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Is India Shining?

Author

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  • Anurag N Banerjee

    () (Durham Business School)

  • Nilanjan Banik

    (Institute for Financial Management and Research, Chennai, India)

Abstract

In India, the popular perception is economic reforms have benefited the rich more than the poor leading to an unequal income distribution, as in Quah's twin peaks hypothesis. In this article we test this hypothesis by studying the spatial dynamics of income distribution. Using district-level per-capita income we find that the income distribution has not changed. The perception about economic reforms having benefitted only the rich is not correct because income growth across districts is positively correlated spatially. Thus there is a positive spatial multiplier effect on income and growth. In addition, we also identify physical infrastructure, human capital, and factories, as factors responsible for increase in income for both the rich, and the poor districts.

Suggested Citation

  • Anurag N Banerjee & Nilanjan Banik, 2011. "Is India Shining?," Working Papers 2011_11, Durham University Business School.
  • Handle: RePEc:dur:durham:2011_11
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    References listed on IDEAS

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    1. Quah, Danny T, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," Economic Journal, Royal Economic Society, vol. 106(437), pages 1045-1055, July.
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    3. Quah, Danny, 1993. "Empirical cross-section dynamics in economic growth," European Economic Review, Elsevier, vol. 37(2-3), pages 426-434, April.
    4. Rosenzweig, Mark R, 1990. "Population Growth and Human Capital Investments: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 38-70, October.
    5. Kelejian, Harry H. & Prucha, Ingmar R., 2004. "Estimation of simultaneous systems of spatially interrelated cross sectional equations," Journal of Econometrics, Elsevier, vol. 118(1-2), pages 27-50.
    6. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-255, March-Apr.
    7. Paul Cashin & Ratna Sahay, 1996. "Internal Migration, Center-State Grants, and Economic Growth in the States of India," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 123-171, March.
    8. Charles I. Jones, 1997. "On the Evolution of the World Income Distribution," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 19-36, Summer.
    9. Danny Quah, 1996. "Twin Peaks: Growth and Convergence in Models of Distribution Dynamics," CEP Discussion Papers dp0280, Centre for Economic Performance, LSE.
    10. Robin Burgess & Rohini Pande, 2005. "Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment," American Economic Review, American Economic Association, vol. 95(3), pages 780-795, June.
    11. Quah, Danny, 1996. "Twin peaks : growth and convergence in models of distribution dynamics," LSE Research Online Documents on Economics 2278, London School of Economics and Political Science, LSE Library.
    12. Nidhiya Menon & Paroma Sanyal, 2007. "Labor Conflict and Foreign Investments: An Analysis of FDI in India," Review of Development Economics, Wiley Blackwell, vol. 11(4), pages 629-644, November.
    13. Rosenzweig, Mark R. & Wolpin, Kenneth I., 1982. "Governmental interventions and household behavior in a developing country : Anticipating the unanticipated consequences of social programs," Journal of Development Economics, Elsevier, vol. 10(2), pages 209-225, April.
    14. Singh, Nirvikar & Kendall, Jake & Jain, R.K. & Chander, Jai, 2013. "Regional Inequality in India in the 1990s: A Further Look," Santa Cruz Department of Economics, Working Paper Series qt8pd8n5qn, Department of Economics, UC Santa Cruz.
    15. 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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    Cited by:

    1. Anurag N. Banerjee & Nilanjan Banik & Ashvika Dalmia, 2017. "Demand for household sanitation in India using NFHS-3 data," Empirical Economics, Springer, vol. 53(1), pages 307-327, August.

    More about this item

    Keywords

    Districts of India; Income; Moran’s Index; Spatial Analysis;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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