Economic Geography of Industry Location in India :: India Economics Industries Essays

Economic Geography of Industry Location in India____________________________________Paper prepared for the UNU/WIDER Project Conference onSpatial discrepancy in Asia3Economic Geography of Industry Location in IndiaWhere do different industries locate? What factors influence the spatialdistribution of sparing activity within countries? Finding answers to these questions isimportant for understanding the development potency of sub national regions. This isparticularly important for developing countries as they ware relatively lower levels ofoverall investment and economic activity is voiceless in one or a few growth centers.Thus, regions that do not attract dynamic industries are not only characterized by lowproductivity, but also by lower relative incomes and standards of living. These questionson industry mend and their implications are not new. Examining the locational aspectsof economic activity has desire been of interest to geographers, planners, and regionalscientists (We ber, 1909 Lsch, 1940 Hotelling, 1929 Greenhut and Greenhut, 1975,Isard 1956). However, analytic difficulties in modeling change magnitude returns to scalemarginalized the analysis of geographic aspects in mainstream economic analysis(Krugman 1991). late research on externalities, increasing returns to scale, andimperfect spatial competition (Dixit and Stiglitz 1977 Fujita, et al. 1999 Krugman1991) has guide to renewed interest in analyzing the spatial organization of economicactivity. This is in particular true in case of geographic concentration or clustering.Models in the New Economic Geography literature (see review in Fujita,Krugman, and Venables, 1999) waive us to move from the question Where leave behindmanufacturing concentrate (if it does)? to the question What manufacturing willconcentrate where? These insightful theoretical models provide, for the most part,renewed analytical bridge over for the cumulative causation arguments made in earlierdecades on the core-perip hery relationship, on agglomeration economies, and onindustrial clustering. In this context, we are interested in purpose empirical answers tothese (very old) questions, and to go beyond, to ask, What manufacturing will locatewhere and why?Industry location and concentration decisions are driven by two fundamentalconsiderations a set of pure location or economic geography criteria, including comfortablyrecognized elements such as urbanization and localization economies, market access, home availability, etc. The other is a set of practical or political economycriteria, where the state is a key player in industrial ownership and production, and useslocation considerations that are different from the private field. The private sectorresponds to the very strong influence of state regulations, and the result is an industrialgeography that is shaped by factors of economic geography and political economy.To understand the offset of industrial location and concentration, it is importa ntto first analyze the location decisions of firms in particular industries.