Regional Economic Growth Spillover in India

In open market economies, spatial externalities play a crucial role in economic growth. These spatial externalities emerge from the agglomeration economies or the market potentials of the regions. The present study examining the economic growth spillovers among states of India for the period 2005–2020 finds that growth spillover plays a major role in shaping the regional economic development in India. The impact of labor and capital on economic growth is weaker, showing the structural issues in these two sectors, but human capital is found to have a significant impact on regional economic growth. The states with direct access to the sea (coasts) are found to be having higher levels of development. The study also shows that household inequalities in asset ownership within states negatively impact economic growth. This shows that economic inequality within Indian states is already higher, and there is a need to bring it down to accelerate economic growth. The chapter also discusses the infrastructural bottlenecks, lack of effective governance, and rising cost of higher education, which may have a negative impact on the economic spillover process.