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Infrastructure, Openness, And Regional Inequality In India

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  • Zhang, Xiaobo
  • Fan, Shenggen

Abstract

This paper aims to quantify the driving forces behind the observed divergence of Indian economy. The results show that in a closed economy with agriculture as the predominant mode of production, the comparative advantage is mainly determined by the difference in land quality and climate across regions within a country. However, when the economy opens its door to the rest of the world, a region’'s comparative advantage is evaluated in a broader global context. Therefore, regions adjacent to more developed economies, or with better infrastructure such as ports and airports, enjoy a far better location advantage for trade and development than landlocked regions. More investment in physical infrastructure such as roads will bring the interior regions closer to the world markets and reduce regional disparity. Among all the factors considered, education is the only equalizing factor to regional development.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2002 Annual meeting, July 28-31, Long Beach, CA with number 19902.

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Date of creation: 2002
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Handle: RePEc:ags:aaea02:19902

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Keywords: Community/Rural/Urban Development;

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  1. Sylvie DEMURGER & SACHS & Wing Thye WOO & BAO & CHANG & MELLINGER, 2001. "Geography, Economic Policy and Regional Development in China," Working Papers 200109, CERDI.
  2. Zhang, Siao-Bo & Kanbur, Ravi, 1999. "What Difference Do Polarization Measures Make? An Application To China," Working Papers, Cornell University, Department of Applied Economics and Management 7224, Cornell University, Department of Applied Economics and Management.
  3. Fan, Shenggen & Zhang, Linxiu & Zhang, Xiaobo, 2002. "Growth, inequality, and poverty in rural China: the role of public investments," Research reports 125, International Food Policy Research Institute (IFPRI).
  4. Jeffrey Sachs & Andrew Warner, 1995. "Economic Reform and the Progress of Global Integration," Harvard Institute of Economic Research Working Papers 1733, Harvard - Institute of Economic Research.
  5. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, December.
  6. Jeffrey D. Sachs & Nirupam Bajpai & Ananthi Ramiah, 2002. "Understanding Regional Economic Growth in India," Asian Economic Papers, MIT Press, MIT Press, vol. 1(3), pages 32-62.
  7. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, Econometric Society, vol. 50(1), pages 193-211, January.
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