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Does Openness Affect Regional Inequality? A Case Study for India

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  • Alokesh Barua
  • Pavel Chakraborty

Abstract

This paper examines the impact of economic liberalization on interregional inequality in India. It has been observed in many studies that interregional inequality in India has been steadily increasing over time. This paper is a further confirmation of this result. We have tried to locate the cause of rising interregional inequality within the production structure of the economy and observed that it is positively and systematically related to the cross‐regional inequalities in agriculture and manufacturing. This systematic relationship has further been examined from a structuralist viewpoint to unravel the factors determining manufacturing production across regions where we have found that trade openness is the key factor determining the manufacturing share in income across the regions. Our further enquiry into manufacturing and trade patterns has shown that the Herfindahl index of concentration has been increasing over time on both counts. This result, along with the findings of the structuralist model about disproportionate growth of manufacturing across regions, provides an explanation of the cause of rising interregional inequality in India.

Suggested Citation

  • Alokesh Barua & Pavel Chakraborty, 2010. "Does Openness Affect Regional Inequality? A Case Study for India," Review of Development Economics, Wiley Blackwell, vol. 14(3), pages 447-465, August.
    • Handle: RePEc:bla:rdevec:v:14:y:2010:i:3:p:447-465
    DOI: 10.1111/j.1467-9361.2010.00564.x
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    Cited by:

    1. Chandan, Roy, 2016. "Inclusive trade in Indian silk industry during post globalized era," MPRA Paper 102322, University Library of Munich, Germany, revised Jan 2017.
    2. Dilip Saikia, 2016. "Location Pattern of Unorganised Manufacturing Industries in India: A District-level View," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 10(2), pages 225-263, May.
    3. Anurag Banerjee & Nilanjan Banik, 2014. "Is India Shining?," Review of Development Economics, Wiley Blackwell, vol. 18(1), pages 59-72, February.
    4. Devasmita Jena & Alokesh Barua, "undated". "Does Trade, Structural Transformation and Income Convergence: Empirical Evidence from the EU and the ASEAN," Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi Discussion Papers 18-04, Centre for International Trade and Development, Jawaharlal Nehru University, New Delhi, India.
    5. Chandan ROY, 2017. "The artisanal silk industry of West Bengal: A study of its history, performance and current problems," Turkish Economic Review, KSP Journals, vol. 4(4), pages 444-451, December.
    6. Naranpanawa, Athula & Arora, Rashmi, 2014. "Does Trade Liberalization Promote Regional Disparities? Evidence from a Multiregional CGE Model of India," World Development, Elsevier, vol. 64(C), pages 339-349.
    7. Kadigi, Reuben M.J. & Robinson, Elizabeth & Szabo, Sylvia & Kangile, Joseph & Mgeni, Charles P. & De Maria, Marcello & Tsusaka, Takuji & Nhau, Brighton, 2022. "Revisiting the Solow-Swan model of income convergence in the context of coffee producing and re-exporting countries in the world," LSE Research Online Documents on Economics 115636, London School of Economics and Political Science, LSE Library.
    8. Sethi, Pradeepta & Bhattacharjee, Sankalpa & Chakrabarti, Debkumar & Tiwari, Chhavi, 2021. "The impact of globalization and financial development on India’s income inequality," Journal of Policy Modeling, Elsevier, vol. 43(3), pages 639-656.
    9. Dilip Saikia, 2011. "Does Economic Integration Affect Spatial Concentration of Industries? Theory and a Case Study for India," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 14(42), pages 89-114, December.
    10. Dhamija, Nidhi, 2019. "Trade Liberalization and Unemployment in India: A State Level Analysis," MPRA Paper 95001, University Library of Munich, Germany.
    11. Naranpanawa, Athula & Arora, Rashmi, 2012. "Trade Liberalisation and Regional Disparities: Evidence from a Multi-Regional General Equilibrium Model of India," Conference papers 332270, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    12. Jena , Devasmita, 2021. "International Trade, Structural Transformation and Economic Catch-Up: An Analysis of The Asean Experiences," Journal of Economic Development, The Economic Research Institute, Chung-Ang University, vol. 46(3), pages 135-155, September.

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