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What makes cities more competitive ? spatial determinants of entrepreneurship in India

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  • Ghani, Ejaz
  • Kerr, William R.
  • O'Connell, Stephen D.

Abstract

Policy makers in both developed and developing countries want to make cities more competitive, attract entreprepreneurs, boost economic growth, and promote job creation. The authors examine the spatial location of entrepreneurs in India in manufacturing and services sectors, as well as in the formal and informal sectors, in 630 districts spread across 35 states/union territories. They quantify entrepreneurship as young firms that are less than three years old, and define entry measures through employment in these new establishments. They develop metrics that unite the incumbent industrial structures of districts with the extent to which industries interact through the traditional agglomeration channels. The two most consistent factors that predict overall entrepreneurship for a district are its education and the quality of local physical infrastructure. These patterns are true for manufacturing and services. These relationships are much stronger in India than those found for the United States. The authors also find strong evidence of agglomeration economies in India's manufacturing sector. This influence is through both traditional Marshallian economies like a suitable labor force and proximity to customers and through the Chinitz effect that emphasizes small suppliers. India's footprints in structural transformation, urbanization, and manufacturing sector are still at an early stage. At such an early point and with industrial structures not yet entrenched, local policies and traits can have profound and lasting impacts by shaping where industries plant their roots.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6198.

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Date of creation: 01 Sep 2012
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Handle: RePEc:wbk:wbrwps:6198

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Related research

Keywords: Microfinance; Labor Markets; Labor Policies; Private Participation in Infrastructure; Small Scale Enterprise;

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  1. Audretsch, David B. & Falck, Oliver & Feldman, Maryann P. & Heblich, Stephan, 2012. "Local entrepreneurship in context," Munich Reprints in Economics 20181, University of Munich, Department of Economics.
  2. Klaus Desmet & Esteban Rossi-Hansberg, 2014. "Spatial Development," American Economic Review, American Economic Association, vol. 104(4), pages 1211-43, April.
  3. Falck, Oliver & Fritsch, Michael & Heblich, Stephan, 2010. "The Phantom of the Opera: Cultural Amenities, Human Capital, and Regional Economic Growth," IZA Discussion Papers 5065, Institute for the Study of Labor (IZA).
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  6. ANT Bozkaya & William R. Kerr, 2009. "Labor Regulations and European Private Equity," Working Papers CEB 09-055.RS, ULB -- Universite Libre de Bruxelles.
  7. Bruce Fallick & Charles A. Fleischman & James B. Rebitzer, 2005. "Job-hopping in Silicon Valley: some evidence concerning the micro-foundations of a high technology cluster," Finance and Economics Discussion Series 2005-11, Board of Governors of the Federal Reserve System (U.S.).
  8. Gilles Duranton & Henry G. Overman, 2005. "Testing for Localization Using Micro-Geographic Data," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 1077-1106.
  9. David Audretsch & Michael Fritsch, 2002. "Growth Regimes over Time and Space," Regional Studies, Taylor & Francis Journals, vol. 36(2), pages 113-124.
  10. Fernandes, Ana M. & Sharma, Gunjan, 2012. "Together we stand ? agglomeration in Indian manufacturing," Policy Research Working Paper Series 6062, The World Bank.
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  12. Uwe Deichmann & Somik V. Lall & Stephen J. Redding & Anthony J. Venables, 2008. "Industrial Location in Developing Countries," World Bank Research Observer, World Bank Group, vol. 23(2), pages 219-246, May.
  13. Desmet, Klaus & Ghani, Ejaz & O'Connell, Stephen & Rossi-Hansberg, Esteban, 2012. "The spatial development of India," Policy Research Working Paper Series 6060, The World Bank.
  14. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
  15. repec:bla:restud:v:75:y:2008:i:4:p:1011-1038 is not listed on IDEAS
  16. Amin, Mohammad & Mattoo, Aaditya, 2008. "Human capital and the changing structure of the Indian economy," Policy Research Working Paper Series 4576, The World Bank.
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