Socioeconomic Progress across the Major Indian states: Converging or Diverging

Goli, Srinivas and Perianayagam, Arokiasamy and Bheemeshwar, Reddy (2013): Socioeconomic Progress across the Major Indian states: Converging or Diverging.

Abstract

The purpose of this paper is to examine the progress in socioeconomic conditions across the major states of India by using convergence hypothesis. Earlier studies that examined regional disparities of development used per capita State Net Domestic Product (SNDP) as an important proxy for assessing human well-being. This study attempts a more comprehensive assessment of socioeconomic convergence in terms of critical indicators of economic inequality, poverty ratios, literacy rate and Human Development Index (HDI) along with per capita SNDP. The results reveal that in the period between 1981 and 2011, statistically significant absolute and conditional Beta (β)-convergence in literacy rates and HDI have been observed but only conditional β-convergence has been evident in case of per capita SNDP and poverty ratios. β-convergence estimates for the recent period (post-2001) show, a divergence in per capita SNDP and poverty ratios but convergence in literacy rates and HDI. Kernel density plots for socioeconomic indicators show the existence of convergence clubs but not absolute convergence among all the major states. Thus, this study suggests that use of the non-parametric convergence measures is crucial to gain more clear insights on socioeconomic progress and to identify the short-term divergent paths.

• Item Type: MPRA Paper
• Language: English
• Keywords: Convergence, Divergence, Socioeconomic progress, India
• Subjects: N - Economic History > N9 - Regional and Urban History > N95 - Asia including Middle East; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

References

Ahluwalia, M., 2002. State level performance under economic reforms in India. In Krueger, A. (Ed.), Economic Policy Reforms and the Indian Economy. University Of Chicago Press, Chicago, pp. 91-128.

Aiyar, S., 2001. Growth theory and convergence across Indian states: a panel study. In: Callen, T., Reynolds, P., Towe, C. (Eds.), India at the Crossroads: Sustaining Growth and Reducing Poverty. International Monetary Fund, Washington DC, pp. 143–169.

Barro, R.J., 1991. Economic growth in a cross-section of countries. The Quarterly Journal of Economics 106, 407-44.

Barro, R.J., Sala-I-Martin, X., 1995. Economic Growth. Mcgraw-Hill, New York.

- 1992. Convergence. Journal of Political Economy 100, 223-251.

Baumol, W.J., 1986. Productivity growth, convergence and welfare: what the long-run data show. American Economic Review 76, 1072-85.

Bhattacharya, B.B., Sakthivel, S., 2004. Regional growth and disparity in India: comparison of pre and post-reform decades. Economic and Political Weekly 39, 1071–77.

Cashin, P., Sahay, R., 1996. Regional economic growth and convergence in India. Finance and Development 33, 49 – 52.

Darwent, D., 1969. Growth poles and growth centers in regional planning- a review. Environment and Planning 1, 5-32.

Das, K., 1993. Planning and regional differentiation in India: strategies and practices. Journal of Indian School of Political Economy 5, 603-632.

Dholakia, R.H., 1994. Spatial dimensions of accelerations of economic growth in India. Economic and Political Weekly 29, 2303-2309.

- 2003. Regional disparity in economic and human development in India. Economic and Political Weekly 27, 4166-4172.

- 1985. Regional Disparity in Economic Growth in India. Himalaya, New Delhi.

Dorius, S.F., 2008. Global demographic convergence? Are consideration of changing inter-country inequality in fertility. Population and Development Review 34, 519-539.

Drèze, J., Khera, R., 2012. Regional patterns of human and child deprivation in India. Economic and Political Weekly 47, 42-49.

Fujita, M., Krugman, P., Venables, A., 1999. The Spatial Economy: Cities, Regions, and International Trade. MIT Press, Cambridge, MA.

Friedmann, J., 1956. Locational aspects of economic development. Land Economics 32, 213-227.

- 1964. Regional development in post-industrial society. Journal of the American Institute of Planners 32(3), 84-90.

Friedman, M., 1992. Do old fallacies ever die? Journal of Economic Literature 30, 2129–2132.

Ghosh, B., Marjit, S., Neogi, C., 1998. Economic growth and regional divergence in India, 1960 to 1995. Economic and Political Weekly 33, 1623-1630.

Ghosh, M., 2006. Economic Growth and Human Development in Indian States. Economic & Political Weekly 41, 3321-3329.

– 2011. Regional Disparities in education, health and human development in India. Indian Journal of Human Development 5, 5-28.

Hall, P., 1992. Regional Planning. Routledge, London, New York.

Herbertsson, T.T., Orszag, P.R., Orszag, J.M., 2000. Population dynamics and convergence in fertility rates. Available online at www.econ.bbk.ac.uk/wp/ewp/ewp9921.pdf [Accessed 10 December 2012].

Hirschman, A.O., 1958. The Strategy of Economic Development. Yale University Press, New Haven.

Hoover, E.M., 1971. An Introduction to Regional Economics. Alfred A. Knopf, New York. Institute of Applied Manpower Research. 2011. India Human Development Report 2011. Oxford university press, New Delhi.

Jha, R. 2004. Reducing poverty and inequality in India: has the liberalization helped? In: Cornia, G.A., (Ed.), Inequality, Growth and Poverty in an Era of Liberalization and Globalization. Oxford University Press, New York, pp. 297-327.

Johnson, P.A., 2000. A non-parametric analysis of income convergence across the US. Economic Letters 69, 219-223.

Kar, S., Sakthivel, S., 2007. Reforms and regional inequality in India. Economic and Political Weekly 42(47), 69-77. Kumar, S., Russell, R.R., 2002. Technological change, technological catch-up, and capital deepening: relative contributions to growth and convergence. American Economic Review 92, 527-548.

Krugman, P., 1979. Increasing returns, monopolistic competition and international trade. Journal of International Economics 9, 469–479.

- 1991a. Increasing returns and economic geography. Journal of Political Economy 99, 483-499.

- 1991b. Geography and Trade. MIT Press, Cambridge.

Kurian, N.J., 2000. Widening regional disparities in India – some indicators. Economic and Political Weekly 35, 538-550.

- 2007. Widening economic and social disparities: implications for India. Indian Journal of Medical Research 126, 374-380.

Kuznets, S., 1957. Quantitative aspects of economic growth of nations-II. Economic Development and Cultural Change 5, 3-111.

Lipton, M., 1977. Why Poor People Stay Poor: Urban Bias in World Development. Harvard University Press, Cambridge, MA.

Lucas, R.E., 2000. Some macroeconomics for the 21st Century. Journal of Economic Perspectives 14(1), 159-168.

Mankiw, N.G., Weil, D.N., Romer, D., 1992. A contribution to the empirics of economic growth. The Quarterly Journal of Economics 107, 407-437.

Misra R.P., (Ed.), 1969. Regional Planning: Concepts, Techniques and Policies. Mysore: The University of Mysore.

Moser, K., Shkolnikov, V., Leon, D., 2005. World mortality 1950-2000: divergence replaces convergence from the late 1980s. Bulletin of the World Health Organization 83, 202-209.

Myrdal, G., 1957. Economic Theory and Under-Developed Region. Gerald Duckworks, London.

Nagaraj, R., Varoudakis, A., Veganzones, M., 2000. Long-run growth trends and convergence across Indian states. Journal of International Development 12, 45-70.

Ottaviano, G.I.P., Thisse, J., 2004. Agglomeration and economic geography. In: Henderson V., Thisse Jacques F., (Eds.), Handbook of Regional and Urban Economics. North-Holland press: Amsterdam, pp. 2563–2608.

Parr, J.B. 1999. Growth-pole strategies in regional economic planning: a retrospective view. Urban Studies 36, 1195- 1215.

Pal, P., Ghosh, J., 2007. Inequality in India: a survey of recent trends. DESA Working Paper No. 45, ST/ESA/2007/DWP/45. United Nations, New York.

Perroux, F., 1950. Economic space: theory and applications. Quarterly Journal of Economics 64, 89–104.

Prasad, P.H., 1988. Roots of uneven regional growth in India. Economic and Political Weekly 23, 1689-1692.

Pritchett, 1996. Forget convergence: divergence past, present and future. Finance and Development 33, 40-43.

Quah, D.T., 1993. Empirical cross-section dynamics in economic growth. European Economic Review 37, 426-434.

- 1996a. Empirics for economic growth and convergence. European Economic Review 40, 1353-1375.

- 1996b. Twin peaks: growth and convergence in models of distribution dynamics. The Economic Journal 106, 1045-1055.

Raileanu, S.M., 2011. Exploring the economic convergence in the European Union’s new member states by using non- parametric models. Romanian Journal of Economic Forecasting 14, 20-40.

Rao, H., 1984. Regional Disparities and Development in India. Ashish Publishing House, New Delhi.

Rao, M.G., Shand, R., Kalirajan, K.P., 1999. Convergence of incomes across Indian states: a divergent view. Economic and Political Weekly 34, 769-778.

Rey. S. and Montouri, B., 1999. US regional income convergence: a spatial econometric perspective. Regional Studies 33, 143-156.

Roy, C., Datta, U., 1992. Inter-state and intra-state variations in economic development and standard of living. Economic and Political Weekly 27, 2651-2655. - 1993. Inter-state and intra-state variations in economic development and standard of living. Journal of Indian School of Political Economy 1, 47-68.

Romer, P.M., 1986. Increasing returns and long-run growth. Journal of Political Economy 94, 1002-1037.

- 1990. Endogenous technological change. Journal of Political Economy 98, 71-102.

Sala-I-Martin, X., 1996a. Regional cohesion: evidence and theories of regional growth and convergence. European Economic Review 40, 1325-52.

- 1996b. The classical approach to convergence analysis. The Economic Journal 106, 1019-1036.

Sarker, P.C., 1994. Regional imbalances in Indian economy over plan periods. Economic and Political Weekly 27(11), 621-633.

- 1995. Regional disparities in India: issues and measurement. PhD Dissertation, University of Bombay, Bombay.

Sen, A., 1983. Development: which way now. The Economic Journal93, 745-762. - 1998. Mortality as an indicator of economic success and failure. The Economic Journal 108, 1-25.

Scott, D.W., 1978. Choosing the window width when estimating a density. Biometrika 65, 1-11.

- 1979. On optimal and data based histograms. Biometrika 66, 605-610. Siriopoulos, S.C., Asteriou, D., 1998. Testing for convergence across the Greek regions. Regional Studies 32, 537-546.

Shkolinkov, V.M., Andreev, E.M., Begun, A.Z., 2003. Gini coefficient as a life table function: computation from discrete data, decomposition of differentials and empirical examples. Demographic Research 8, 305-358.

Shkolinkov, V.M., et al., (2011) Increasing absolute mortality disparities by education in Finland, Norway and Sweden, 1971-2000. Journal of Epidemiology and Community Health, 66: 372-378.

Solow, R.M. 1956. A contribution to theory of economic growth. The Quarterly Journal of Economics 70, 65-94.

Tewari, R.T., 1985. Inter-regional disparities in levels of development. In: G.P. Mishra (Ed.), Regional Structure of Development and Growth in India. Ashish Publishing House, New Delhi, pp.102-23.

Trivedi, K., 2002. Regional convergence and catch-up in India between 1960 and 1992. Working Paper No. 2003-W01. Nuffield College, University of Oxford, Oxford.

Williamson, J.G. 1965. Regional inequality and the process of national development: a description of the patterns. Economic Development and Cultural Change13, 3-45.

Workie, M., 2003. Absolute convergence across time and space: new empirical evidence for an old debate. Journal of Economics51, 1270 -1290.

Young, A.T., Higgins, M.J., Levy, D., 2008. Σ-convergence versus β- convergence: evidence form U.S. county-level data. Journal of Money, Credit and Banking 40, 1083-1093.