The Impact of Business Environment and Economic Geography on Plant-Level Productivity : An Analysis of Indian Industry

The authors' analysis of manufacturing plants sampled from India's major industrial centers shows large productivity gaps across cities. The gaps partly reflect differences in agglomeration economies and in market access. However, they are also explained to a greater extent by differences in the degree of labor regulation and in the severity of power shortages. This is an indication that governments can help narrow regional disparities in industrial growth by fostering the "right business environment" in locations where industry might otherwise be held back by powerful forces of economic geography. There is indeed a pattern in the data whereby geographically disadvantaged cities seem to compensate partially for their natural disadvantage by having a better business environment than more geographically advantaged locations.

Bibliographic Details

Main Authors:	Lall, Somik V., Mengistae, Taye
Language:	English
Published:	World Bank, Washington, DC 2005-07
Subjects:	ASSETS, BANKRUPTCY, BANKRUPTCY LAWS, BOOK VALUE, CITIES, COMPETITIVENESS, COMPLIANCE COSTS, CONSENSUS, CONTRACT ENFORCEMENT, COST OF CAPITAL, DAMAGES, DEREGULATION, ECONOMIC ACTIVITY, ECONOMIC DEVELOPMENT, ECONOMIC GEOGRAPHY, ECONOMIC PERFORMANCE, ECONOMIES OF SCALE, EFFECTIVE USE, EMPLOYMENT, EXCHANGE RATE, EXPLOITATION, EXPORTS, EXTERNALITIES, FARMS, FEDERAL GOVERNMENT, FINANCIAL MARKETS, FOREIGN MARKET, FOREIGN TRADE, GDP, GOVERNMENT AGENCIES, GOVERNMENT POLICIES, GOVERNMENT POLICY, GROWTH RATE, IDLE CAPACITY, INDUSTRIALIZATION, INEFFICIENCY, INSOLVENCY, INSOLVENCY PROCEDURES, INVESTMENT CLIMATE, LABOR FORCE, LABOR MARKET, LABOR MARKET REGULATIONS, LABOR PRODUCTIVITY, LAND PRICES, LATIN AMERICAN, LEGISLATION, MACROECONOMIC STABILITY, MARKET POWER, METALS, POLICY ENVIRONMENT, POSITIVE EXTERNALITIES, POTENTIAL INVESTORS, POTENTIAL OUTPUT, PRODUCERS, PRODUCTION FUNCTION, PRODUCTION FUNCTIONS, PRODUCTIVITY, PROFIT MAXIMIZING FIRMS, PROFITABILITY, PUBLIC GOODS, PURCHASING POWER, REGULATORY FRAMEWORK, REGULATORY POLICY, SOCIAL INFRASTRUCTURE, SOCIAL WELFARE, STATE GOVERNMENT, SUBSIDIARY, TIME SERIES, TOTAL FACTOR PRODUCTIVITY, TRADE TAXES, TRANSPORT, VALUE ADDED, WAGE RATES, WELFARE GAINS,
Online Access:	http://documents.worldbank.org/curated/en/2005/07/6058145/impact-business-environment-economic-geography-plant-level-productivity-analysis-indian-industry https://hdl.handle.net/10986/8253
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