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Is India's manufacturing sector moving away from cities ?

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

Abstract

This 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 Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6271.

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Date of creation: 01 Nov 2012
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Handle: RePEc:wbk:wbrwps:6271

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Keywords: Banks&Banking Reform; National Urban Development Policies&Strategies; Urban Housing and Land Settlements; Population Policies; Urban Slums Upgrading;

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  1. 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.
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Citations

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Cited by:
  1. Ghani, Ejaz & Kerr, William R. & Tewari, Ishani, 2013. "Specialization, diversity, and Indian manufacturing growth," Policy Research Working Paper Series 6648, The World Bank.
  2. Tripathi, Sabyasachi, 2012. "Estimating Urban Agglomeration Economies for India: A New Economic Geography Perspective," MPRA Paper 43501, University Library of Munich, Germany.
  3. Ajay Sharma & S Chandrasekhar, 2014. "Growth of the urban shadow, spatial distribution of economic activities and commuting by workers in rural and Urban India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-015, Indira Gandhi Institute of Development Research, Mumbai, India.
  4. 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.
  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. Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2012. "Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing," NBER Working Papers 18524, National Bureau of Economic Research, Inc.
  7. Ghani, Ejaz & Goswami, Arti Grover & Kerr, William R., 2013. "Highways and Spatial Development," World Bank - Economic Premise, The World Bank, The World Bank, issue 131, pages 1-6, December.
  8. 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.
  9. 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.
  10. 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.

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