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Measuring state–business relations within developing countries: An application to Indian states

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  • Massimiliano Calì
  • Siddhartha Mitra
  • Purnima Purohit

Abstract

Effective relations between states and business have been increasingly identified as an important institution for sustaining economic development. This paper constructs quantitative indices measuring the quality of state–business relations (SBRs) across Indian states in the 1985–2008 period. It represents the first effort to systematically characterise SBRs across sub-national units within a country without resorting to subjective surveys. We discuss the possible sensitivity of the indices to minor and major definitional changes and examine the evolution of SBRs across Indian states and at the national level through the study of cross‐sectional and secular trends in these indices. The results suggest that SBRs have improved over time in all states barring Bihar. Rankings of states in terms of the SBR index show varying time trends—stable and high ranks for states like Andhra Pradesh, Karnataka, and Tamil Nadu, stable and low ranks for states like Uttar Pradesh and West Bengal, rapidly improving ranks for states like Haryana, Punjab and Rajasthan and swift deterioration in ranks for states like Bihar and Madhya Pradesh. Copyright (C) 2011 John Wiley & Sons, Ltd.

Suggested Citation

  • Massimiliano Calì & Siddhartha Mitra & Purnima Purohit, 2011. "Measuring state–business relations within developing countries: An application to Indian states," Journal of International Development, John Wiley & Sons, Ltd., vol. 23(3), pages 394-419, April.
    • Handle: RePEc:wly:jintdv:v:23:y:2011:i:3:p:394-419
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    File URL: http://hdl.handle.net/10.1002/jid.1777
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    Citations

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    Cited by:

    1. Burhan Can Karahasan & Firat Bilgel, 2018. "State-Business Relations and Financial Accessibility: Explaining Firm Performance in the MENA Region," Working Papers 1279, Economic Research Forum, revised 26 Dec 2018.
    2. Vinish Kathuria & Rajesh Raj S.N. & Kunal Sen, 2013. "Institution of State–Business Relation and Its Impact on Manufacturing Productivity Growth in India: A Post-reform Analysis," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 14(1), pages 83-108, March.
    3. Baranov, Alexey & Malkov, Egor & Polishchuk, Leonid & Rochlitz, Michael & Syunyaev, Georgiy, 2015. "How (not) to measure Russian regional institutions," Russian Journal of Economics, Elsevier, vol. 1(2), pages 154-181.
    4. Calì, Massimiliano & Sen, Kunal, 2011. "Do Effective State Business Relations Matter for Economic Growth? Evidence from Indian States," World Development, Elsevier, vol. 39(9), pages 1542-1557, September.
    5. Burhan Can Karahasan & Fırat Bilgel, 2020. "State–Business Relations, Financial Access and Firm Performance: A Causal Mediation Analysis," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(7), pages 1033-1074, October.

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