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Spatial Durbin Model of Regional Incomes in India: The Role of Public, Private and Human Capital

Author

Listed:
  • Vivek Jadhav

    ((Corresponding Author)Ph.D. Scholar, Madras School of Economics, Chennai)

  • Brinda Viswanathan

    (Professor & Dean Research, Madras School of Economics, Chennai)

Abstract

Most regional income studies in India examine only the convergence of regional per capita incomes with a limited number of studies analyzing the relative role of its determinants. Spatial Durbin model of regional income and growth based on the augmented Mankiw-Romer-Weil (MRW) -with public, private, household and human capitals as the determinants - is estimated using the 2015 Indicus data on per worker incomes for 103 regions (clusters of districts) of India. The results of the spatial model support spillover effect of public, human and private capital from neighbouring regions on per worker Gross Regional Domestic Product (GRDP) as found in several studies for European regions. We additionally find that public capital, which is not accounted for separately in the developed country regional models, is a relatively more important determinant for a developing country like India than private capital or human capital for this data. In the spatial growth model of per worker GRDP, none of the determinants except the state capital dummy variable have significant impact on the regional growth rate between 2001 and 2015. This may be a data limitation and perhaps a panel data model may be more suited for such an analysis.

Suggested Citation

  • Vivek Jadhav & Brinda Viswanathan, 2023. "Spatial Durbin Model of Regional Incomes in India: The Role of Public, Private and Human Capital," Working Papers 2023-243, Madras School of Economics,Chennai,India.
    • Handle: RePEc:mad:wpaper:2023-243
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    References listed on IDEAS

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    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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