Regional heterogeneity and firms' R&D in India

Abstract

The present study seeks to examine the influence of regional factors on firm-level R&D activities in an emerging economy. Based on a unique firm-level dataset it shows that the total manufacturing R&D investment in India is unevenly distributed regionally with a few Indian regions and states accounting for disproportionate share of it. This inter-state disparity in the magnitude and intensity of manufacturing firms' R&D continued during the period 1991–2008. The empirical results obtained from a multidimensional framework of analysis confirm that a group of regional factors like the local abundance of science and technology (S&T) institutions, presence of greater number of foreign firms, and technology-intensive structure of manufacturing play an important role in shaping the R&D intensity of the sample of firms.

Keywords:

• regional heterogeneity
• R&D
• manufacturing firms
• Indian states
• censored quintile regression

Acknowledgements

This is a significantly revised and corrected version of a key note presentation at the ISID–CSH–CEFC International Seminar on The Globalization of Production Models and Innovation in Emerging Economies: Comparative Research on Subnational Industrial Policies, 19–20 November 2010 (Institute for Studies in Industrial Development, New Delhi). Very useful comments from two anonymous referees of the journal have been instrumental in the revision of the paper.