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Exporting status and energy efficiency: an empirical analysis of manufacturing firms in India

Student name: Ms Roshni Tara
Guide: Dr Seema Sangita
Year of completion: 2015
Host Organisation: The Energy and Resources Institute (TERI)
Supervisor (Host Organisation): Mr Nitya Nanda
Abstract: Globalization and the process of opening up the economies has been a common phenomenon in the recent past, where there has been emphasis especially on the developing economies, to allow for less restrictive trade and integrate their markets to the world market. While this integration has significant benefits, one of the major concerns has been its impact on the environment. As a consequence of globalization, the issue of the environment ceases to only be local and has become an international concern. The impact of globalization on the environment has become a serious point of contention for economists, environmentalists and policy makers. According to the World Bank, international trade comprises of more than half of the world GDP. The sheer volume is a reason enough to look at the impact trade has on the environment Recent findings in the literature suggest that the relationship between trade and environment is not straightforward when environmental policy is endogenised, or pollution is local, factor endowments are taken into consideration or when governments have other strategic considerations. This study looks at this relationship by analyzing the impact of exporting on the energy efficiency of manufacturing firms in India. It considers these firms for the time period 1990-2010 and checks for the ‘self-selection’ and ‘learning by exporting’ hypotheses; and finds that fuel-efficient firms self-select to become exporters, whereas the learning by exporting is not found to be significant for Indian manufacturing firms. These firms learn to export, rather than learn by exporting. Keywords: Firms, Fuel-efficiency, Exports, Meltiz Model, Self-Selection, Learning-by-Exporting, Quantile Regression, Propensity Score Matching