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Club-Convergence and Polarisation of States : A Nonparametric Analysis of Post-Reform India

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  • Sabyasachi Kar

    (Institute of Economic Growth)

  • Debajit Jha
  • Alpana Kateja
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    Abstract

    The objective of this paper is to study the dynamics of the distribution of regional per capita income of Indian states in the post reform period, in order to identify trends towards convergence-club formation, polarisation or stratification during this period. We adopt the distribution dynamics framework that uses kernel density estimates, stochastic kernels and ergodic distributions in order to identify these trends. The results show that there is polarisation in India in the post-reform period and this is due to the contrary growth dynamics of the middle income states resulting in the vanishing middle of the relative income distribution. Since polarisation increases the possibility of conflict, this study highlights one of the undesirable consequences of the current growth process in India.

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    Bibliographic Info

    Paper provided by East Asian Bureau of Economic Research in its series Development Economics Working Papers with number 23036.

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    Date of creation: Jan 2010
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    Handle: RePEc:eab:develo:23036

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    Related research

    Keywords: Distribution Dynamics; Regional Convergence; Nonparametric estimation; Polarisation; India;

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    1. Sanghamitra Bandyopadhyay, 2011. "Rich States, Poor States: Convergence And Polarisation In India," Scottish Journal of Political Economy, Scottish Economic Society, vol. 58(3), pages 414-436, 07.
    2. R. Nagaraj & A. Varoudakis & M.-A. Véganzonès, 2000. "Long-run growth trends and convergence across Indian States," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(1), pages 45-70.
    3. Xavier Sala-I-Martin, 1997. "Transfers, Social Safety Nets, and Economic Growth," IMF Staff Papers, Palgrave Macmillan, vol. 44(1), pages 81-102, March.
    4. Paul Cashin & Ratna Sahay, 1996. "Internal Migration, Center-State Grants, and Economic Growth in the States of India," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 123-171, March.
    5. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
    6. Abigail Barr, 1995. "The missing factor: entrepreneurial networks, enterprises and economic growth in Ghana," CSAE Working Paper Series 1995-11, Centre for the Study of African Economies, University of Oxford.
    7. Martin, Philippe & Rogers, Carol Ann, 1997. "Stabilization Policy, Learning-by-Doing, and Economic Growth," Oxford Economic Papers, Oxford University Press, vol. 49(2), pages 152-66, April.
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