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Understanding divergence in India: a political economy approach

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  • Chetan Ghate

Abstract

We construct a simple political economy model with imperfect capital markets to explain infrastructure investments across Indian states. The model predicts that: i) the fixed cost of accessing the modern sector, ii) the initial stock of infrastructure, iii) median voter wealth, and iv) corruption, can all potentially explain why different states have different levels of infrastructure investments. The theoretical model is motivated by recent empirical work on India that argues that the reason per-capita income across Indian states has diverged is because of the distribution of infrastructure investments.

Suggested Citation

  • Chetan Ghate, 2008. "Understanding divergence in India: a political economy approach," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 11(1), pages 1-9.
  • Handle: RePEc:taf:jpolrf:v:11:y:2008:i:1:p:1-9
    DOI: 10.1080/17487870802031411
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    Cited by:

    1. Chetan Ghate & Stephen Wright, 2008. "V-Factor: Distribution, timing and correlates of the the great Indian growth turnaround," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-03, Indian Statistical Institute, New Delhi, India.
    2. Das, Samarjit & Ghate, Chetan & Robertson, Peter E., 2015. "Remoteness, Urbanization, and India’s Unbalanced Growth," World Development, Elsevier, vol. 66(C), pages 572-587.
    3. Mohanty, Biswajit & Bhanumurthy, N. R. & Dastidar, Ananya Ghosh, 2017. "What explains Regional Imbalances in Infrastructure?: Evidence from Indian States," Working Papers 17/197, National Institute of Public Finance and Policy.
    4. Ghate, Chetan & Wright, Stephen, 2012. "The “V-factor”: Distribution, timing and correlates of the great Indian growth turnaround," Journal of Development Economics, Elsevier, vol. 99(1), pages 58-67.
    5. repec:unt:jnapdj:v:24:y:2017:i:2:p:113-139 is not listed on IDEAS

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