Effects of Land Misallocation on Capital Allocations in India

89 Pages Posted: 20 Apr 2016

See all articles by Gilles Duranton

Gilles Duranton

University of Pennsylvania - Real Estate Department

Syed Ejaz Ghani

World Bank

Arti Grover Goswami

World Bank

William Kerr

Harvard University - Entrepreneurial Management Unit

Date Written: October 20, 2015

Abstract

Growing research and policy interest focuses on the misallocation of output and factors of production in developing economies. This paper considers the possible misallocation of financial loans. Using plant-level data on the organized and unorganized sectors, the paper describes the temporal, geographic, and industry distributions of financial loans. The focus of the analysis is the hypothesis that land misallocation might be an important determinant of financial misallocation (for example, because of the role of land as collateral against loans). Using district-industry variations, the analysis finds evidence to support this hypothesis, although it does not find a total reduction in the intensity of financial loans or those being given to new entrants. The analysis also considers differences by gender of business owners and workers in firms. Although potential early gaps for businesses with substantial female employment have disappeared in the organized sector, a sizeable and persistent gap remains in the unorganized sector.

Keywords: Economic Growth, Technology Innovation, Economic Theory & Research, Transport Economics Policy & Planning, Technology Industry, Industrial Economics

Suggested Citation

Duranton, Gilles and Ghani, Ejaz and Goswami, Arti Grover and Kerr, William R., Effects of Land Misallocation on Capital Allocations in India (October 20, 2015). World Bank Policy Research Working Paper No. 7451. Available at SSRN: https://ssrn.com/abstract=2677021

Gilles Duranton (Contact Author)

University of Pennsylvania - Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States

Ejaz Ghani

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Arti Grover Goswami

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

William R. Kerr

Harvard University - Entrepreneurial Management Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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