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Seminar by Dr Ritika Jain

A seminar on “Is R&D Spending Influenced by Disinvestment and Local Political Corruption? The Case of Indian Central Public Sector Enterprises” was held at the Joan Robinson Hall on June 25, 2019. The seminar was presented by Dr Ritika Jain, Assistant Professor, Centre for Development Studies Trivandrum.

Abstract: The current study examines the effect of disinvestment (dilution of state ownership) and local political corruption on R&D spending in enterprises owned by the Central government of India. Based on certain characteristic features of innovation as a strategy available to state owned enterprises, the study builds two sets of hypotheses formalising the channels of how these variables may affect R&D possibility and amount. Drawing data from multiple sources, the study compiles a dataset that covers all manufacturing central government owned enterprises in India and spans for a period of ten years from 2007 to 2016. The study employs instrument variable technique for reducing the endogeneity between disinvestment and R&D decisions. The study finds that while disinvestment and local political corruption have strong negative effects on whether a firm invests in R&D or not, it has no effect on R&D amount. In fact, R&D amount is driven by a host of firm specific factors such as size, profit and proficiency of labor- share of skilled labor, managerial strength and non-unionisation of labor. Finally, the study finds that the effects are strongly driven by the size of firm, type of firms and ideology of the state where the enterprise operates.