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Large business groups gained more by economic liberalization in India

LiveMint logoLiveMint 04-08-2017 Ragini Bhuyan

An Economic and Political Weekly paper by Aditya Mohan Jadhav and V. Nagi Reddy, professors of economics and finance at TA Pai Management Institute, Manipal, and ICFAI Business School, Hyderabad, respectively shows that the influence of large business groups on the Indian economy has increased in the post-liberalization period. This might seem counter-intuitive, as dismantling the “license permit raj” ought to have levelled the playing field for smaller firms. However, larger business groups could better exploit the growth drivers post liberalization and hence maintain their lead, according to the paper. Thus, the share of 30 biggest conglomerates in total assets and total sales has increased owing to better exports, larger market size, and greater focus on selling, distribution and technology. Other smaller conglomerates have lost out in the post-liberalization period. The authors studied three different periods: 1990-92, when the reforms had just begun, 2000-02 (10 years later), and 2010-12, (20 years after the reforms).

Also Read: Indian Business Groups and Their Dominance in the Indian Economy

Task-based goals can motivate students to improve their academic performance, according to a paper published in the National Bureau of Economic Research (NBER) by Damon Clark, professor of economics at the University of California, Irvine, and co-authors. The authors conducted a field study where students were asked to set two different types of goals: one that asked them to achieve a certain grade in exams, and the other that needed them to complete a certain number of online practice exams. The authors found that the latter, task-based goals helped students to not only complete the tasks, but also increased their grades. In contrast, there was no significant improvement in performance for those who were asked to achieve a certain grade.

Also Read: Using Goals to Motivate College Students: Theory and Evidence from Field Experiments

Gender roles and stereotypes emerge in response to historical events, but persist long after circumstances change, according to a new NBER paper by Paola Giuliano, associate professor of economics at the University of California, Los Angeles. The author surveys existing literature on the emergence of various gender norms. Research shows that societies whose language is gendered to a greater degree, with more pronounced gender and sex-based distinctions, tend to have lower female labour force participation. In regions where women played a greater role in agriculture, the practice of bride price dominated instead of dowry. In societies with strong family ties, work was divided on gender lines with women confined to domestic work. Societies with weaker family ties saw equal labour force participation from both men and women.

Also Read: Gender: An Historical Perspective

Between 1991 and 2014 labour’s share in total income declined in 29 of the largest 50 economies in the world. These 29 economies accounted for two-thirds of the global GDP in 2014. Across industries, labour experienced a decline in seven out of 10 industries. The decline was greater in sectors which were more impacted by international trade. These are findings from a new International Monetary Fund (IMF) working paper authored by Mai Chi Dao and others. The paper notes that there are significant differences in the reasons for decline in labour’s share in developed and emerging market economies. In developed nations, the decline has been led by factors such as automation, import competition and off-shoring. This has affected middle-skilled workers the most. Emerging market labour experienced a relatively lower decline, partly because of limited substitutability between labour and capital in these countries than developed economies. There are significant country-wise differences between both country groups though.

Also Read: Why Is Labor Receiving a Smaller Share of Global Income? Theory and Empirical Evidence

Being poor in a rich society can be very demoralizing, according to an article in the VoxEU by Carol Graham, professor of public policy at the University of Maryland. Inequality affects different communities in the US in different ways, with poor blacks more likely to be hopeful and less stressed than poor whites. Graham provides several explanations for this phenomenon. Minorities have narrowed the gap with whites on indicators such as education and life expectancy. They are better off than their parents, while white-working class individuals are dissatisfied as they are worse off than their parents. Graham also finds greater optimism in urban areas and in areas that have greater diversity. She attributes this to healthier habits in urban areas, such as less smoking and more exercise.

Also Read: Lack of hope in America: The high costs of being poor in a rich land

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