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What Makes Cities More Competitive? Lessons from India

Author

Listed:
  • Ghani, Ejaz

    () (World Bank)

  • o'Connell, Stephen D.

    () (City University of New York)

  • Kerr, William R.

    () (Harvard Business School)

Abstract

Policy makers in both developed and developing countries want to accelerate spatial development, make cities more competitive, attract new entrepreneurs, boost economic growth, and promote job creation. These are commendable goals given that city populations in developing countries are expected to double from 2 billion to 4 billion people between 2000 and 2030. So what makes some cities more competitive than others? This note examines city competitiveness in India through the lens of spatial location choices of new and young entrepreneurs using plant-level data from the manufacturing and services sectors, including formal and informal operations. Findings show that the two most consistent factors that predict overall entrepreneurship for a district are its population's level of education and the quality of local physical infrastructure; these patterns are true for manufacturing and services. Agglomeration economies are much stronger in India than in the United States, but there is much greater variation in spatial outcomes in India than in the United States. Micro evidence for India also suggests that while strict labor regulations discourage formal sector entry, better household banking environments encourage entry into the informal sectors. Informal sectors conform much more closely to the overall contours of India’s economic geography than formal sectors. Policy makers looking to promote competitiveness in their local areas have several policy levers to exploit.

Suggested Citation

  • Ghani, Ejaz & o'Connell, Stephen D. & Kerr, William R., 2014. "What Makes Cities More Competitive? Lessons from India," World Bank - Economic Premise, The World Bank, issue 132, pages 1-4, January.
  • Handle: RePEc:wbk:prmecp:ep132
    as

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    File URL: http://siteresources.worldbank.org/EXTPREMNET/Resources/EP132final.pdf
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    References listed on IDEAS

    as
    1. Ejaz Ghani & William R. Kerr & Stephen O'Connell, 2014. "Spatial Determinants of Entrepreneurship in India," Regional Studies, Taylor & Francis Journals, vol. 48(6), pages 1071-1089, June.
    2. Edward L. Glaeser & William R. Kerr, 2009. "Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(3), pages 623-663, September.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • L8 - Industrial Organization - - Industry Studies: Services
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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