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Notes From the Field: India, South Asia Buying into Integration

Kaori Niina's picture

Train station in Mumbai, India. Source - World BankEditor's Note: "Notes from the Field" is an occasional feature where we let World Bank professionals conducting interesting trade-related projects around the globe explain some of the challenges and triumphs of their day-to-day work. The views expressed here are personal and should not be attributed to the World Bank. All interviews have been edited for clarity.

The interview below is with Ashish Narain, a Senior Economist at the World Bank Group’s Investment Climate Department. He is based in India from where he manages the World Bank Group’s South Asia Regional Trade and Investment Project. He spoke with us about his project, his personal connection with the region, and the evolution of regional trade facilitation in South Asia.

Of Gazelles and Gazillas

Megha Mukim's picture

Gazelle. Source: Bahman Farzad -- http://www.flickr.com/photos/21644167@N04/2104059837/sizes/m/in/photostream/Governments and policy makers often look to small and medium-sized enterprises to drive growth in developing economies. These SMEs are held up as incubators of creativity and entrepreneurship, pushing the market to change, expand, and better meet consumer needs. But perhaps SMEs aren’t the only category to applaud. Research has shown that certain firms, regardless of their size, create jobs, export goods, and generally grow faster than others. We think these are the firms to watch.

To explain, we use an animal analogy developed by David Birch. Birch classified firms into “mice,” small firms that tend to stay small; “elephants,” large firms that do not grow rapidly; and “gazelles,” firms that both grow rapidly and account for a large share of employment or revenue growth. These gazelling firms are key to nascent, growing economies. As Caroline Freund and Martha Denisse Peirola show in Export Superstars, a World Bank Research Policy Paper, it is often a few big firms that account for the lion’s share of national exports. Not only are these few good firms responsible for the largest growth in exports, they also contribute most of the export diversification. In fact, countries’ relative comparative advantage is defined by these large, well-performing firms.

The Mysterious Case of Chilean Service Exports

Sebastián Sáez's picture

Chile has long been known as a superstar in liberalization reforms and innovative export-led growth strategies. The country successfully exports tourism and transportation services. But these successes are, in some ways, yesterday’s news. The country’s performance in more modern service exports – internet and communications technology, business process outsourcing and others – has been less remarkable. Chile is no India.

What does this mean for a country that has famously followed sound economic policies? Is the government doing something wrong? Is the country stuck? A look at the way services data is interpreted may provide a different answer. Perhaps Chile’s reputation is simply a victim of statistical inaccuracies.