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Industry and the urge to cluster: a study of the informal sector in India

Mukim, Megha (2011) Industry and the urge to cluster: a study of the informal sector in India. SERC Discussion Papers, SERCDP0072. Spatial Economics Research Centre (SERC), London School of Economics and Political Sciences, London, UK.

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Abstract

This paper studies the determinants of firm location choice at the district-level in India to gauge the relative importance of agglomeration economies vis-à-vis good business environment. A peculiar characteristic of the Indian economy is that the unorganised nonfarm sector accounts for 43.2% of NDP and employs 71.6% of the total workforce. I analyse National Sample Survey data that covers over 4.4 million firms, in both unorganised sectors – manufacturing and services. The empirical analysis is carried out using count models, and I instrument with land revenue institutions to deal with possible endogeneity bias. I find that buyer-suppler linkages and industrial diversity make a district more attractive to economic activity, whilst the quality and level of infrastructure are also important. I conclude that public policy may be limited in its ability to encourage relocation of informal firms.

Item Type: Monograph (Working Paper)
Official URL: http://www.spatialeconomics.ac.uk/SERC/publication...
Additional Information: © 2011 Megha Mukim
Library of Congress subject classification: G Geography. Anthropology. Recreation > G Geography (General)
H Social Sciences > HC Economic History and Conditions
Journal of Economic Literature Classification System: O - Economic Development, Technological Change, and Growth > O1 - Economic Development
Sets: Research centres and groups > Spatial Economics Research Centre
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: SERCDP0072
Date Deposited: 28 Mar 2011 10:42
URL: http://eprints.lse.ac.uk/33592/

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