Do Effective State Business Relations Matter for Economic Growth? Evidence from Indian States

IPPG Discussion Paper No. 29

Posted: 11 Jan 2010

See all articles by Massimiliano Calì

Massimiliano Calì

Overseas Development Institute (ODI)

Kunal Sen

University of Manchester

Date Written: January 11, 2010

Abstract

Effective state-business relations are a set of highly institutionalised, responsive and public interactions between the state and the business sector. This paper examines the impact of effective state-business relations on economic growth across Indian states over the period 1985-2006. We propose a measure that captures the various dimensions of effective state-business relations (SBR) at the sub-national level, and estimate standard growth regressions using dynamic panel data methods with this measure, controlling for other determinants of sub-national level growth. Our results show that effective state-business relations contribute significantly to economic growth. This result is robust to the use of different specifications and methods for computing the SBR measure and appears to be driven by the intensity of the interactions between the state and the private sector as well as by the absence of harmful collusive behaviour between them.

Keywords: State-business relations, institutions, economic growth, Asia, India

JEL Classification: O10, O43, O53, R11

Suggested Citation

Cali, Massimiliano and Sen, Kunal, Do Effective State Business Relations Matter for Economic Growth? Evidence from Indian States (January 11, 2010). IPPG Discussion Paper No. 29, Available at SSRN: https://ssrn.com/abstract=1534596 or http://dx.doi.org/10.2139/ssrn.1534596

Massimiliano Cali (Contact Author)

Overseas Development Institute (ODI) ( email )

111 Westminster Bridge Road
London
United Kingdom

Kunal Sen

University of Manchester ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

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