Spatial Durbin Model of Regional Incomes in India: The Role of Public, Private and Human Capital

Vivek Jadhav and Brinda Viswanathan ()
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Vivek Jadhav: (Corresponding Author)Ph.D. Scholar, Madras School of Economics, Chennai
Brinda Viswanathan: Professor & Dean Research, Madras School of Economics, Chennai

Working Papers from Madras School of Economics,Chennai,India

Abstract: Most regional income studies in India examine only the convergence of regional per capita incomes with a limited number of studies analyzing the relative role of its determinants. Spatial Durbin model of regional income and growth based on the augmented Mankiw-Romer-Weil (MRW) -with public, private, household and human capitals as the determinants - is estimated using the 2015 Indicus data on per worker incomes for 103 regions (clusters of districts) of India. The results of the spatial model support spillover effect of public, human and private capital from neighbouring regions on per worker Gross Regional Domestic Product (GRDP) as found in several studies for European regions. We additionally find that public capital, which is not accounted for separately in the developed country regional models, is a relatively more important determinant for a developing country like India than private capital or human capital for this data. In the spatial growth model of per worker GRDP, none of the determinants except the state capital dummy variable have significant impact on the regional growth rate between 2001 and 2015. This may be a data limitation and perhaps a panel data model may be more suited for such an analysis.

Keywords: Public capital; Regional Income; Spatial Durbin Model; Augmented MRW model (search for similar items in EconPapers)
JEL-codes: C21 O47 R12 R53 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2023-08
New Economics Papers: this item is included in nep-geo and nep-ure
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