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Do economic reforms promote urbanization in India?

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  • Sabyasachi Tripathi

    (Adamas University)

Abstract

Recent urban population explosion in developing countries demands for several policy considerations. Is India ready for it? In this perspective, we assess the impact of economic reforms on urbanization in India for the period of 1991–2016. It is found that economic reform variables (except import of goods and services as % of GDP) have a positive effect on urbanization. The vector error correction model shows that economic reforms have influenced only on total urban population with a very slower rate with the speed of adjustment of 0.003. The short-run effect is also negligible. Granger causality test shows that there is no causal relationship between them. Therefore, we conclude that economic reforms do not promote urbanization in India. Our results also support the Krugman and Elizondo (J Dev Econ 49:137–150, 1996) hypothesis about the relationship between trade policy and urban agglomerations. Finally, we suggest that we need to promote urbanization through encouraging export for higher and sustainable economic growth in India.

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  • Sabyasachi Tripathi, 2019. "Do economic reforms promote urbanization in India?," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 647-674, October.
    • Handle: RePEc:spr:apjors:v:3:y:2019:i:3:d:10.1007_s41685-019-00117-8
    DOI: 10.1007/s41685-019-00117-8
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    More about this item

    Keywords

    Economic reforms; Urbanization; Time series modeling; India;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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