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Globalisation and regional income growth disparity in India and the People’s Republic of China (PRC)

Jagannath Mallick (State Bank of India, State Bank Institute of Leadership, Kolkata, India)
Atsushi Fukumi (University of Hyogo, Kobe, Japan)

Indian Growth and Development Review

ISSN: 1753-8254

Article publication date: 30 September 2020

Issue publication date: 15 June 2021

227

Abstract

Purpose

This study aims to explain the role of globalisation on the regional income growth disparities in the states of India and provinces in the People’s Republic of China (PRC).

Design/methodology/approach

The authors use two approaches to analyse regional growth disparities: growth accounting and the panel spatial Durbin model.

Findings

The growth accounting shows that contributions of growth of capital intensity (GKI) and total factor productivity growth (TFPG) distinguish the high-income (HI) regions from medium-income (MI) and lower-income (LI) regions in India. In the PRC, the contributions of GKI and TFPG in MI regions are slightly higher than HI regions, but significantly higher than the LI regions. The empirical results find that foreign direct investment (FDI), domestic investment, human capital, and interaction of FDI and human capital explain income growth states/provinces in India and the PRC. A region’s income growth and FDI inflows spread the benefit to neighbourhoods in both countries.

Originality/value

The paper contributes by performing a comparative analysis of Indian states and the PRC’s provinces by capturing the neighbourhood effects of economic growth, FDI, investment and human capital and also the interaction effects of FDI with human capital and domestic investment. A comparison of the decomposition of income growth to the growth of factor inputs and efficiency in Indian states and the PRC’s provinces also adds to the existing literature.

Keywords

Acknowledgements

The initial draft of the work was presented at the Leibniz Institute of Agricultural Development in Transitional Economies (IAMO) Forum 2017, Halle, Germany. The revised draft was also presented at the XIX annual April International conference 2018 at National Research University, Higher School of Economics, Moscow. The author is thankful to the anonymous referees for their detailed comments. However, the usual disclaimer applies.

Citation

Mallick, J. and Fukumi, A. (2021), "Globalisation and regional income growth disparity in India and the People’s Republic of China (PRC)", Indian Growth and Development Review, Vol. 14 No. 2, pp. 172-198. https://doi.org/10.1108/IGDR-04-2019-0041

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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