Place-based public investment in regional infrastructure, the locational choice of firms and regional performance: the case of India

Figures & data

Table 1. Indian road network.

Type of road	Length (km)
National highways	76,818
Single lane/intermediate lane	16,998
Double lane	40,720
Four or more lanes	19,100
State highways	164,360
Other Public Works Department roads	1,022,287
Rural roads	2,838,220
Urban roads	464,294

Source: Ministry of Transport (2012).

Table 2. Average annual growth rates of Infrastructure.

	Growth of width-adjusted national highways (%)	Growth of width-adjusted state highways (%)	Growth of electricity-generating capacity (%)
Andhra Pradesh	4.52%	4.66%	8.38%
Gujarat	5.79%	2.96%	8.55%
Haryana	5.42%	1.48%	6.48%
Himachal Pradesh	4.13%	0.54%	10.45%
Karnataka	3.94%	4.86%	4.21%
Kerala	2.80%	5.37%	3.97%
Madhya Pradesh	4.24%	2.86%	7.05%
Maharashtra	2.15%	4.08%	6.59%
Odisha	4.59%	2.24%	5.38%
Punjab	3.94%	3.06%	5.43%
Rajasthan	5.54%	5.36%	7.45%
Tamil Nadu	6.42%	7.00%	5.91%
Uttar Pradesh	6.09%	2.21%	4.92%
West Bengal	4.92%	2.39%	4.98%

Sources: Calculated using data from the Ministry of Transport, Basic Road Statistics of India (various issues) and Ministry of Power, Annual Reports.

Table 3. Variable definitions and summary statistics.

Variable	Definition	Mean	SD
Firmsm,t	Number of manufacturing firms (factories) in state m at time t. Annual Survey of Industries	7638.6	5988.8
Electricitym,t	Electricity-generating capacity (GW) in state m at time t. Also in per capita terms (PC). Centre for Monitoring Indian Economy (Energy)	3686	3188
NHighwaysm,t	Width-adjusted length (km) of national highways in state m at time t. Transport Research Wing, Ministry of Road Transport and Highways; Government of India, Basic Road Statistics of India	4264.1	3264.4
SHighwaysm,t	Width-adjusted length (km) of state highways in state m at time t. Transport Research Wing, Ministry of Road Transport and Highways; Government of India, Basic Road Statistics of India	9088.8	8436.5
Fixed Capitalm,t	Real capital stock (Rs lakh, constant prices) in state m at time t, with all Indian price of capital used as deflator. Annual Survey of Industries	28,09507	3,090,604
Workersm,t	Number of workers in registered manufacturing in state m at time t. Annual Survey of Industries	429,629	300,934
Outputm,t	Real output in registered manufacturing (Rs lakh, constant prices) in state m at time t. Annual Survey of Industries	5947	8525
Urbanm,t	Proportion of the state m population living in an urban centre at time t. Census of India	26.30	9.50
Agriculturem,t	Share of agricultural output in state domestic product in state m at time t. Domestic product of States of India	32.4	11.7

Table 4. Estimation results.

	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
	ln(Firmsm,t*)					ln(Ouputm,t*)
ln(Electricitym,t−1*)	0.379***							0.076*
	(0.03)							(0.03)
ln(ElectricityPCm,t−1*)		0.280***	0.285***	0.282***	0.284***		0.095**
		(0.03)	(0.03)	(0.03)	(0.03)		(0.03)
ln(NHighwaysm,t−1*)	0.150***	0.105***	0.097***	0.109***	0.108***		0.064*	0.070*
	(0.03)	(0.03)	(0.03)	(0.03)	(0.03)		(0.03)	(0.03)
ln(SHighwaysm,t−1*)	0.011	0.025	0.020
	(0.03)	(0.02)	(0.02)
ln(Firmsm,t*)						0.209***	0.095	0.128*
						(0.05)	(0.05)	(0.05)
ln(Real Wagesm,t−1*)		–0.122**		–0.120**	–0.119**	0.121**
		(0.04)		(0.04)	(0.04)	(0.04)
ln(Fixed Capitalm,t−1*)		0.053*	0.046*	0.053*	0.052*	0.288***	0.290***	0.290***
		(0.02)	(0.02)	(0.02)	(0.02)	(0.02)	(0.02)	(0.02)
ln(Workersi,t−1*)		0.251***	0.257***	0.249***	0.245***	0.523***	0.485***	0.499***
		(0.04)	(0.04)	(0.04)	(0.04)	(0.05)	(0.05)	(0.05)
ln(Agriculturem,t−1*)			–0.021		–0.015
			(0.05)		(0.05)
ln(Urbanm,t−1*)			–0.050	–0.020	–0.022	0.174*	0.230**	0.258**
			(0.09)	(0.09)	(0.09)	(0.07)	(0.07)	(0.07)
ln(Populationm,t−1*)						–0.186**		–0.220**
						(0.07)		(0.08)
State dummies	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Time Effects	Yes	Yes	Yes	Yes	Yes	Trend	Trend	Trend
Estimator	GLS	GLS	GLS	GLS	GLS	IV	IV	IV

Table 5. Impact on economic activity from an increase of 10% in place-based infrastructure investment.

	1	2	3	4
	Additional firms	Additional firms (%)	Additional manufacturing output (Rs lakh)	Additional manufacturing output (%)
Odisha	107	4%	142	1.97%
Madhya Pradesh	271	4%	308	1.97%
Uttar Pradesh	339	2.4%	246	1.18%
Himanchal Pradesh	75	3%	8	1.48%

Table 6. Electricity-generating capacity required to achieve 60% of the median number of firms and effect on manufacturing output.

	1	2
	Additional electricity-generating capacity (%)	Additional manufacturing output (%)
Odisha	39.67%	17.17%
Madhya Pradesh	173.95%	75.30%
Uttar Pradesh	58.60%	25.37%

Ministry of Transport. (2012). Basic road statistics of India.

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