Spatial Determinants of Entrepreneurship in India

Abstract

Ghani E., Kerr W. R. and O'Connell S. Spatial determinants of entrepreneurship in India, Regional Studies. The spatial determinants of entrepreneurship in India in the manufacturing and services sectors are analysed. Among general district traits, the quality of the physical infrastructure and workforce education are the strongest predictors of entry, with labour laws and household banking access also playing important roles. Extensive evidence is also found 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. In comparison with the United States, regional conditions in India play a stronger relative role for the spatial patterns of entrepreneurship compared with incumbent industry locations.

Ghani E., Kerr W. R. and O'Connell S. 印度创业精神的空间决定因素，区域研究。本研究分析印度在製造业与服务业部门中，企业创业精神的空间决定因素。在一般的行政区特徵中，实质基础建设的质量与劳动力教育水平最能有效预测企业进入，而劳动法规与家户取得银行业务的渠道亦扮演了重要的角色。製造业中亦发现了聚集经济的大量证据。特别是投入与产出市场的当前支持性产业结构，与较高的创立进入率显着相关。与美国相较而言，印度的区域条件与目前的产业地点相较之下，在创业的空间模式上扮演了相对重要的角色。

Ghani E., Kerr W. R. et O'Connell S. Les déterminants spatiaux de l'esprit d'entreprise en Inde, Regional Studies. On analyse les déterminants spatiaux de l'esprit d'entreprise en Inde dans les secteurs de la fabrication et des services. Parmi les caractéristiques générales des districts, la qualité de l'infrastructure physique et de la formation professionnelle sont les meilleurs indicateurs de l'entrée, alors que le droit du travail et l'accès des ménages aux services bancaires jouent également un rôle important. Il s'avère aussi de nombreuses preuves des économies d'agglomération dans le secteur de la fabrication. En particulier, les structures d'appui industrielles établies pour les marchés amont et aval sont fortement liées à des taux d'entrée plus élevés des entreprises. Par rapport aux États-Unis, les conditions régionales en Inde jouent un rôle relatif plus fort pour ce qui est des structures spatiales de l'esprit d'entreprise par comparaison avec les emplacements industriels établis.

Ghani E., Kerr W. R. und O'Connell S. Räumliche Determinanten des Unternehmertums in Indien, Regional Studies. Wiranalysieren die räumlichen Determinanten des Unternehmertums im Produktions- und Dienstleistungssektor von Indien. Unter den generellen Merkmalen der Bezirke sind die Qualität der physischen Infrastruktur sowie der Bildungsgrad der Arbeitnehmer die stärksten Prädiktoren für Firmengründungen; die Arbeitsgesetze und die Verfügbarkeit von Haushaltsbanken spielen ebenfalls eine wichtige Rolle. Darüber hinaus finden wir unter den produzierenden Branchen umfangreiche Belege für Agglomerationsökonomien. Insbesondere besteht eine starke Verbindung zwischen den vorhandenen unterstützenden Branchenstrukturen für Input-und Outputmärkte und einem höheren Anteil an Unternehmensgründungen. Bei einem Vergleich mit den vorhandenen Branchenstandorten spielen die regionalen Bedingungen in Indien verglichen mit den USA eine größere relative Rolle für die räumlichen Muster des Unternehmertums.

Ghani E., Kerr W. R. y O'Connell S. Determinantes espaciales del empresariado en India, Regional Studies. En este artículo analizamos los determinantes espaciales del empresariado en los sectores de producción y servicios de India. Entre las características generales de las comarcas, la calidad de la infraestructura física y la educación de la mano de obra son los determinantes más importantes para predecir la creación de empresas, siendo las leyes laborales y la disponibilidad de servicios bancarios a hogares también factores muy importantes. Observamos asimismo pruebas extensas de economías de aglomeración entre las industrias de producción. En particular, las estructuras industriales establecidas y de apoyo para los mercados de insumos y productos están muy vinculadas a índices más altos en la creación de nuevas empresas. En comparación con los Estados Unidos, las condiciones regionales en India desempeñan un papel relativo más importante en los patrones espaciales del empresariado en comparación con las ubicaciones industriales establecidas.

• Entrepreneurship
• Agglomeration
• Development
• India
• South Asia

• 创业精神
• 聚集
• 发展
• 印度
• 南亚

• Esprit d'entreprise
• Agglomération
• Développement
• Inde
• Asie du Sud

• Unternehmertum
• Agglomeration
• Entwicklung
• Indien
• Südasien

• Empresariado
• Aglomeración
• Desarrollo
• India
• Asia meridional

JEL classifications:

• L26
• M13
• R10
• R12

Acknowledgments

The authors thank Ahmad Ahsan, Mehtabul Azam, Rajeev Dehejia, Gilles Duranton, Arti Grover, Michael Fritsch, Lakshmi Iyer, Henry Jewell, Arvind Panagariya, David Storey, Hyoung Gun Wang and three anonymous referees for helpful comments on this work. They thank The World Bank's South Asia Labor Flagship team for providing the primary datasets used in this paper. The authors are particularly indebted to Shanthi Nataraj for sharing her wisdom regarding the industrial survey data. The views expressed in this paper are those of the authors alone and not of any institution with which they may be associated.

Funding – Funding for this project was provided by The World Bank and Multi-Donor Trade Trust Fund.

Notes

1. High rates of local entrepreneurship are linked to stronger subsequent job growth for regions in several countries (e.g., Fritsch, 2008; Ghani et al., 2011; Glaeser et al., 2012). Mueller et al. (2008) caution, however, about sweeping statements given the substantial heterogeneity in the British experience, where the job growth of regions depended strongly on the types of entrepreneurs entering and the initial conditions of the regions. Baumol (1990) also highlights how the positive or negative role of entrepreneurship depends upon the incentives in society.

2. In contemporaneous work, Mukim (2011) examines spatial entry patterns for India's unorganized sector. The working paper version of this article discusses similarities and differences between the studies. Other related work includes: Drucker and Feser (2007, 2012), Acs and Varga (2005), Ardagna and Lusardi (2008), Rosenthal and Strange (2010), Delgado et al. (2010), and Calá et al. (2013).

3. Parker (2009a) provides a complete review of the entrepreneurship literature. Storey (1994) and Storey and Greene (2010) give an overview of small businesses and their connections to entrepreneurship specifically. Deichmann et al. (2008) survey prior work on firm locations in developing economies.

4. The data combine single-unit start-ups with expansion facilities of multi-unit firms. One can, to some degree, separate the entry of multi-unit firms within organized manufacturing, although this distinction is not comprehensively available for all plants. With the splits available, very similar results are found when modelling single-unit entry rates. These splits are not possible for the unorganized sectors and services. A major development limitation for India is the growth and replication of successful initial businesses (e.g., Hsieh and Klenow, 2009). From this perspective, many policy-makers are equally concerned about encouraging entry of expansion establishments. The working paper version of this article provides an extended discussion about the measures of entrepreneurship and alternative approaches. The paper also returns to this discussion when considering the entrant size distribution.

5. The sampling frame for the organized sector depends on the business register, and a concern might exist that firms indirectly sample out if they select a size so as to avoid registration. As panel data are lacking, corrections like Disney et al. (2003) cannot be taken. Absent a correlation with one of the explanatory variables, this measurement error will primarily be for the outcome variables and thus it will not bias the estimates. With respect to the explanatory variables, the same covariates with the unorganized sector are also studied. No evidence of this type of gaming behaviour is observed when comparing results for the two sectors.

6. This approach is used by Glaeser and Kerr (2009), Jofre-Monseny et al. (2011), Dauth (2011), and Mukim (2011). It follows upon the co-agglomeration work of Ellison et al. (2010).

7. Culture and social capital aspects are taken up by Fritsch and Wyrwich (2013), Kibler et al. (2013), and Westlund et al. (2013).

8. A value of less than one entering employee on average is recoded as one entering employee. This maintains a consistent sample size, and the distinction between zero and one employee for a district–industry is not economically meaningful. These cells can be excluded without impacting the results.

9. For example, Ghani et al. (2012) extend the distance to major city work by considering the development of the Golden Quadrangle highway system in India and its impact on districts (e.g., Datta, 2011).

10. Rosenthal and Strange (2012) and Ghani et al. (2013) identify similar features between the United States and India in the spatial sorting patterns of female entrepreneurs.