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Is India Shining?

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  • Anurag N Banerjee

    ()
    (Durham Business School)

  • Nilanjan Banik

    (Institute for Financial Management and Research, Chennai, India)

Abstract

In India, the popular perception is economic reforms have benefited the rich more than the poor leading to an unequal income distribution, as in Quah's twin peaks hypothesis. In this article we test this hypothesis by studying the spatial dynamics of income distribution. Using district-level per-capita income we find that the income distribution has not changed. The perception about economic reforms having benefitted only the rich is not correct because income growth across districts is positively correlated spatially. Thus there is a positive spatial multiplier effect on income and growth. In addition, we also identify physical infrastructure, human capital, and factories, as factors responsible for increase in income for both the rich, and the poor districts.

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Bibliographic Info

Paper provided by Durham University Business School in its series Working Papers with number 2011_11.

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Date of creation: 16 Feb 2011
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Handle: RePEc:dur:durham:2011_11

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Postal: Durham University Business School, Mill Hill Lane, Durham DH1 3LB, England
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Web page: http://www.dur.ac.uk/business
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Related research

Keywords: Districts of India; Income; Moran’s Index; Spatial Analysis;

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References

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  1. Robin Burgess & Rohini Pande, 2005. "Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment," American Economic Review, American Economic Association, vol. 95(3), pages 780-795, June.
  2. Danny Quah, 1992. "Empirical cross-section dynamics in economic growth," Discussion Paper / Institute for Empirical Macroeconomics 75, Federal Reserve Bank of Minneapolis.
  3. Kalpana Kochhar & Utsav Kumar & Raghuram Rajan & Arvind Subramanian, 2006. "India's Patterns of Development: What Happened, What Follows," NBER Working Papers 12023, National Bureau of Economic Research, Inc.
  4. Singh, Nirvikar & Kendall, Jake & Jain, R.K. & Chander, Jai, 2013. "Regional Inequality in India in the 1990s: A Further Look," Santa Cruz Department of Economics, Working Paper Series qt8pd8n5qn, Department of Economics, UC Santa Cruz.
  5. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
  6. Kelejian, Harry H. & Prucha, Ingmar R., 2004. "Estimation of simultaneous systems of spatially interrelated cross sectional equations," Journal of Econometrics, Elsevier, vol. 118(1-2), pages 27-50.
  7. Rosenzweig, Mark R, 1990. "Population Growth and Human Capital Investments: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S38-70, October.
  8. Paul Cashin & Ratna Sahay, 1995. "Internal Migration, Center-State Grants and Economic Growth in the States of India," IMF Working Papers 95/66, International Monetary Fund.
  9. Quah, Danny T, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," Economic Journal, Royal Economic Society, vol. 106(437), pages 1045-55, July.
  10. Rosenzweig, Mark R. & Wolpin, Kenneth I., 1982. "Governmental interventions and household behavior in a developing country : Anticipating the unanticipated consequences of social programs," Journal of Development Economics, Elsevier, vol. 10(2), pages 209-225, April.
  11. Charles I. Jones, . "On the Evolution of the World Income Distribution," Working Papers 97009, Stanford University, Department of Economics.
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