Abstract
Augmented Solow model neoclassical growth theory framework is used with infrastructure. The poor economies tend to grow more because of diminishing returns to capital. The idea of conditional convergence used by Barro and Sala-i-Martin for the β-convergence of the steady state equilibrium is used for the Indian States and Union Territories with the infrastructure index. The panel data set is used for the analysis as it has more advantages over the cross section and time series data. The dynamic panel data are estimated using the fixed effect model and generalized methods of moments for the estimation for the period of 1990–1991 to 2010–2011. The dynamic panel data models are more consistent and efficient estimator with the generalized methods of moments than the fixed effect models. The infrastructure index and growth have significant positive relationship. The Barro and Sala-i-Martin version of the β-convergence holds for the Indian States and Union Territories a clear evidence of conditional convergence.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Adabar K (2004) Economic growth and convergence in India. Working paper series 153, Institute for social and economic change. Retrieved from http://www.isid.ac.in/~planning/ka.pdf
Anderson TW, Hsiao C (1981) Estimation of dynamic models with error components. J Am Stat Assoc 76(375):598–606
Arellano M, Bond S (1991) Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. Rev Econ Stud 58(2):277–297
Aschauer DA (1990b) Why is infrastructure important? In: Munnell AH (ed) Is there a shortfall in public capital investment? Proceedings of a conference. Federal Reserve Bank of Boston, Boston, pp 21–50
Bajar S (2013) The infrastructure-output nexus: regional experience from India. The economics of infrastructure provisioning: The (changing) role of the state. ces ifo venice Summer Institute 2013 workshop, Italy, pp 1–39
Bandyoupadhyay S (2011) Convergence club empirics: evidence from Indian states. Inequality, mobility and segregation: essays in honor of Jacques Silber. pp 175–203
Barro R, Sala–i-Martin X (1992) Convergence. J Polit Econ 100(2):223–251
Barro R, Sala–i-Martin X, Blanchard O, Hall R (1990) Economic growth and convergence among United States, NBER Working paper no. 3419 National Bureau of Economic Research
Bhandari P (2012) Refining state level comparison in India. Working paper planning commission, Government of India, pp 1–13
Brodzicki T (2012) Augmented Solow model with mincerian education and transport infrastructure externalities. Czech Econ Rev 6(2):155–170
Cashwin P, Sahay R (1996) Regional economic growth and convergence in India. Finance Dev 33(1):49–52
Chaterjee T (2014) Spatial convergence and growth of Indian agriculture 1967–2010, Working paper no. 35, Indira Gandhi Institute of Development Research (IGIDR), Mumbai
Das S, Ghate C, Robertson P (2013) Remoteness and unbalanced growth: understanding divergence across Indian districts: Working Paper No. 268, Indian Council for Research on International Economic Relations, New Delhi
Datta A, Agrawal S (2004) Telecommunications and economic growth: a panel data approach. Appl Econ 36(15):1649–1654
De P, Ghosh B (2005) Effects of infrastructure on regional income in the era of globalization. Asia Pac Dev J 12(1):81–107
Demurger S (2001) Infrastructure development and economic growth: an explanation for regional disparities in China? J Comp Econ 29:95–117
Ding L, Haynes K, Liu Y (2008) Telecommunications infrastructure and regional income convergence in China: panel data approaches. Ann Reg Sci 42(4):843–861
Ghosh B, De P (1998) Role of infrastructure in regional development: a study over the plan period. Econ Polit Wkly 33(47–48):3039–3048
Hansen N (1965) Unbalanced growth and regional development. West Econ J 4(1):3–14
Hirschman A (1958) The strategy of economic development. Yale University Press, New Haven, p 217
Islam N (1995) Growth empirics: a panel data approach. Q J Econ 110(4):1127–1170
Majumder R (2003) Infrastructural facilities in India: district level availability index. Indian J Res Sci 3(2). Online at https://mpra.ub.uni-muenchen.de/4779/
Mankiw G, Romer D, Weil D (1992) A contribution to the empirics of economic growth. Q J Econ 107(2):407–437
Mukhopadhyay D, Sarkar N (2014) Convergence of food grains production across Indian states: a study with panel data. Discussion paper Economic Research Unit, Indian Statistical Institute, Kolkata
Myrdal G (1958) Economic theory and underdeveloped regions (London, 1957). Myrdal Economic Theory and Underdeveloped Regions 1957
Nagaraj R, Varondakis A, Veganzones M (1998) Long run growth trends and convergence across Indian states, Working paper no. 131 OECD Publishing, Paris
Nauriyal D, Sahoo B (2010) Economic growth across Indian states: role of education, infrastructure and health. Inter-regional disparity in India. Deep and Deep Publications
Patra A, Acharya A (2011) Regional disparity, infrastructure development and economic growth: an inter-state analysis. Res Pract Soc Sci 6(2):17–30
Rao MG, Shand RT, Kalirajan KP (1999) Convergence of incomes across Indian states: a divergent view. Econ Polit Wkly 34(13):769–778
Raychaudhuri A, De P (2010) Trade, infrastructure and income in selected Asian Countries: an empirical analysis. Working paper series 82, Asia-Pacific research and training network on trade
Raychaudhuri A, Haldar S (2009) An investigation into the inter-district disparity in West Bengal, 1991–2005. Econ Polit Wkly 44(26–27):258–263
Roodman D (2007) How to do xtabond 2: an introduction to “difference” and “system” GMM in stata, Working paper 103 Center for Global Development
Solow RM (1956) A contribution to the theory of economic growth. Q J Econ 65–94
Somasekharan J, Prasad S, Roy VPN (2011) Convergence hypothesis: some dynamics and explanations of agricultural growth across Indian states. Agric Econ Res Rev 24:211–216
Acknowledgements
The authors are grateful to Professor Neeraj Hatekar for his valuable comments and suggestions. However, the usual disclaimer applies.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Pandya, F., Maind, S. Panel data analysis: convergence of Indian states with infrastructure. J. Soc. Econ. Dev. 19, 181–195 (2017). https://doi.org/10.1007/s40847-017-0033-3
Published:
Issue Date:
DOI: https://doi.org/10.1007/s40847-017-0033-3