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What makes cities more competitive ? spatial determinants of entrepreneurship in India

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

Policy makers in both developed and developing countries want to make cities more competitive, attract entreprepreneurs, boost economic growth, and promote job creation. The authors examine the spatial location of entrepreneurs in India in manufacturing and services sectors, as well as in the formal and informal sectors, in 630 districts spread across 35 states/union territories. They quantify entrepreneurship as young firms that are less than three years old, and define entry measures through employment in these new establishments. They develop metrics that unite the incumbent industrial structures of districts with the extent to which industries interact through the traditional agglomeration channels. The two most consistent factors that predict overall entrepreneurship for a district are its education and the quality of local physical infrastructure. These patterns are true for manufacturing and services. These relationships are much stronger in India than those found for the United States. The authors also find strong evidence of agglomeration economies in India's manufacturing sector. This influence is through both traditional Marshallian economies like a suitable labor force and proximity to customers and through the Chinitz effect that emphasizes small suppliers. India's footprints in structural transformation, urbanization, and manufacturing sector are still at an early stage. At such an early point and with industrial structures not yet entrenched, local policies and traits can have profound and lasting impacts by shaping where industries plant their roots.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6198.

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Date of creation: 01 Sep 2012
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Handle: RePEc:wbk:wbrwps:6198
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  1. Mercedes Delgado & Michael E. Porter & Scott Stern, 2010. "Clusters and entrepreneurship," Journal of Economic Geography, Oxford University Press, vol. 10(4), pages 495-518, July.
  2. Desmet, Klaus & Rossi-Hansberg, Esteban, 2009. "Spatial Development," CEPR Discussion Papers 7479, C.E.P.R. Discussion Papers.
  3. Thomas Astebro & Jing Chen & Peter Thompson, 2010. "Stars and Misfits: Self-Employment and Labor Market Frictions," Working Papers 1003, Florida International University, Department of Economics.
  4. Duranton, Gilles & Henry G Overman, 2003. "Testing for Localisation Using Micro-Geographic Data," Royal Economic Society Annual Conference 2003 69, Royal Economic Society.
  5. Falck, Oliver & Fritsch, Michael & Heblich, Stephan, 2011. "The phantom of the opera: Cultural amenities, human capital, and regional economic growth," Munich Reprints in Economics 20513, University of Munich, Department of Economics.
  6. Bruce Fallick & Charles A. Fleischmann & James B. Rebitzer, 2005. "Job Hopping in Silicon Valley: Some Evidence Concerning the Micro-Foundations of a High Technology Cluster," NBER Working Papers 11710, National Bureau of Economic Research, Inc.
  7. Desmet, Klaus & Ghani, Ejaz & O'Connell, Stephen D & Rossi-Hansberg, Esteban, 2013. "The Spatial Development of India," CEPR Discussion Papers 9433, C.E.P.R. Discussion Papers.
  8. ANT Bozkaya & William R. Kerr, 2009. "Labor Regulations and European Private Equity," Working Papers CEB 09-055.RS, ULB -- Universite Libre de Bruxelles.
  9. Agrawal, Ajay & Kapur, Devesh & McHale, John & Oettl, Alexander, 2011. "Brain drain or brain bank? The impact of skilled emigration on poor-country innovation," Journal of Urban Economics, Elsevier, vol. 69(1), pages 43-55, January.
  10. Mercedes Delgado & Michael Porter & Scott Stern, 2010. "Clusters, Convergence, and Economic Performance," Working Papers 10-34, Center for Economic Studies, U.S. Census Bureau.
  11. Mohammad Arzaghi & J. Vernon Henderson, 2008. "Networking off Madison Avenue," Review of Economic Studies, Oxford University Press, vol. 75(4), pages 1011-1038.
  12. Amin, Mohammad & Mattoo, Aaditya, 2008. "Human capital and the changing structure of the Indian economy," Policy Research Working Paper Series 4576, The World Bank.
  13. Audretsch, David B. & Falck, Oliver & Feldman, Maryann P. & Heblich, Stephan, 2012. "Local entrepreneurship in context," Munich Reprints in Economics 20181, University of Munich, Department of Economics.
  14. repec:bla:restud:v:75:y:2008:i:4:p:1011-1038 is not listed on IDEAS
  15. Uwe Deichmann & Somik V. Lall & Stephen J. Redding & Anthony J. Venables, 2008. "Industrial Location in Developing Countries," World Bank Research Observer, World Bank Group, vol. 23(2), pages 219-246, May.
  16. David Audretsch & Michael Fritsch, 2002. "Growth Regimes over Time and Space," Regional Studies, Taylor & Francis Journals, vol. 36(2), pages 113-124.
  17. Fernandes, Ana M. & Sharma, Gunjan, 2012. "Together we stand ? agglomeration in Indian manufacturing," Policy Research Working Paper Series 6062, The World Bank.
  18. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
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