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

frugal Geography of Industry Location in India____________________________________Paper on the watch for the UNU/WIDER Project Conference onSpatial Inequality in Asia3Economic Geography of Industry Location in IndiaWhere do different industries localise? What factors influence the spatialdistribution of economic activity within countries? Finding answers to these questions is historic for understanding the development potential of sub national regions. This isparticularly important for developing countries as they have tellingly lower levels ofoverall investment and economic activity is concentrated in one or a hardly a(prenominal) growth centers.Thus, regions that do not attract dynamic industries atomic number 18 not only characterized by lowproductivity, but also by lower relative incomes and standards of living. These questionson industry location and their implications are not new. Examining the locational aspectsof economic activity has long been of interest to geographer s, planners, and regionalscientists (Weber, 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). Recent research on externalities, increasing returns to scale, andimperfect spatial competition (Dixit and Stiglitz 1977 Fujita, et al. 1999 Krugman1991) has led to regenerate interest in analyzing the spatial organization of economicactivity. This is especially true in case of geographic concentration or clustering.Models in the New Economic Geography literature (see review in Fujita,Krugman, and Venables, 1999) allow us to move from the question Where willmanufacturing concentrate (if it does)? to the question What manufacturing willconcentrate where? These insightful supposititious models provide, for the most part,renewed analytical support for the cumulative causation arguments made in earlier decades on the core-periphery relationship, on agglomeration economies, and onindustrial clustering. In this context, we are interested in finding 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 devil fundamentalconsiderations a set of pure location or economic geography criteria, including wellrecognized elements such as urbanization and localization economies, marketplace access,infrastructure 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 sector. The private sectorresponds to the very strong influence of state regulations, and the result is an industrialgeography that is regulate by factors of economic geography and political economy.To understand the process of industrial locat ion and concentration, it is importantto first analyze the location decisions of firms in particular industries.