India's Spatial Development
This note examines the recent spatial development of India. Services, and to a lesser extent manufacturing, are increasingly concentrating in high-density clusters. This stands in contrast with the United States, where in the last decades services...
| Main Authors: | , , , |
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| Format: | Brief |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2015
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2013/09/18310359/indias-spatial-development http://hdl.handle.net/10986/22615 |
| Summary: | This note examines the recent spatial
development of India. Services, and to a lesser extent
manufacturing, are increasingly concentrating in
high-density clusters. This stands in contrast with the
United States, where in the last decades services have
tended to grow fastest in medium-density locations, such as
Silicon Valley. Indias experience is not common to all
fast-growing developing economies. The spatial growth
pattern of China looks more similar to that of the United
States than to that of India. What is preventing Indias
medium-density cities from growing and taking full advantage
of agglomeration forces? Future research should focus on
identifying the barriers to growth in medium-density places.
In the last two decades, the Indian economy has been growing
at unprecedented rates, but that development has led to
widening spatial disparities (Ghani 2010a). While some
cities, such as Hyderabad, have become major high-tech hubs
with world-class companies and real estate development
reminiscent of Silicon Valley, many others remain mired in
poverty and stagnation. Given the huge congestion in cities
such as Mumbai or Kolkata, this seems to be a reasonable
policy concern in the context of India. However, those
cities also benefit from important agglomeration economies,
so there is a need to analyze the trade-offs between the
costs and benefits of economic density before articulating
policy recommendations. Such an analysis should provide
valuable insights into what types of spatial and regional
policy interventions may be useful and effective. Compared
to other countries at similar levels of development, Indias
growth stems disproportionately from its burgeoning service
sector (Ghani 2010b). The evidence of agglomeration in the
U.S. service sector is in cities with densities of
employment below 150 employees per square kilometer, while
in India, evidence of agglomeration is found in cities with
densities above this threshold. In other words, if the
United States is used as the efficient benchmark, then 150
employees per square kilometer is the ideal density to take
advantage of agglomeration economies. In India, however,
these medium-density cities are the worst places. This
suggests that the costs of congestion in India are either
much smaller than in the United States, the agglomeration
forces are much larger than in the United States, or that
there are some frictions, policies, and a general lack of
infrastructure in medium-density cities that prevent them
from growing faster, therefore favoring concentration in
high-density areas. |
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