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Is India's Manufacturing Sector Moving Away From Cities?

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  • Ejaz Ghani
  • Arti Grover Goswami
  • William R. Kerr

Abstract

This paper investigates the urbanization of the Indian manufacturing sector by combining enterprise data from formal and informal sectors. We find that plants in the formal sector are moving away from urban and into rural locations, while the informal sector is moving from rural to urban locations. While the secular trend for India’s manufacturing urbanization has slowed down, the localized importance of education and infrastructure have not. Our results suggest that districts with better education and infrastructure have experienced a faster pace of urbanization, although higher urban-rural cost ratios cause movement out of urban areas. This process is associated with improvements in the spatial allocation of plants across urban and rural locations. Spatial location of plants has implications for policy on investments in education, infrastructure, and the livability of cities. The high share of urbanization occurring in the informal sector suggests that urbanization policies that contain inclusionary approaches may be more successful in promoting local development and managing its strains than those focused only on the formal sector.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17992.

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Date of creation: Apr 2012
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Handle: RePEc:nbr:nberwo:17992

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Citations

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Cited by:
  1. Tripathi, Sabyasachi, 2012. "Estimating Urban Agglomeration Economies for India: A New Economic Geography Perspective," MPRA Paper 43501, University Library of Munich, Germany.
  2. Ghani, Ejaz & Goswami, Arti Grover & Kerr, William R., 2013. "The golden quadrilateral highway project and urban/rural manufacturing in India," Policy Research Working Paper Series 6620, The World Bank.
  3. Sharma, Ajay & Chandrasekhar, S., 2014. "Growth of the Urban Shadow, Spatial Distribution of Economic Activities, and Commuting by Workers in Rural and Urban India," World Development, Elsevier, vol. 61(C), pages 154-166.
  4. Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2013. "Female business ownership and informal sector persistence," Policy Research Working Paper Series 6612, The World Bank.
  5. Ghani, Ejaz & Goswami, Arti Grover & Kerr, William R., 2013. "Highway to success in India : the impact of the golden quadrilateral project for the location and performance of manufacturing," Policy Research Working Paper Series 6320, The World Bank.
  6. Ghani, Ejaz & Goswami, Arti Grover & Kerr, William R., 2013. "Highways and Spatial Development," World Bank - Economic Premise, The World Bank, issue 131, pages 1-6, December.
  7. Ghani, Ejaz & Kerr, William R. & Tewari, Ishani, 2014. "Regional diversity and inclusive growth in Indian cities," Policy Research Working Paper Series 6919, The World Bank.
  8. Ghani, Ejaz & Kerr, William R. & Tewari, Ishani, 2013. "Specialization, diversity, and Indian manufacturing growth," Policy Research Working Paper Series 6648, The World Bank.
  9. Ejaz Ghani & Grover Goswami & William R. Kerr, 2012. "Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing," Harvard Business School Working Papers 13-040, Harvard Business School.
  10. S. Chandrasekhar & Ajay Sharma, 2014. "Urbanization and spatial patterns of internal migration in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-016, Indira Gandhi Institute of Development Research, Mumbai, India.

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