Structural Transformation and Spillovers from Industrial Areas

52 Pages Posted: 9 Oct 2017

See all articles by David S. Blakeslee

David S. Blakeslee

New York University (NYU) - New York University Abu Dhabi

Ritam Chaurey

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS)

Samreen Malik

New York University (NYU) - New York University Abu Dhabi

Multiple version iconThere are 2 versions of this paper

Date Written: September 30, 2017

Abstract

Industrial areas (IAs) are sites established by the government for the promotion of industrial production, in which land-use laws are relaxed to enable non-agricultural economic activity. IAs also provide necessary infrastructure and basic amenities, but do not give subsidies, tax incentives, or other pecuniary benefits. To better understand the potential of such low-powered interventions by the state to promote economic development, we study the effects of newly created IAs in the Indian state of Karnataka on a variety of economic outcomes between the years 1990-2013. We quantify the effect of Industrial Areas on economic activity in the locations where they are established, as well as the spillovers to villages further away. Using a detailed dataset on the geographic locations and date of establishment of these IAs, together with village-level demographic and economic census data spanning more than 20 years, we show that the IAs led to a large increase in the number of firms, and employment. Furthermore, IAs lead to a classic “structural transformation" of the economy, with workers leaving agricultural for non-agricultural employment, and households previously engaged in subsistence agriculture shifting to commercial farming. The transformation occurs at distances up to 4-5 kilometers from the IA, and is accompanied by an increase in night-time luminosity and asset accumulation.

Keywords: Industrial Areas, Spill-Over, Labor Market

Suggested Citation

Blakeslee, David S. and Chaurey, Ritam and Malik, Samreen, Structural Transformation and Spillovers from Industrial Areas (September 30, 2017). Available at SSRN: https://ssrn.com/abstract=3049617 or http://dx.doi.org/10.2139/ssrn.3049617

David S. Blakeslee

New York University (NYU) - New York University Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates

Ritam Chaurey

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

1740 Massachusetts Avenue, NW
Washington, DC 20036-1984
United States

Samreen Malik (Contact Author)

New York University (NYU) - New York University Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates

HOME PAGE: http://samreenmalik.net

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