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Regional Divergence and Club Convergence in India

Lookup NU author(s): Professor Atanu Ghoshray

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Abstract

This paper examines regional divergence in income across different states in India, and estimates convergence clubs endogenously. The paper makes two useful contributions. First, the data is analyzed using a novel method due to Phillips and Sul (2007) leading to different conclusions in comparison to past studies, and secondly sectoral level data is employed which to our knowledge has not been employed in the literature before. Applying the novel approach to panel data relating to fifteen major states of India for the period 1968/69–2008/09, the results display significant divergence in per capita income across states at the aggregate and sectoral levels. There is also evidence of convergence clubs and variations in the number and composition of clubs across sectors. While three clubs are identified at the aggregate level, at the sectoral level we find three clubs in the industrial sector, two clubs are identified in both the agriculture and services sectors. The final part of the paper deals with the policy implications.

Publication metadata

Author(s): Ghosh M, Ghoshray A, Malki I

Publication type: Article

Publication status: Published

Journal: Economic Modelling

Year: 2013

Volume: 30

Pages: 733-742

Print publication date: 13/01/2013

Online publication date: 05/12/2012

Acceptance date: 14/10/2012

ISSN (print): 0264-9993

ISSN (electronic): 1873-6122

Publisher: Elsevier

URL: http://dx.doi.org/10.1016/j.econmod.2012.10.008

DOI: 10.1016/j.econmod.2012.10.008

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