ABSTRACT
Most of the countries in the world, irrespective of their developmental stages, have pursued more liberalised policies during the last couple of decades and, since then, academicians and policy makers have been pursuing research to understand the implications of such reform for their respective growth and development. In many economies, it is observed that education, health, infrastructure, institutions, financial development, institutions and capacity utilisation appear to be the most important and influential factors in productivity growth (Isaksson, 2007). Any single economy intending to improve productivity through changing these factors takes a relatively longer time and thus external factors like trade openness and foreign technology transfer have been considered to play the most detrimental role in a comparatively shorter time. Therefore, the current attempt has been to examine the effect of trade reform on productivity improvement. Note that trade reform can largely benef t productivity growth through a change in competitiveness apart from scale effect. If so, without addressing the issue of changing market conditions, the effects of trade reform cannot be understood and estimated accurately. This has been an increasing realisation in the literature on productivity estimation. Scholars (e.g. Abraham et al., 2009) have tried to eliminate the influence of market imperfection in order to find the unbiased effect of trade reform on productivity growth, and the current chapter is based on such argument made in Maiti (2013a).
