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Convergence Club Empirics: Some Dynamics and Explanations of Unequal Growth across Indian States

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  • Sanghamitra Bandyopadhyay

Abstract

This paper documents the convergence of incomes across Indian states over the period 1965 to 1998. It departs from traditional analyses of convergence by tracking the evolution of the entire income distribution, instead of standard regression and time series analyses. The findings reveal twin-peaks dynamics - the existence of two income convergence clubs, one at 50 per cent, another at 125% of the national average income. Income disparities across states seem to have declined over the sixties, only to increase over the following three decades. The observed polarization is strongly explained by the disparate distribution of infrastructure, and that of education, and to an extent by a number of macroeconomic indicators, that of capital expenditure and fiscal deficits.

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  • Sanghamitra Bandyopadhyay, 2003. "Convergence Club Empirics: Some Dynamics and Explanations of Unequal Growth across Indian States," STICERD - Distributional Analysis Research Programme Papers 69, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  • Handle: RePEc:cep:stidar:69
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    Cited by:

    1. Petia Topalova, 2007. "Trade Liberalization, Poverty and Inequality: Evidence from Indian Districts," NBER Chapters, in: Globalization and Poverty, pages 291-336, National Bureau of Economic Research, Inc.
    2. Amartya Lahiri & Kei-Mu Yi, 2009. "A Tale of Two States: Maharashtra and West Bengal," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(3), pages 523-542, July.
    3. Artelaris, Panagiotis & Arvanitidis, Paschalis & Petrakos, George, 2006. "Theoretical and Methodological Study on Dynamic Growth Regions and Factors Explaining their Growth Performance," Papers DYNREG02, Economic and Social Research Institute (ESRI).
    4. World Bank, 2004. "Stabilization and Fiscal Empowerment : The Twin Challenges Facing India's States, Volume 2. Detailed Report," World Bank Other Operational Studies 16775, The World Bank.
    5. Shingal, ANIRUDH, 2010. "Services growth and convergence: Getting India’s states together," MPRA Paper 32813, University Library of Munich, Germany.
    6. FE, Doukouré Charles, 2010. "Réduction de Droits de Douane et Convergence Réelle dans l'UEMOA [Tariffs Reduction and Real Convergence in WAEMU]," MPRA Paper 26763, University Library of Munich, Germany.
    7. Roberto Basile, 2009. "Productivity Polarization across Regions in Europe," International Regional Science Review, , vol. 32(1), pages 92-115, January.
    8. REY, Serge, 2005. "Convergence réelle et convergence nominale dans les Pays de la région MENA [Real and nominal convergence amongst MENA countries]," MPRA Paper 30206, University Library of Munich, Germany.

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    More about this item

    Keywords

    Convergence clubs; conditional convergence; distribution dynamics; infrastructure; capital investment; macroeconomic stability; panel data; India.;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables

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