TY - JOUR AU - Goldberg,Pinelopi K. AU - Khandelwal,Amit AU - Pavcnik,Nina AU - Topalova,Petia TI - Multi-product Firms and Product Turnover in the Developing World: Evidence from India JF - National Bureau of Economic Research Working Paper Series VL - No. 14127 PY - 2008 Y2 - June 2008 UR - http://www.nber.org/papers/w14127 L1 - http://www.nber.org/papers/w14127.pdf N1 - Author contact info: Pinelopi K. Goldberg Yale University Department of Economics 37 Hillhouse Ave. P.O. Box 208264 New Haven, CT 06520-8264 E-Mail: penny.goldberg@yale.edu Amit Khandelwal Graduate School of Business Columbia University Uris Hall 606, 3022 Broadway New York, NY 10027 Tel: 212/854-7506 Fax: 212/316-9219 E-Mail: ak2796@columbia.edu Nina Pavcnik Department of Economics 6106 Rockefeller Center Dartmouth College Hanover, NH 03755 Tel: 603/646-2537 Fax: 603/646-2122 E-Mail: nina.pavcnik@dartmouth.edu Petia Topalova Asia and Pacific Department International Monetary Fund (IMF) 700 19th Street, N.W. Washington DC 20431 E-Mail: PTopalova@imf.org AB - Recent theoretical work predicts that an important margin of adjustment to deregulation or trade reforms is the reallocation of output within firms through changes in their product mix. Empirical work has accordingly shifted its focus towards multi-product firms and their product mix decisions. Existing studies have however focused exclusively on the U.S. Using detailed firm-level data from India, we provide the first evidence on the patterns of multi-product firm production in a large developing country during a period (1989-2003) that spans large-scale trade and other market reforms. We find that in the cross-section, multi-product firms in India look remarkably similar to their U.S. counterparts, confirming the predictions of recent theoretical models. The time-series patterns however exhibit important differences. In contrast to evidence from the U.S., product churning--particularly product rationalization -- is far less common in India. We thus find little evidence of "creative destruction". We also find no link between declines in tariffs on final goods induced by India's 1991 trade reform and product dropping. The lack of product dropping is consistent with the role of industrial regulation in India, which, like in many other developing countries, may prevent an efficient allocation of resources. ER -