Productivity and competition in India’s brick industry

Firm productivity has long been considered a key driver of economic growth. Yet there is little understanding of why the competition and innovation that fuels productivity growth in the developed world seems lower in low- and middle-income countries. When many firms show low productivity and use inferior technologies even when more efficient ones are available, it suggests that markets are not functioning efficiently and that there may be a role for policy intervention. This project seeks to improve understanding of the dispersion of productivity within local markets and the impacts of productivity gains on firm growth in the developing country context. It involves a field experiment with 600 brick kilns across Uttar Pradesh, Madhya Pradesh, and Karnataka, that induces random variation in firm’s technologies and the technologies of their competitors, and compares outcomes in terms of revenue, pricing, sales, and firm decision-making.

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