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Industrializing West Bengal? The case of institutional stickiness

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  • Deepita Chakravarty

    (Centre for Economic and Social Studies)

  • Indranil Bose
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    Abstract

    While there is a clear policy shift towards large-scale industrialization in the state of West Bengal (WB) during the early 1990s, not much improvement can be discerned in the performance of the manufacturing output. Moreover, contrary to the Indian experience, more than half of the manufacturing output is still produced by small initiatives in the unorganized sector. We argue that it is the peculiarity of institutional behaviour that determines the policy outcomes in the state. The rigidities in the political as well as the economic institutions in the state are prompting us to look at WB as a classic case of "institutional stickiness" leading to "path dependency". Clearly the right institutions for creating a more enabling environment for industry do not seem to exist. Not only do they not exist, but also their growth or emergence is frustrated by an overarching institution - 'the party' which seems to keep encroaching upon every sphere. All this results in a veritable decline of organized manufacturing alongside a corresponding growth of the unorganized sector in the state. Apart from secondary sources this paper is based on information collected from some selected stakeholders : business associations, firms, trade unions and bureaucrats.

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    Bibliographic Info

    Paper provided by East Asian Bureau of Economic Research in its series Governance Working Papers with number 22772.

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    Date of creation: Jan 2010
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    Handle: RePEc:eab:govern:22772

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    Related research

    Keywords: formal and informal institutions; institutional stickiness; path dependency; India; West Bengal;

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    1. Peter R. Fallon & Robert E. B. Lucas, 1989. "Job Security Regulations and the Dynamic Demand for Industrial Labor in India and Zimbabwe," Boston University - Institute for Economic Development, Boston University, Institute for Economic Development 2, Boston University, Institute for Economic Development.
    2. Bardhan, Pranab & Mookherjee, Dilip, 2006. "Pro-poor targeting and accountability of local governments in West Bengal," Journal of Development Economics, Elsevier, Elsevier, vol. 79(2), pages 303-327, April.
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