The Services Sector in India's States: A Tale of Growth, Convergence and Trade

21 Pages Posted: 14 Dec 2014

See all articles by Anirudh Shingal

Anirudh Shingal

S.P. Jain Institute of Management & Research; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS); University of Bern - World Trade Institute

Date Written: December 2014

Abstract

India's success story in services is well documented at the national level, but similar literature does not exist for India's states. We bridge this gap by studying India's services growth at the sub‐national level. Contrary to earlier commentary on the unsustainability of India's services growth process, our findings suggest that per capita services may be converging across Indian states (this is not true of per capita income); unlike previous studies on India, evidence is provided using both traditional sigma and beta‐convergence measures and advanced panel unit root tests from the recent econometrics literature. A disaggregated analysis of services sectors reveals convergence in railways, public administration and financial services. Finally, a Jensen and Kletzer approach to determine tradability and an additional original methodology provide evidence of most services being ‘traded’ across India's states, suggesting the role of such trade in the services growth story even at the sub‐national level.

Suggested Citation

Shingal, Anirudh, The Services Sector in India's States: A Tale of Growth, Convergence and Trade (December 2014). The World Economy, Vol. 37, Issue 12, pp. 1773-1793, 2014, Available at SSRN: https://ssrn.com/abstract=2538027 or http://dx.doi.org/10.1111/twec.12163

Anirudh Shingal (Contact Author)

S.P. Jain Institute of Management & Research ( email )

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European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

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Italy

University of Bern - World Trade Institute ( email )

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Switzerland

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