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Divergent Policies for Convergence Clubs: A Study of PostReform Indian States

Author

Listed:
  • Sabyasachi Kar
  • Debajit Jha

    (Institute of Economic Growth, Delhi)

Abstract

Should economies attempting to break out of low-growth convergence clubs adopt policies distinctly different from those in high-growth clubs? This paper proposes a framework that helps answer this question. To do this, we extend the logic of policy divergence from the growth transitions literature to the analysis of club convergence. We then test this framework by applying it to an analysis of regional growth in India in the postreform period. Our framework identifies sixteen sub-national regions in India belonging to two low-growth clubs that should focus on improving their investment climate. Another fifteen such regions from two high-growth clubs however, need urgent institutional reforms."

Suggested Citation

  • Sabyasachi Kar & Debajit Jha, 2021. "Divergent Policies for Convergence Clubs: A Study of PostReform Indian States," IEG Working Papers 449, Institute of Economic Growth.
    • Handle: RePEc:awe:wpaper:449
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    More about this item

    Keywords

    Club Convergence; Growth Transition; Policy Divergence; Investment Climate; Institutional Reform; Indian Economy;
    All these keywords.

    JEL classification:

    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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