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Understanding Regional Economic Growth in India

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Author Info

  • Jeffrey D. Sachs

    (Director, The Earth Institute at Columbia University Columbia University B-16 Hogan Hall, 2910 Broadway New York, NY 10027 USA)

  • Nirupam Bajpai

    (Senior Development Advisor & Director, India Program Center for Globalization and Sustainable Development The Earth Institute at Columbia University Columbia University B-16 Hogan Hall, 2910 Broadway New York, NY 10027 USA)

  • Ananthi Ramiah

    (Center for International Development (CID) Harvard University 79 John F. Kennedy St. Cambridge, MA 02138 USA)

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    Abstract

    This paper aims to explain the growth experiences of 14 major states of India between 1980 and 1998. Using two measures of convergence, σ-convergence and ß-convergence, we examine whether per capita incomes in the states have been converging or diverging. By both standards of convergence, India demonstrated overall divergence during 1980-;98, as well as during both the pre-reform and post-reform subperiods. Interestingly, the richer states experienced a degree of convergence during the post-reform period, whereas the poorer states did not. Divergence was most notable within the poorer group of states. A remarkable 82 percent of the cross-state variation in growth is explained by just the urbanization variable in India, with no hint of any conditional convergence after controlling for the degree of urbanization. The regression estimate shows that a 10 percentage point higher rate of urbanization is associated with 1.3 percentage points per year higher rate of annual growth. Copyright (c) 2002 Center for International Development and the Massachusetts Institute of Technology.

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    Bibliographic Info

    Article provided by MIT Press in its journal Asian Economic Papers.

    Volume (Year): 1 (2002)
    Issue (Month): 3 ()
    Pages: 32-62

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    Handle: RePEc:tpr:asiaec:v:1:y:2002:i:3:p:32-62

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    Cited by:
    1. Uzma Afzal, 2012. "Human Capital Convergence: Evidence from the Punjab," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 17(1), pages 45-61, Jan-June.
    2. Kayam, Saime Suna & Ecer, Sencer & Gupta, R, 2011. "Social determinants of intra-regional dispersion of FDI in India," MPRA Paper 39153, University Library of Munich, Germany.
    3. Misra, Biswa, 2009. "Changing Dimensions of India's Growth Process: A State Level Analysis," MPRA Paper 21848, University Library of Munich, Germany, revised Mar 2009.
    4. Alessandrini, Michele & Buccellato, Tullio & Scaramozzino, Pasquale, 2008. "Whither the Indian Federation? Regional Disparities and Economic Reforms," MPRA Paper 23416, University Library of Munich, Germany.
    5. Zhang, Xiaobo & Fan, Shenggen, 2002. "Infrastructure, Openness, And Regional Inequality In India," 2002 Annual meeting, July 28-31, Long Beach, CA 19902, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Thakur, Sudhir K., 2008. "Identification of Regional Fundamental Economic Structure (FES) of India: An Input-Output and Field of Influence Approach," Working Papers RP2008/59, World Institute for Development Economic Research (UNU-WIDER).
    7. Canares, Michael, 2009. "Macro-economic trends and their impacts on forests and forestry in Asia and the Pacific, outlook to 2020," MPRA Paper 28970, University Library of Munich, Germany.
    8. Purohit, Brijesh C., 2008. "Health and human development at sub-state level in India," The Journal of Socio-Economics, Elsevier, vol. 37(6), pages 2248-2260, December.
    9. Shingal, ANIRUDH, 2010. "Services growth and convergence: Getting India’s states together," MPRA Paper 32813, University Library of Munich, Germany.
    10. Petia Topalova, 2005. "Trade Liberalization, Poverty, and Inequality: Evidence from Indian Districts," NBER Working Papers 11614, National Bureau of Economic Research, Inc.
    11. Sudip Ranjan Basu, 2007. "Comparing China and India: Is dividend of economic reforms polarized?," IHEID Working Papers 01-2007, Economics Section, The Graduate Institute of International Studies.
    12. Ghosh, Saibal, 2007. "Economic Geography of Industrial Location: Evidence from Indian States," MPRA Paper 22441, University Library of Munich, Germany.
    13. Ghosh, Saibal, 2009. "Does Financial Outreach Engender Economic Growth? Evidence from Indian States," MPRA Paper 32072, University Library of Munich, Germany.
    14. Arup Mitra, 2011. "Urbanization in India: Evidence on Agglomeration Economies," Working Papers id:4394, eSocialSciences.
    15. Kumar, Surender & Managi, Shunsuke, 2009. "Productivity and Convergence in India: State Level Analysis," MPRA Paper 23738, University Library of Munich, Germany.
    16. Sabyasachi Kar & Debajit Jha & Alpana Kateja, 2011. "Club-convergence and polarization of states: A nonparametric analysis of post-reform India," Indian Growth and Development Review, Emerald Group Publishing, vol. 4(1), pages 53-72, April.
    17. Wu, Yanrui, 2008. "Comparing Regional Development in China and India," Working Papers RP2008/13, World Institute for Development Economic Research (UNU-WIDER).
    18. Sudip Ranjan Basu, 2005. "Correlating Growth with Well-Being during Economic Reforms Evidence from India and China," Development and Comp Systems 0509010, EconWPA.

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