29.10.10 Globalisation, Domestic Market Integration, and the Regional Disparities of India
NUPI-notat 780 | 59 sider.
Indias vekst har vært ledsaget av økende regional ulikhet. Notatet viser at økt handel neppe er årsak til dette; en mer nærliggende forklaring er forskjeller i utdanning, investeringer og infrastruktur mellom regionene. For at vekst skal fjerne fattigdom bør India øke integrasjonen mellom delstatene og ikke bare den internasjonale handelen.
>> Summary
Using a world trade model with India subdivided into states, the paper examines how regional disparities are affected by domestic inter-state trade as well as international trade. According to the analysis, international liberalisation promotes decentralisation and convergence, not divergence, so trade is not to blame for India’s growing regional disparities. High economic growth within India makes domestic markets more important and the geographical effect of this is opposite to that of globalisation. This may counterbalance the geographical impact of international liberalisation and explain why recent changes in geographical clustering in India are limited. The empirical results are consistent with this. They also indicate that Indian services expansion is largely driven by increases in domestic demand due to growth, and that domestic market integration is essential for India’s manufacturing sector. We argue that for larger nations, the domestic inter-regional trade is important and India should have a trade policy that addresses domestic as well as international market integration.
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