Factory locations of public sector manufacturing firms in India 2014-2018

Stata dataset containing information on the district locations of the factories of public sector manufacturing firms in India that were privatized during the period 1991-2013, including an imputed 3-digit industry code based on the National Industrial Classification of 1987. Factory locations were determined from searching company websites. NIC codes were assigned on the basis of matching the description of what each factory is producing with the National industrial Classification codes. We suggest that the operation of state-owned enterprises (SOEs) may lock an economy into an inefficient allocation of resources. We seek to understand when and under what conditions privatisation policy can serve as an instrument to restore allocative efficiency and improve aggregate productivity by releasing resources to more innovative sectors of the economy. This proposal therefore addresses the "Innovation and Productivity Growth" theme of the call. We propose to conduct the first empirical analysis of the effects of privatization on the allocation of productive resources in an LIC, addressing the following questions: 1. How does privatisation impact the productivity of other private enterprises that have labour and input market linkages with the privatized SOE? 2. How do the market and regulatory environments interact with privatisation? We will examine a number of policy features that are likely to condition the effects of privatisation, including labor legislation and trade openness. Our empirical strategy makes use of large episodes of privatization in India, starting in the early 1990s. We will utilize data from annual industry surveys, as well as data from household employment surveys, and combine these with data on privatisation in India. We argue that the episodes of privatisation in India can be thought of as exogenous shocks to firms that were proximate to the privatized entities. To identify labour market effects, we take advantage of the fact that geographically, labor mobility in India is low, and labour markets are distinct. A comparison of changes in productivity and labour market outcomes for factories in districts that saw a reduction in the public sector due to privatization, with the corresponding changes in productivity and labor market outcomes in districts that experienced no changes will allow us to identify and estimate the effects of privatization. Similarly, to identify effects arising through input market linkages, we will compare productivity in industries that were exposed to privatisation in their input markets to industries that were not exposed.