Is India's manufacturing sector moving away from cities ?
AbstractThis paper investigates the urbanization of the Indian manufacturing sector by combining enterprise data from formal and informal sectors. It finds 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. Although the secular trend for India's manufacturing urbanization has slowed down, the localized importance of education and infrastructure has not. The 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. Cities are evolving in India from places of goods production to forges of human capital and coping mechanisms for survival.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 6271.
Date of creation: 01 Nov 2012
Date of revision:
Banks&Banking Reform; National Urban Development Policies&Strategies; Urban Housing and Land Settlements; Population Policies; Urban Slums Upgrading;
Other versions of this item:
- Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2012. "Is India’s Manufacturing Sector Moving Away From Cities?," Harvard Business School Working Papers 12-090, Harvard Business School.
- Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2012. "Is India's Manufacturing Sector Moving Away From Cities?," NBER Working Papers 17992, National Bureau of Economic Research, Inc.
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General
- O14 - Economic Development, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- R - Urban, Rural, Regional, Real Estate, and Transportation Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-06 (All new papers)
- NEP-IUE-2012-12-06 (Informal & Underground Economics)
- NEP-URE-2012-12-06 (Urban & Real Estate Economics)
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