@article{f981dc27749d468cb6d249dd858a5b91,
title = "Threats to property rights: Effects on economic performance of the manufacturing sector in Indian states",
abstract = "We examine the effects of the threats to property rights on the economic performance of the manufacturing sector in Indian states. We constructed indices of the threats using data on crime against property rights. In our analysis, we correct for the problem of underreporting of crimes in official crime data. The results of our instrumental variable estimation show that not only threats to private property but also to contracts adversely affect the performance of the manufacturing sector in India. We also extend our basic model to examine the effects of kidnapping and the scale economies of property rights protection.",
keywords = "Contract, Gross value added, Property rights, TFP",
author = "Atsushi Kato and Takahiro Sato",
note = "Funding Information: We use data from the EPW Research Foundation's Annual Survey of Industries 1973–74 to 1997–98 on the manufacturing industries in India's 17 main states for the period 1979–1997. We exclude “gas, water, and electricity” from the category of manufacturing industries in order to add new data from the Annual Survey of Industries for the period 1998–2000, which is available on the Central Statistics Office's (CSO) website. The definitions of the main variables are given below. = (gross value of output)/(wholesale price index) − (total input)/(input price index). The depreciation shown in the Real Gross Value Added (GVA) : We obtain GVA by using the double-deflation method. GVA Annual Survey of Industries need not necessarily be the real value, since it is linked to the firm's tax obligation and accounting practices. Thus, the gross term that includes depreciation as a measure of output is better than the net term that excludes depreciation. We deflate the gross output value by its wholesale price index to obtain the real value. We construct the input price series as follows. Input price is the weighted average of fuel price, material price, and the prices of other inputs, and its weights are drawn from the fuel consumed, material consumed, and other inputs consumed, as stated in the Annual Survey of Industries . The fuel price, material price, and prices of other inputs are also based on the wholesale prices, the implicit deflator of national account statistics, and the weight from the input–output table. The data sources used for constructing the input price index are the Reserve Bank of India's Database on Indian Economy and Handbook of Statistics on Indian Economy , and CSO's Input–Output Transaction Table 1989 and National Account Statistics . = ( − − 1) + = − 1) + = + + = 0.95 Capital Stock: The fixed capital appearing in the Annual Survey of Industries is evaluated at the end of the reference year. This value does not include accumulated depreciation. We employ the perpetual inventory accumulation method to calculate the capital stock. Real gross fixed capital formation I is defined as I ( t ) B ( t ) B ( t D ( t ))/ P ( t ) I , where D is depreciation, B is fixed capital, and P ( t ) I is the implicit deflator of gross fixed capital formation. We then construct the time-series of real gross capital stock K ( t ) G by using the equation K ( t ) G K ( t G I ( t ) K (0) G ∑ i =1 t I ( t ), where K (0) G stands for the base-year capital stock, and is equal to B (0) D (0). Finally, assuming an annual depreciation ratio of 5%, the real net capital stock K is set as K ( t ) K ( t ) G . Labor Input: We consider the number of workers as labor input. Crime Data: Each state's data on burglary, robbery, cheating, and kidnapping are obtained from Crime in India , published annually by the Ministry of Home Affairs, the Government of India. Electricity: The total amount of electricity sold to the ultimate consumers, divided by population. This data are obtained from the CMIE publication Infrastructure . Road: Total road length data are available from the Basic Road Statistics of India , published by the Ministry of Shipping, Road Transport and Highways, the Government of India. The total is divided by the area of each state. School enrollment rates: Both the primary school and secondary school enrollment rates are available from the Selected Educational Statistics , published by the Ministry of Human Resource Development, the Government of India. We consider the enrollment ratio for classes I–V as the primary school data. ",
year = "2013",
month = jun,
doi = "10.1016/j.asieco.2013.02.005",
language = "English",
volume = "26",
pages = "65--81",
journal = "Journal of Asian Economics",
issn = "1049-0078",
publisher = "Elsevier",
}
