Handbook of Regional Growth and Development Theories
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Handbook of Regional Growth and Development Theories

Edited by Roberta Capello and Peter Nijkamp

Regional economics – an established discipline for several decades – has gone through a rapid pace of change in the past decade and several new perspectives have emerged. At the same time the methodology has shown surprising development. This volume brings together contributions looking at new pathways in regional economics, written by many well-known international scholars. The most advanced theories, measurement methods and policy issues in regional growth are given in-depth treatment.
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Chapter 24: New Regional Policies for Less Developed Areas: The Case of India

Maria Abreu and Maria Savona


Maria Abreu and Maria Savona 24.1 Introduction Regional disparities in growth and income levels present an important challenge for policy-makers in less developed countries, particularly in the context of increasing globalisation (World Bank, 2006). Globalisation heightens regional income disparities since wealthier regions typically have an infrastructure and skills advantage which, on top of wage differentials and less stringent environmental regulation, enables them to attract further domestic and foreign investment. A large number of recent empirical contributions have analysed the extent to which developing countries are able to benefit from trade liberalisation and other economic reform policies. However, only a few of these contributions are devoted to the impact of these policies on regional income disparities.1 This chapter reviews the empirical literature on regional policies in less developed countries, with an illustration based on the case of India. Our review shows that regional policies can complement or counteract the effects of national policies, with the effectiveness of specific regional policies depending on the degree of decentralisation of the policymaking process, the extent of sectoral specialisation across regions and the degree of regional variation in initial endowments in physical and social infrastructure. We analyse this issue further in the context of regional policies pursued by the state governments of India over the period 1988–2001. India implemented national trade liberalisation policies starting in 1991, as part of a wider economic liberalisation strategy. Under the federal system of government in India, states have substantial jurisdiction over public health,...

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