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The misallocation of land and other factors of production in India

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  • Duranton,Gilles
  • Ghani,Syed Ejaz
  • Grover,Arti Goswami
  • Kerr,William Robert
  • Duranton,Gilles
  • Ghani,Syed Ejaz
  • Goswami,Arti Grover
  • Kerr,William Robert

Abstract

This paper quantifies the misallocation of manufacturing output and factors of production between establishments across Indian districts during 1989-2010. It first distills a number of stylized facts about misallocation in India, and demonstrates the validity of misallocation metrics by connecting them to regulatory changes in India that affected real property. With this background, the study next quantifies the implications and determinants of factor and output misallocation. Although more-productive establishments in India tend to produce more output, factors of production are grossly misallocated. A better allocation of output and factors of production is associated with greater output per worker. Misallocation of land plays a particularly important role in these challenges.

Suggested Citation

  • Duranton,Gilles & Ghani,Syed Ejaz & Grover,Arti Goswami & Kerr,William Robert & Duranton,Gilles & Ghani,Syed Ejaz & Goswami,Arti Grover & Kerr,William Robert, 2015. "The misallocation of land and other factors of production in India," Policy Research Working Paper Series 7221, The World Bank.
    • Handle: RePEc:wbk:wbrwps:7221
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why are Indian firms five times less productive than American ones? One reason is land
      by Ejaz Ghani in Let's Talk Development on 2015-10-09 19:00:18

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