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Long-Run Growth Trends and Convergence Across Indian States

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  • Rayaprolu Nagaraj
  • Aristomène Varoudakis
  • Marie-Ange Véganzonès

Abstract

This paper examines the growth performance of Indian States during 1970-94. We, first, propose a grouping of States according to differences in the availability of physical, social, and economic infrastructure, using principal components analysis. Then, combining principal components analysis and panel data estimation techniques, we assess the contribution of various infrastructure indicators to growth performance. The analysis tackles endogeneity issues in the provision of infrastructure by way of instrumental variables estimation for many of the infrastructure indicators. We do find evidence of conditional convergence across States. This does not rule out persistent income inequalities due to the dispersion of steady-state income levels. Such disparities are accounted for by differences, first, in the structure of production, second, in infrastructure endowments, and, third, in Statespecific fixed effects in the growth regression. Consequently, economic policy measures aiming at ... Ce document examine les performances de croissance des États Indiens sur la période 1970-94. Nous procédons tout d’abord à un regroupement des États en fonction de leurs dotations en infrastructures physiques, économiques et sociales, sur la base d’une analyse en composantes principales. Nous combinons ensuite cette technique et l’économétrie des données de panel, dans le but d’évaluer la contribution des divers types d’infrastructures à la croissance. L’analyse tient compte de l’endogénéité de certains types d’infrastructures par l’utilisation de variables instrumentales. Nos résultats permettent de mettre en évidence la convergence conditionnelle des États Indiens. Ce constat n’exclut pas la persistance des inégalités de revenu par tête entre les États, du fait de l’existence de différences dans le niveau d’équilibre de ces revenus. Ces différences s’expliquent par celles premièrement des structures de production, deuxièmement des dotations en infrastructures ...

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File URL: http://dx.doi.org/10.1787/138016038733
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Paper provided by OECD Publishing in its series OECD Development Centre Working Papers with number 131.

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Date of creation: Jan 1998
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Handle: RePEc:oec:devaaa:131-en

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  1. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 35(2), pages 688-726, June.
  2. Quah, Danny, 1993. " Galton's Fallacy and Tests of the Convergence Hypothesis," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 95(4), pages 427-43, December.
  3. repec:chb:bcchwp:03 is not listed on IDEAS
  4. Barro, R.J. & Sala-I-Martin, X., 1991. "Convergence Across States and Regions," Papers, Yale - Economic Growth Center 629, Yale - Economic Growth Center.
  5. Xavier Sala-i-Martin, 1994. "Regional cohesion: Evidence and theories of regional growth and convergence," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 104, Department of Economics and Business, Universitat Pompeu Fabra.
  6. Mankiw, N Gregory & Romer, David & Weil, David N, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(2), pages 407-37, May.
  7. Caselli, Francesco & Esquivel, Gerardo & Lefort, Fernando, 1996. " Reopening the Convergence Debate: A New Look at Cross-Country Growth Empirics," Journal of Economic Growth, Springer, Springer, vol. 1(3), pages 363-89, September.
  8. Paul Cashin & Ratna Sahay, 1995. "Internal Migration, Center-State Grants and Economic Growth in the States of India," IMF Working Papers, International Monetary Fund 95/66, International Monetary Fund.
  9. Demetriades, Panicos O & Luintel, Kul B, 1996. "Financial Development, Economic Growth and Banker Sector Controls: Evidence from India," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(435), pages 359-74, March.
  10. Jimenez, Emmanuel, 1995. "Human and physical infrastructure: Public investment and pricing policies in developing countries," Handbook of Development Economics, Elsevier, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 43, pages 2773-2843 Elsevier.
  11. Islam, Nazrul, 1995. "Growth Empirics: A Panel Data Approach," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(4), pages 1127-70, November.
  12. Tianlun Jian & Jeffrey D. Sachs & Andrew M. Warner, 1996. "Trends in Regional Inequality in China," NBER Working Papers 5412, National Bureau of Economic Research, Inc.
  13. Jian, Tianlun & Sachs, Jeffrey D. & Warner, Andrew M., 1996. "Trends in regional inequality in China," China Economic Review, Elsevier, Elsevier, vol. 7(1), pages 1-21.
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