NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Spatial Determinants of Entrepreneurship in India

Ejaz Ghani, William R. Kerr, Stephen D. O'Connell

NBER Working Paper No. 17514
Issued in October 2011
NBER Program(s):   PR

We analyze the spatial determinants of entrepreneurship in India in the manufacturing and services sectors. Among general district traits, quality of physical infrastructure and workforce education are the strongest predictors of entry, with labor laws and household banking quality also playing important roles. Looking at the district-industry level, we find extensive evidence of agglomeration economies among manufacturing industries. In particular, supportive incumbent industrial structures for input and output markets are strongly linked to higher establishment entry rates. We also find substantial evidence for the Chinitz effect where small local incumbent suppliers encourage entry. The importance of agglomeration economies for entry hold when considering changes in India’s incumbent industry structures from 1989, determined before large-scale deregulation began, to 2005.

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Document Object Identifier (DOI): 10.3386/w17514

Published: Ghani, Ejaz, William R. Kerr, and Stephen O'Connell. "Spatial Determinants of Entrepreneurship in India." Special Issue on Entrepreneurship in a Regional Context . Regional Studies 48, no. 6 (December 2013).

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