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Industrial Activity in Indian States: The Role of Infrastructure


  • Dutta, Jayasri
  • Horsewood, Nicholas
  • Vasilakos, Nicholas


We use panel data for fourteen Indian states to assess the influence of public infrastructure on industrial activity, namely productivity, employment, real wages and investment, at the state level and over the period 1974-1998. Our results indicate that the length of national highways has on average the greatest impact on each of the four measures of industrial activity. While the length of national highways and electricity generating capacity are found to be important determinants of state real wages and productivity, total highway length is a key variable in determining the level of investment in fixed capital in each state.

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  • Dutta, Jayasri & Horsewood, Nicholas & Vasilakos, Nicholas, 2007. "Industrial Activity in Indian States: The Role of Infrastructure," MPRA Paper 7184, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:7184

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    Industrial activity; productivity; infrastructure; wages; investment;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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