Total factor productivity growth and urbanization economies: a case of Indian industries

Type Working Paper - Review of Urban & Regional Development Studies
Title Total factor productivity growth and urbanization economies: a case of Indian industries
Author(s)
Volume 12
Issue 2
Publication (Day/Month/Year) 2000
Page numbers 97-108
URL http://www.ingentaconnect.com/content/bpl/rurd/2000/00000012/00000002/art00001
Abstract
Based on panel data for fifteen major states in India, this paper provides evidence in favor of the existence of urbanization economies. In eleven of seventeen two-digit industry groups, total factor productivity growth is responsive to urban population or industrial spread. Although the impact of these variables taken to capture agglomeration economies on total factor productivity growth is not monotonic, economic policy would yield a sub-optimal outcome by ignoring the positive effect of the size factor. Urban population or industrial spread benefits firms by possibly improving the quality of labor and enhancing the productive utilization of resources.

Related studies

»