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Infrastructure, Openness, And Regional Inequality In India

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  • Zhang, Xiaobo
  • Fan, Shenggen

Abstract

This paper aims to quantify the driving forces behind the observed divergence of Indian economy. The results show that in a closed economy with agriculture as the predominant mode of production, the comparative advantage is mainly determined by the difference in land quality and climate across regions within a country. However, when the economy opens its door to the rest of the world, a region's comparative advantage is evaluated in a broader global context. Therefore, regions adjacent to more developed economies, or with better infrastructure such as ports and airports, enjoy a far better location advantage for trade and development than landlocked regions. More investment in physical infrastructure such as roads will bring the interior regions closer to the world markets and reduce regional disparity. Among all the factors considered, education is the only equalizing factor to regional development.

Suggested Citation

  • Zhang, Xiaobo & Fan, Shenggen, 2002. "Infrastructure, Openness, And Regional Inequality In India," 2002 Annual meeting, July 28-31, Long Beach, CA 19902, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea02:19902
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    File URL: http://purl.umn.edu/19902
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    References listed on IDEAS

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    1. Jeffrey D. Sachs & Nirupam Bajpai & Ananthi Ramiah, 2002. "Understanding Regional Economic Growth in India," Asian Economic Papers, MIT Press, vol. 1(3), pages 32-62.
    2. Sylvie Démurger & Jeffrey D. Sachs & Wing Thye Woo & Shuming Bao & Gene Chang & Andrew Mellinger, 2002. "Geography, Economic Policy, and Regional Development in China," Asian Economic Papers, MIT Press, vol. 1(1), pages 146-197.
    3. Jeffrey D. Sachs & Ananthi Ramiah & Nirupam Bajpai, 2002. "Understanding Regional Economic Growth in India," CID Working Papers 88, Center for International Development at Harvard University.
    4. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, January.
    5. Jeffrey D. Sachs & Andrew Warner, 1995. "Economic Reform and the Process of Global Integration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 1-118.
    6. X. Zhang & R. Kanbur, 2001. "What Difference Do Polarisation Measures Make? An Application to China," Journal of Development Studies, Taylor & Francis Journals, vol. 37(3), pages 85-98.
    7. Fan, Shenggen & Zhang, Linxiu & Zhang, Xiaobo, 2002. "Growth, inequality, and poverty in rural China: the role of public investments," Research reports 125, International Food Policy Research Institute (IFPRI).
    8. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
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    Cited by:

    1. Alokesh Barua & Aparna Sawhney, 2015. "Development Policy Implications for Growth and Regional Inequality in a Small Open Economy: The Indian Case," Review of Development Economics, Wiley Blackwell, vol. 19(3), pages 695-709, August.
    2. Alokesh Barua & Pavel Chakraborty, 2010. "Does Openness Affect Regional Inequality? A Case Study for India," Review of Development Economics, Wiley Blackwell, vol. 14(s1), pages 447-465, August.

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    Keywords

    Community/Rural/Urban Development;

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