Structural Transformation and Spillovers from Industrial Areas

58 Pages Posted: 29 Oct 2018

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)

Ram Fishman

George Washington University

Samreen Malik

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

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Abstract

Like many developing countries, India features a variety of land-use restrictions that make it difficult to establish industrial firms on agricultural lands. Such policies have received some of the blame for the slow pace of industrialization, and there is widespread agreement on the need for reform. Traditional agrarian economies, however, have many features that may serve as barriers to industrialization, making it unclear that land-use reform would be sufficient for promoting manufacturing growth in rural areas. To better understand the role played by such regulations, we study the effects of the Industrial Areas (IAs) program in India, which facilitated the establishment of industrial firms in areas that had previously been restricted to agriculture.We find that IAs caused a large increase in the number of firms and employment, and that there were substantial spillovers to neighboring villages. Furthermore, IAs trigger a classic "structural transformation" of the economy, with a shift of workers from agricultural to non-agricultural employment, and the creation of numerous small manufacturing and agricultural firms.

Keywords: industrial areas, spillovers, labor market

JEL Classification: O12, O25, R2

Suggested Citation

Blakeslee, David S. and Chaurey, Ritam and Fishman, Ram and Malik, Samreen, Structural Transformation and Spillovers from Industrial Areas. IZA Discussion Paper No. 11886. Available at SSRN: https://ssrn.com/abstract=3273726

David S. Blakeslee (Contact Author)

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

Ram Fishman

George Washington University ( email )

Washington, D.C., DC
United States

Samreen Malik

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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