Synergy in government policies and global competitiveness of two Indian industries: an empirical study

Abstract

The paper analyzes the role of Government policies in influencing the competitiveness of two Indian industries: Automobile Components and Leather. These industries were chosen due to their good export performance, prima facie evidence that they are influenced by government policies and their potential for improvement in competitiveness. The paper charts the major government policies and identifies clusters of these policies of different years. The competitiveness is measured by the export performance. In the leather industry, India s export share as a percentage of world exports was also looked at. The study finds a striking relationship between sharp increase in competitiveness and a coherent set of government policies introduced within a short period. The major conclusions of the paper are that (i) government policies have a great influence on competitiveness of industries (ii) the policies should be in synergetic bundles, and (iii) industry specific measures may be useful in promoting the competitiveness of specific industries. The findings are related to Michael Porter s diamond model and implications of policy makers and industry associations are discussed.