVITY NETWORKS OPEN ACCESS OUTSOURCING PLANT PRODUCTIVITY PLANT SIZE PRODUCT MARKET PRODUCT MARKETS PRODUCT MIX PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH RESULT RESULTS SEARCH SKILL UPGRADING SKILLED WORKER SUPPLIERS SUPPLY NETWORKS TIME PERIOD TOTAL EMPLOYMENT TOTAL FACTOR PRODUCTIVITY TOTAL WAGE TRADE LIBERALIZATION TRADE REFORMS UNEMPLOYMENT USES WAGE BILL WAGES WEB WORK FORCE WORKER WORKERS 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. 2013-10-02T21:28:18Z 2013-10-02T21:28:18Z 2013-09 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 English en_US Policy Research Working Paper;No. 6588 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research South Asia India
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCOUNTING AGGLOMERATION EFFECTS BUSINESSES BUYER BUYERS COMMERCE COMPETITIVE PRESSURE COMPETITORS DEVELOPMENT ECONOMICS E-MAIL ECONOMIC ACTIVITY ECONOMIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH EMPLOYMENT EMPLOYMENT GENERATION EMPLOYMENT GROWTH EMPLOYMENT SHARE ENTRY BARRIERS FIRM PRODUCTIVITY FIRM SIZE FOREIGN DIRECT INVESTMENT FOREIGN INPUTS GENERAL EQUILIBRIUM GLOBALIZATION HOUSEHOLD ENTERPRISES INCOME INDUSTRIAL CLASSIFICATION INDUSTRIAL POLICY INDUSTRY CHARACTERISTICS INFORMAL ECONOMY INFORMAL SECTOR INNOVATION JOB CREATION JOBLESS GROWTH JOBS LABOR INTENSITY LABOR INTENSIVE INDUSTRIES LABOR MARKET LABOR REGULATIONS LABOUR LABOUR MARKET LICENSING MANUFACTURING MATERIAL MODERNIZATION MOTIVATION MULTIFACTOR PRODUCTIVITY NETWORKS OPEN ACCESS OUTSOURCING PLANT PRODUCTIVITY PLANT SIZE PRODUCT MARKET PRODUCT MARKETS PRODUCT MIX PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH RESULT RESULTS SEARCH SKILL UPGRADING SKILLED WORKER SUPPLIERS SUPPLY NETWORKS TIME PERIOD TOTAL EMPLOYMENT TOTAL FACTOR PRODUCTIVITY TOTAL WAGE TRADE LIBERALIZATION TRADE REFORMS UNEMPLOYMENT USES WAGE BILL WAGES WEB WORK FORCE WORKER WORKERS
spellingShingle	ACCOUNTING AGGLOMERATION EFFECTS BUSINESSES BUYER BUYERS COMMERCE COMPETITIVE PRESSURE COMPETITORS DEVELOPMENT ECONOMICS E-MAIL ECONOMIC ACTIVITY ECONOMIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH EMPLOYMENT EMPLOYMENT GENERATION EMPLOYMENT GROWTH EMPLOYMENT SHARE ENTRY BARRIERS FIRM PRODUCTIVITY FIRM SIZE FOREIGN DIRECT INVESTMENT FOREIGN INPUTS GENERAL EQUILIBRIUM GLOBALIZATION HOUSEHOLD ENTERPRISES INCOME INDUSTRIAL CLASSIFICATION INDUSTRIAL POLICY INDUSTRY CHARACTERISTICS INFORMAL ECONOMY INFORMAL SECTOR INNOVATION JOB CREATION JOBLESS GROWTH JOBS LABOR INTENSITY LABOR INTENSIVE INDUSTRIES LABOR MARKET LABOR REGULATIONS LABOUR LABOUR MARKET LICENSING MANUFACTURING MATERIAL MODERNIZATION MOTIVATION MULTIFACTOR PRODUCTIVITY NETWORKS OPEN ACCESS OUTSOURCING PLANT PRODUCTIVITY PLANT SIZE PRODUCT MARKET PRODUCT MARKETS PRODUCT MIX PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH RESULT RESULTS SEARCH SKILL UPGRADING SKILLED WORKER SUPPLIERS SUPPLY NETWORKS TIME PERIOD TOTAL EMPLOYMENT TOTAL FACTOR PRODUCTIVITY TOTAL WAGE TRADE LIBERALIZATION TRADE REFORMS UNEMPLOYMENT USES WAGE BILL WAGES WEB WORK FORCE WORKER WORKERS Ghani, Ejaz O'Connell, Stephen D. Sharma, Gunjan Friend or Foe or Family? A Tale of Formal and Informal Plants in India
geographic_facet	South Asia India
relation	Policy Research Working Paper;No. 6588
description	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.
format	Publications & Research :: Policy Research Working Paper
author	Ghani, Ejaz O'Connell, Stephen D. Sharma, Gunjan
author_facet	Ghani, Ejaz O'Connell, Stephen D. Sharma, Gunjan
author_sort	Ghani, Ejaz
title	Friend or Foe or Family? A Tale of Formal and Informal Plants in India
title_short	Friend or Foe or Family? A Tale of Formal and Informal Plants in India
title_full	Friend or Foe or Family? A Tale of Formal and Informal Plants in India
title_fullStr	Friend or Foe or Family? A Tale of Formal and Informal Plants in India
title_full_unstemmed	Friend or Foe or Family? A Tale of Formal and Informal Plants in India
title_sort	friend or foe or family? a tale of formal and informal plants in india
publisher	World Bank, Washington, DC
publishDate	2013
url	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
_version_	1764432054069493760

Friend or Foe or Family? A Tale of Formal and Informal Plants in India

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