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Spatial Determinants of Entrepreneurship in India

  • Ejaz Ghani
  • William R. Kerr
  • Stephen D. O'Connell

We analyze the spatial determinants of entrepreneurship in India in the manufacturing and services sectors. Among general district traits, quality of physical infrastructure and workforce education are the strongest predictors of entry, with labor laws and household banking quality also playing important roles. Looking at the district-industry level, we find extensive evidence of agglomeration economies among manufacturing industries. In particular, supportive incumbent industrial structures for input and output markets are strongly linked to higher establishment entry rates. We also find substantial evidence for the Chinitz effect where small local incumbent suppliers encourage entry. The importance of agglomeration economies for entry hold when considering changes in India's incumbent industry structures from 1989, determined before large-scale deregulation began, to 2005.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 17514.

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Date of creation: Oct 2011
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Publication status: published as Ghani, Ejaz, William R. Kerr, and Stephen O'Connell. "Spatial Determinants of Entrepreneurship in India." Special Issue on Entrepreneurship in a Regional Context . Regional Studies 48, no. 6 (December 2013).
Handle: RePEc:nbr:nberwo:17514
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