Multi-product Firms and Product Turnover in the Developing World: Evidence from India

Pinelopi K. Goldberg, Amit Khandelwal, Nina Pavcnik, Petia Topalova

NBER Working Paper No. 14127
Issued in June 2008
NBER Program(s):International Trade and Investment

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.

download in pdf format
   (173 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w14127

Published: Pinelopi K Goldberg & Amit K Khandelwal & Nina Pavcnik & Petia Topalova, 2010. "Multiproduct Firms and Product Turnover in the Developing World: Evidence from India," The Review of Economics and Statistics, MIT Press, vol. 92(4), pages 1042-1049, 02. citation courtesy of

Users who downloaded this paper also downloaded* these:
Bernard, Redding, and Schott w12782 Multi-Product Firms and Trade Liberalization
Goldberg, Khandelwal, Pavcnik, and Topalova w14416 Imported Intermediate Inputs and Domestic Product Growth: Evidence from India
Bernard, Redding, and Schott w12293 Multi-Product Firms and Product Switching
Feenstra and Ma w13703 Optimal Choice of Product Scope for Multiproduct Firms under Monopolistic Competition
Manova and Zhang w15249 China's Exporters and Importers: Firms, Products and Trade Partners
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us