Industrial Location in Developing Countries
AbstractDespite a diminishing role in industrial countries, the manufacturing sector continues to be an engine of economic growth in most developing countries. This article surveys the evidence on the determinants of industry location in developing countries. It also employs micro data for India and Indonesia to illustrate recent spatial dynamics of manufacturing relocation within urban agglomerations. Both theory and empirical evidence suggest that agglomeration benefits, market access, and infrastructure endowments in large cities outweigh the costs of congestion, higher wages, and land prices. Despite this evidence, many countries have tried to encourage industrial firms to locate in secondary cities or other lagging areas. Cross-country evidence suggests that fiscal incentives to do so rarely succeed. They appear to influence business location decisions among comparable locations, but the result may be a negative-sum game between regions and inefficiently low tax rates, which prevent public goods from being funded at sufficiently high levels. Relocation tends to be within and between agglomerations rather than from large cities to smaller cities or lagging regions. Rather than provide subsidies and tax breaks, policymakers should focus on streamlining laws and regulations to make the business environment more attractive. Copyright The Author 2008. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: firstname.lastname@example.org, Oxford University Press.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by World Bank Group in its journal The World Bank Research Observer.
Volume (Year): 23 (2008)
Issue (Month): 2 (May)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Phone: (202) 477-1234
Fax: 01865 267 985
Web page: http://wbro.oxfordjournals.org/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2013. "The exceptional persistence of India's unorganized sector," Policy Research Working Paper Series 6454, The World Bank.
- Deichmann, Uwe & Shilpi, Forhad & Vakis, Renos, 2009. "Urban Proximity, Agricultural Potential and Rural Non-farm Employment: Evidence from Bangladesh," World Development, Elsevier, vol. 37(3), pages 645-660, March.
- Maarten Bosker & Harry Garretsen, 2012.
"Economic Geography and Economic Development in Sub-Saharan Africa,"
World Bank Economic Review,
World Bank Group, vol. 26(3), pages 443-485.
- Maarten Bosker & Harry Garretsen, 2008. "Economic Geography and Economic Development in Sub-Saharan Africa," CESifo Working Paper Series 2490, CESifo Group Munich.
- Ailenei Dorel & Mosora Liviu - Cosmin, 2011. "Local Action Groups - The European Integration Catalyst For The Romanian Rural Area," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 40-46, July.
- Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2012. "What explains big gender disparities in India ? local industrial structures and female entrepreneurship," Policy Research Working Paper Series 6228, The World Bank.
- Ailenei Dorel & Mosora Cosmin, 2011. "Local Action Groups - a possible solution to the rural problem of Romania," ERSA conference papers ersa11p1136, European Regional Science Association.
- Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2012. "What makes cities more competitive ? spatial determinants of entrepreneurship in India," Policy Research Working Paper Series 6198, The World Bank.
- Ejaz Ghani & William R. Kerr & Stephen D. O'Connell, 2011. "Spatial Determinants of Entrepreneurship in India," NBER Working Papers 17514, National Bureau of Economic Research, Inc.
- Brulhart, Marius & Hoppe, Mombert, 2011. "Economic integration in the lower Congo region : opening the Kinshasa-Brazzaville bottleneck," Policy Research Working Paper Series 5909, The World Bank.
- Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2013. "Input usage and productivity in Indian manufacturing plants," Policy Research Working Paper Series 6656, The World Bank.
- Ejaz Ghani & William R. Kerr & Stephen D. O'Connell, 2011.
"Local Industrial Structures and Female Entrepreneurship in India,"
NBER Working Papers
17596, National Bureau of Economic Research, Inc.
- Ejaz Ghani & William R. Kerr & Stephen D. O'Connell, 2013. "Local industrial structures and female entrepreneurship in India," Journal of Economic Geography, Oxford University Press, vol. 13(6), pages 929-964, November.
- Saikia, Dilip, 2009. "Industrial Location in India under Liberalization," MPRA Paper 27821, University Library of Munich, Germany.
- Lall, Somik V. & Schroeder, Elizabeth & Schmidt, Emily, 2009. "Identifying spatial efficiency-equity tradeoffs in territorial development policies : evidence from Uganda," Policy Research Working Paper Series 4966, The World Bank.
- David Bailey & Helena Lenihan & Ajit Singh, 2009. "Lessons for African Economies from Irish and East Asian Industrial Policy," Journal of Industry, Competition and Trade, Springer, vol. 9(4), pages 357-382, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.