IDEAS home Printed from https://ideas.repec.org/a/spr/anresc/v51y2013i2p515-536.html
   My bibliography  Save this article

Private investment in India: regional patterns and determinants

Author

Listed:
  • Jagannath Mallick

Abstract

This paper analyses private investment by type for 15 major states over the period from 1993–1994 to 2004–2005. This study is new in investigating the determinants of total private investment and domestic private investment at the state level in the Indian context by using generalized method of moments panel estimator. The results show that there is high variation in private investment across Indian states. The results obtained from the regressions show that private investment in the Indian states is explained by infrastructure, the gross fiscal deficit, market size and labour productivity. This paper contributes to the literature on regional development by empirically establishing the existence of simultaneity between private investment and income at the state level in Indian economy. Copyright Springer-Verlag 2013

Suggested Citation

  • Jagannath Mallick, 2013. "Private investment in India: regional patterns and determinants," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(2), pages 515-536, October.
    • Handle: RePEc:spr:anresc:v:51:y:2013:i:2:p:515-536
    DOI: 10.1007/s00168-012-0537-x
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s00168-012-0537-x
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s00168-012-0537-x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. K.L.Krishna, 2004. "Patterns and determinants of economic growth in Indian states," Indian Council for Research on International Economic Relations, New Delhi Working Papers 144, Indian Council for Research on International Economic Relations, New Delhi, India.
    2. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    3. Rodrik, Dani, 1991. "Policy uncertainty and private investment in developing countries," Journal of Development Economics, Elsevier, vol. 36(2), pages 229-242, October.
    4. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    5. Parthapratim Pal & Jayati Ghosh, 2007. "Inequality in India: A survey of recent trends," Working Papers 45, United Nations, Department of Economics and Social Affairs.
    6. Pradhan, B. K. & Ratha, D. K. & Sarma, Atul, 1990. "Complementarity between public and private investment in India," Journal of Development Economics, Elsevier, vol. 33(1), pages 101-116, July.
    7. Heshmati, Almas & Davis, Rhona, 2007. "The Determinants of Foreign Direct Investment Flows to the Federal Region of Kurdistan," IZA Discussion Papers 3218, Institute of Labor Economics (IZA).
    8. Serven, Luis & Solimano, Andres, 1992. "Private Investment and Macroeconomic Adjustment: A Survey," The World Bank Research Observer, World Bank, vol. 7(1), pages 95-114, January.
    9. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    10. Michelle Baddeley & Kirsty McNay & Robert Cassen, 2006. "Divergence in India: Income differentials at the state level, 1970-97," Journal of Development Studies, Taylor & Francis Journals, vol. 42(6), pages 1000-1022.
    11. Asli Demeirgüç-Kunt & Ross Levine (ed.), 0. "Finance and Growth," Books, Edward Elgar Publishing, number 17119.
    12. Erdal Atukeren, 2005. "Interactions Between Public and Private Investment: Evidence from Developing Countries," Kyklos, Wiley Blackwell, vol. 58(3), pages 307-330, July.
    13. Jagannath Mallick, 2013. "Public expenditure, private investment and income: evidence in indian states," Journal of Developing Areas, Tennessee State University, College of Business, vol. 47(1), pages 181-205, January-J.
    14. Jagannath Mallick, 2009. "Trends and Patterns of Private Investment in India," Working Papers 226, Institute for Social and Economic Change, Bangalore.
    15. Carlberg, Michael, 1981. "A neoclassical model of interregional economic growth," Regional Science and Urban Economics, Elsevier, vol. 11(2), pages 191-203, May.
    16. Khan, Mohsin S. & Reinhart, Carmen M., 1990. "Private investment and economic growth in developing countries," World Development, Elsevier, vol. 18(1), pages 19-27, January.
    17. Miss Catriona Purfield, 2006. "Mind the Gap—Is Economic Growth in India Leaving Some States Behind?," IMF Working Papers 2006/103, International Monetary Fund.
    18. Morris, Sebastian, 2004. "A Study of the Regional Determinants of Foreign Direct Investments in India, and the Case of Gujarat," IIMA Working Papers WP2004-03-07, Indian Institute of Management Ahmedabad, Research and Publication Department.
    19. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(2), pages 269-304, June.
    20. Stephen S. Everhart & Mariusz A. Sumlinski, 2001. "Trends in Private Investment in Developing Countries : Statistics for 1970-2000 and the Impact on Private Investment of Corruption and the Quality of Public Investment," World Bank Publications - Books, The World Bank Group, number 13989.
    21. Pritha Mitra, 2006. "Has Government Investment Crowded Out Private Investment in India?," American Economic Review, American Economic Association, vol. 96(2), pages 337-341, May.
    22. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    23. Beck, Thorsten & Levine, Ross & Loayza, Norman, 2000. "Finance and the sources of growth," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 261-300.
    24. Unknown, 1961. "The Economic Weekly," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 16(2), pages 1-3.
    25. Khan, Mohsin S & Kumar, Manmohan S, 1997. "Public and Private Investment and the Growth Process in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 59(1), pages 69-88, February.
    26. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jagannath Mallick & Sachi Satpathy, 2021. "Estimation of Women Beedi Workers in India and Their Socio-economic Condition," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 64(2), pages 499-521, June.
    2. mallick, Jagannath, 2016. "Investigating the Relationship of Disparity in Income, Private investment and wage rate in Indian states: A Panel Cointegration Approach," MPRA Paper 87736, University Library of Munich, Germany, revised 09 Aug 2017.
    3. Dinh Thanh, Su & Hart, Neil & Canh, Nguyen Phuc, 2020. "Public spending, public governance and economic growth at the Vietnamese provincial level: A disaggregate analysis," Economic Systems, Elsevier, vol. 44(4).
    4. Vivekananda Mukherjee & Paramita Mukherjee & Saheli Bose, 2022. "Extortion, competition among states and private investment in a federation: evidence from Indian manufacturing sector," Economic Change and Restructuring, Springer, vol. 55(2), pages 973-1004, May.
    5. Jagannath Mallick, 2019. "The effects of government investment shocks on private investment: Empirical evidence from the developing economy," Indian Economic Review, Springer, vol. 54(2), pages 291-316, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. W.N.W Azman‐Saini & Peter Smith, 2011. "Finance And Growth: New Evidence On The Role Of Insurance," South African Journal of Economics, Economic Society of South Africa, vol. 79(2), pages 111-127, June.
    2. Jean-Pierre Allegret & Sana Azzabi, 2014. "Intégration financière internationale et croissance économique dans les pays émergents et en développement : le canal du développement financier," Revue d’économie du développement, De Boeck Université, vol. 22(3), pages 27-68.
    3. Yihua Yu & Li Zhang & Fanghua Li & Xinye Zheng, 2013. "Strategic interaction and the determinants of public health expenditures in China: a spatial panel perspective," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(1), pages 203-221, February.
    4. Kul B. Luintel & George Mavrotas, 2005. "Examining Private Investment Heterogeneity: Evidence from a Dynamic Panel," WIDER Working Paper Series DP2005-11, World Institute for Development Economic Research (UNU-WIDER).
    5. Raja Almarzoqi & Sami Ben Naceur & Akshay Kotak, 2015. "What Matters for Financial Development and Stability?," IMF Working Papers 2015/173, International Monetary Fund.
    6. Aras Zirgulis, 2014. "Is International Capital Tax Competition Fueled by the Quest for Increased Productivity?," International Journal of Economic Sciences, Prague University of Economics and Business, vol. 2014(4), pages 99-116.
    7. Seven, Ünal & Yetkiner, Hakan, 2016. "Financial intermediation and economic growth: Does income matter?," Economic Systems, Elsevier, vol. 40(1), pages 39-58.
    8. Aras Zirgulis, 2014. "Is International Capital Tax Competition Fueled by the Quest for Increased Productivity?," Proceedings of International Academic Conferences 0702435, International Institute of Social and Economic Sciences.
    9. repec:wsr:wpaper:y:2015:i:141 is not listed on IDEAS
    10. Alexander Klemm & Stefan Parys, 2012. "Empirical evidence on the effects of tax incentives," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(3), pages 393-423, June.
    11. Samargandi, Nahla & Fidrmuc, Jan & Ghosh, Sugata, 2015. "Is the Relationship Between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle-Income Countries," World Development, Elsevier, vol. 68(C), pages 66-81.
    12. Wahidin, Deni & Akimov, Alexandr & Roca, Eduardo, 2021. "The impact of bond market development on economic growth before and after the global financial crisis: Evidence from developed and developing countries," International Review of Financial Analysis, Elsevier, vol. 77(C).
    13. Abdilahi Ali & Katsushi S. Imai, 2015. "Editor's choice Crises, Economic Integration and Growth Collapses in African Countries," Journal of African Economies, Centre for the Study of African Economies, vol. 24(4), pages 471-501.
    14. Andrés Rodríguez‐Pose & Roberto Ganau & Kristina Maslauskaite & Monica Brezzi, 2021. "Credit constraints, labor productivity, and the role of regional institutions: Evidence from manufacturing firms in Europe," Journal of Regional Science, Wiley Blackwell, vol. 61(2), pages 299-328, March.
    15. Chen, Minjia & Guariglia, Alessandra, 2013. "Internal financial constraints and firm productivity in China: Do liquidity and export behavior make a difference?," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 1123-1140.
    16. Canh Phuc Nguyen & Thanh Dinh Su, 2021. "Export quality dynamics: Multidimensional evidence of financial development," The World Economy, Wiley Blackwell, vol. 44(8), pages 2319-2343, August.
    17. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084, Central Bank of Chile.
    18. Jarko Fidrmuc & Zuzana Fungáčová & Laurent Weill, 2015. "Does Bank Liquidity Creation Contribute to Economic Growth? Evidence from Russia," Open Economies Review, Springer, vol. 26(3), pages 479-496, July.
    19. Dierk Herzer & Michael Grimm, 2012. "Does foreign aid increase private investment? Evidence from panel cointegration," Applied Economics, Taylor & Francis Journals, vol. 44(20), pages 2537-2550, July.
    20. Bojan Srbinoski & Klime Poposki & Gorazd Čibej, 2021. "An empirical investigation of determinants of life insurers’ performance: Evidence from selected countries in Central, Eastern, and Southeastern Europe (CESEE)," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 24(3), pages 293-310, September.
    21. Yaojun Yao, 2010. "Financial Intermediation Development and Economic Growth: Does the Chinese Counterexample Exist?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 18(5), pages 22-36, September.

    More about this item

    Keywords

    E2; R11; C33;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:anresc:v:51:y:2013:i:2:p:515-536. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.