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Growth, geography, and the iron law: Understanding divergence across Indian districts

Author

Listed:
  • Samarjit Das

    () (Indian Statistical Institute, New Delhi)

  • Chetan Ghate

    () (Indian Statistical Institute, New Delhi)

  • Peter E. Robertson

    () (University of Western Australia)

Abstract

The existing literature on Indian growth finds no evidence of B convergence across states. This represents a puzzle given the relatively free flows of capital, labour and commodities across state borders. We use a new data set to estimate convergence rates across 575 Indian districts and find that the pattern of absolute B- divergence remains. To explain this we develop a model of conditional convergence that includes a gravity indicator of trade and migration costs - specifically the distance from a major metropolitan center - as a conditioning variable. We find strong evidence of conditional convergence with an elasticity close to Barro's "iron law". We also find that geography and public infrastructure variables are important conditioning variables.

Suggested Citation

  • Samarjit Das & Chetan Ghate & Peter E. Robertson, 2013. "Growth, geography, and the iron law: Understanding divergence across Indian districts," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 13-06, Indian Statistical Institute, New Delhi, India.
  • Handle: RePEc:ind:isipdp:13-06
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    File URL: http://www.isid.ac.in/~pu/dispapers/dp13-06.pdf
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    More about this item

    Keywords

    Convergence; Divergence; Indian Economic Growth; Gravity Models;

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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