Convergence Divergence Debate within India

International Journal of Economics and Management Studies
© 2017 by SSRG - IJEMS Journal
Volume 4 Issue 8
Year of Publication : 2017
Authors : Kanupriya Suthar
pdf
How to Cite?

Kanupriya Suthar, "Convergence Divergence Debate within India," SSRG International Journal of Economics and Management Studies, vol. 4,  no. 8, pp. 12-16, 2017. Crossref, https://doi.org/10.14445/23939125/IJEMS-V4I8P103

Abstract:

The notion of convergence or catching up by a state/country with lower initial income and capital per capita with a state/country with comparatively higher initial income and capital per capita gained importance with the introduction of neo-classical theory of growth. Many empirical findings confirmed the notion of convergence between rich and poor countries through cross sectional study of data. But any such tendency of convergence has not been visible for Indian states. There has been growing disparities among rich and poor states within India in spite of growing mobility of labor and growing amount of trade of goods and services. Capital has been concentrated in fewer states and has not shown any sign of free mobility even after governmental efforts to further reduce costs in backward states. The absence of social and overhead capital in backward states seems to have nullified or outweighed the effect of reduced marginal returns to capital in richer states.

Keywords:

Convergence, divergence, regional disparities, neo-classical growth theory, steady state situation.

References:

1. Economic Survey of India 2016-17, Oxford University Press.
2. Datt, Gaurav and Mahajan, Ashwini, “Indian Economy”, 71st Edition, S. Chand Publishers.
3. Jhingan, M.L., “The Economics of Development and Planning”, 40th Edition, Vrinda Publications.
4. Ghosh, Buddhadeb, Marjit, Sugata and Neogi, Chiranjib, “Economic Growth and Regional Divergence in India, 1960 to 1995”, Economic and Political Weekly, June 1998.
5. Giannetti, M., “The Effects of Integration on Regional Disparities: Convergence, Divergence or Both?”, European Economic Review 46, 2002, 539-567.
6. Barro, R.J. and X, Sala-i-Martin, “Convergence”, Journal of Political Economy, 1992, Vol. 100.
7. Bishop, J. A., Formby and P. D. Thistle, “Convergence and Divergence of Regional Income Distribution and Welfare”, Review of Economics and Statistics, 1994, Vol. XXVI, May.
8. Ghosh, B. and P. De, “Role of Infrastructure in Regional Development: A Study of India over the Plan Period”, 1998, Economic and Political Weekly.
9. Quah, D., “Gallons Fallacy and Tests of the Convergence Hypothesis”, Scandinavian Journal of Economics, 1993.