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How Does Structural Reform Affect Regional Development? Resolving Contradictory Theory with Evidence from India

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  • Sanjoy Chakravorty

Abstract

Regional theory offers little coherent guidance on the prospects for interregional development after structural reform in developing nations. In this paper I suggest a basic set of hypotheses in which the neoliberal nation-state is simultaneously a reduced state (less concerned about promoting regional balance) and an enlarged state (directing development toward selected regions). Under the new regulatory structure the location of post-reform investments may be expected to favor the coast, advanced regions, and existing metropolises (especially the edge areas); these expectations may be more true for foreign direct investments than domestic investments (especially the direct investments of the state). I use disaggregated pre- and post-reform industrial data from India to test the hypotheses. The results offer partial to full support for all hypotheses, providing evidence of the return of cumulative causation, and raising concerns about the political economy of future development in the lagging regions.

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  • Sanjoy Chakravorty, 2000. "How Does Structural Reform Affect Regional Development? Resolving Contradictory Theory with Evidence from India," Economic Geography, Taylor & Francis Journals, vol. 76(4), pages 367-394, October.
    • Handle: RePEc:taf:recgxx:v:76:y:2000:i:4:p:367-394
    DOI: 10.1111/j.1944-8287.2000.tb00149.x
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    Cited by:

    1. 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.
    2. George Petrakos & Panagiotis Artelaris, 2009. "European Regional Convergence Revisited: A Weighted Least Squares Approach," Growth and Change, Wiley Blackwell, vol. 40(2), pages 314-331, June.
    3. Anupama Sen and Tooraj Jamasb, 2012. "Diversity in Unity: An Empirical Analysis of Electricity Deregulation in Indian States," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    4. Itoh, Ryo, 2009. "Dynamic control of rural-urban migration," Journal of Urban Economics, Elsevier, vol. 66(3), pages 196-202, November.
    5. 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.
    6. Kennedy, Loraine & Robin, Kim & Zamuner, Diego, 2013. "Comparing State-level policy responses to economic reforms in India," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 13.
    7. Chakravorty, Sanjoy & Koo, Jun & Lall, Smik V., 2003. "Metropolitan industrial clusters ; patterns and processes," Policy Research Working Paper Series 3073, The World Bank.
    8. Somik V. Lall & Sanjoy Chakravorty, 2004. "Industrial Location and Spatial Inequality: Theory and Evidence from India," WIDER Working Paper Series RP2004-49, World Institute for Development Economic Research (UNU-WIDER).
    9. Manisha Jain, 2018. "The effect of distance on urban transformation in the Capital Region, India," International Planning Studies, Taylor & Francis Journals, vol. 23(1), pages 37-50, January.
    10. Sanjoy Chakravorty, 2003. "Capital source and the location of industrial investment: a tale of divergence from post-reform India," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(3), pages 365-383.
    11. Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2012. "Is India’s Manufacturing Sector Moving Away From Cities?," Harvard Business School Working Papers 12-090, Harvard Business School.
    12. Rakhee Bhattacharya & Nijara Deka, 2021. "Roads matter at the periphery: India’s post-liberalization road projects in the Northeast," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 23(2), pages 321-337, December.
    13. Indian Institute for Human Settlements, 2017. "Cities as Engines of Inclusive Development," Working Papers id:11713, eSocialSciences.
    14. Sudhir K. Thakur, 2008. "Identification of Regional Fundamental Economic Structure (FES) of India: An Input-Output and Field of Influence Approach," WIDER Working Paper Series RP2008-59, World Institute for Development Economic Research (UNU-WIDER).
    15. Kenji Nozaki, 2014. "Industrial Dispersion in Thailand with Changes in Trade Policies," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 4(7), pages 806-819, July.
    16. Loraine Kennedy, 2005. "Décentralisation et rééquilibrage en faveur des régions en Inde. L'exemple de l'Andhra Pradesh," Revue Tiers Monde, Programme National Persée, vol. 46(181), pages 141-165.
    17. Purohit, Brijesh C., 2008. "Health and human development at sub-state level in India," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2248-2260, December.
    18. World Bank, 2004. "India : Investment Climate and Manufacturing Industry," World Bank Publications - Reports 14378, The World Bank Group.
    19. Somik Vinay Lall & Sanjoy Chakravorty, 2005. "Industrial Location and Spatial Inequality: Theory and Evidence from India," Review of Development Economics, Wiley Blackwell, vol. 9(1), pages 47-68, February.
    20. Sanjoy Chakravorty & Jun Koo & Somik V Lall, 2005. "Do Localization Economies Matter in Cluster Formation? Questioning the Conventional Wisdom with Data from Indian Metropolises," Environment and Planning A, , vol. 37(2), pages 331-353, February.

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