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well I've always been interested in the
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role of government policies in promoting
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uh well-being so India in particular is
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an interesting case because there have
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been extensive regulatory changes and
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policies to try to make people better
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off but the kinds of regulations that
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India has directed towards small and
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medium Enterprises are typical of the
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kinds of policies that many countries
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actually have for their small and medium
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firms so it's a more General and
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important
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question so the key findings for This
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research which as you mentioned is
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co-authored with uh Shanti nataraj and
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Leslie Martin the key finding of that
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research is that the promotion of small
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and medium
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Enterprises by reserving certain
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products only for them didn't have the
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expected results so the idea behind the
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Indian government's policies which were
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known as smallscale reservation was to
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take a large number of products maybe
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thousand products and only small and
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medium Enterprises could produce them um
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so this was tried to Foster these small
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firms so it was expected that by
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removing those policies which the Indian
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government did in the 2000s they got rid
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of all of them we would have thought
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that actually firms would suffer and
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wouldn't grow as quickly the result is
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quite surprising what the result shows
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is that on net employment and wages
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actually grew faster once these
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restrictions were
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removed what our research shows is that
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employment generation is really um
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focused on either young firms New firms
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or larger Enterprises and you might
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wonder why is it that employment is
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being generated in India by these
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younger firms or these larger firms when
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conventional wisdom suggests that it
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would be small and medium Enterprises
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would be the source of of growth well we
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think that the reason we're getting
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these unexpected findings is because um
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essentially young firms are really the
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key innovators in India probably in
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other countries as well
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and so it's youth that's really
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important and also larger firms have the
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connections needed to enter the market
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they have the connections needed to be
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able to access Capital knowledge and a
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well educated worker so when you think
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about it it actually seems almost
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obvious in the end that it's the young
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larger firms that are more likely to
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generate employment
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growth we think that our research really
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has much broader applications although
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of course India is an extremely
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important country we think this research
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is also relevant to many other countries
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including countries like the united
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states and countries like France and
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many other countries which really
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promote small and medium
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Enterprises uh so in fact we know that
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this research is relevant because our
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research is also linked to other Recent
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research that's been done for example in
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the United States by John Al Wanger at
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the University of Maryland his research
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along with his co-authors also shows
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that in the US case it's the younger
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larger firms that are generating more
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employment the advantage of our research
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is that we actually have what's called a
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natural experiment the elimination of a
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regulatory framework which allows us to
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look at before and after which uh other
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researchers have not been able to
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exploit to understand um this
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problem so the policy implications are
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that if you want to promote employment
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growth then restricting the product the
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the production of certain goods for
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certain size firms is not the way to go
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the way to go would be to encourage
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entry by younger firms um or to
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encourage larger Enterprises and that's
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more likely to yield the kind of
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outcomes that governments are looking
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for
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for so there's a perception among
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economists among policy makers that that
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small is beautiful what our research
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suggests is that that is clearly not the
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case if you're trying to maximize
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employment growth if you want to
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maximize employment growth you really
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want to focus on the younger firms but
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that's not to say we shouldn't be
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promoting small and medium Enterprises
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the best way to promote them is
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basically not to discriminate against
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them so don't make it harder on small
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and medium Enterprises to enter in
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because we want new Enterprises but
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explicit policies to encourage being
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small are not a good idea so tax
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holidays that are only focused on small
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and medium Enterprises for example are
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not a good way to go that's what our
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research
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suggests so I'm very excited about uh an
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ongoing research project also on India
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where we are looking at the effects of
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hundreds of regulations to try to
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improve the environment in India there
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have been many different regulatory
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changes some of them mandated by the
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Supreme Court others done at the state
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and local level and we're particularly
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interested in trying to identify what
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kinds of changes uh either through
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regulations or price changes can make
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firms behave in a cleaner more
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environmentally friendly way um so
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that's our that's our ongoing uh project
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uh on India I'm also doing a number of
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other research projects on China looking
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in particular at the success of their
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industrial policies which is an area
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that I find uh particularly important
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