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How Efficiently is Capital Allocated? Evidence from the Knitted Garment Industry in Tirupur

How Efficiently is Capital Allocated? Evidence from the Knitted Garment Industry in Tirupur This paper studies the effect of community identity on investment behaviour in the knitted garment industry in the South Indian town of Tirupur. We document very large and systematic differences in both levels of capital stock and the capital intensity of production in firms owned by people from two different community groups. We argue that the differences in investment cannot be explained by productivity differences alone. We suggest that the most likely explanation is that the two communities differ in their access to capital. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Economic Studies Oxford University Press

How Efficiently is Capital Allocated? Evidence from the Knitted Garment Industry in Tirupur

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References (35)

Publisher
Oxford University Press
Copyright
© Published by Oxford University Press.
Subject
Original Articles
ISSN
0034-6527
eISSN
1467-937X
DOI
10.1111/0034-6527.00274
Publisher site
See Article on Publisher Site

Abstract

This paper studies the effect of community identity on investment behaviour in the knitted garment industry in the South Indian town of Tirupur. We document very large and systematic differences in both levels of capital stock and the capital intensity of production in firms owned by people from two different community groups. We argue that the differences in investment cannot be explained by productivity differences alone. We suggest that the most likely explanation is that the two communities differ in their access to capital.

Journal

The Review of Economic StudiesOxford University Press

Published: Jan 1, 2004

Keywords: JEL classification G31 G32 L67 O14

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