LOCATION AND GEOGRAPHICAL CONCENTRATION PATTERNS OF INDIAN MANUFACTURING INDUSTRIES: EVIDENCE FROM THE RURAL AND URBAN AREAS

Abstract

This paper explores the spatial distribution and dependence of employment of workers and geographical concentration of 71 manufacturing industries by capturing the neighborhood effects across 637 districts in India, covering 10.54 million establishments using Economic Census ( 2013 ) data. Empirical results validate the spatial dependence of employment in rural and urban areas. However, results indicate substantial evidence of rural–urban employment disparity, especially in the northern states of India. Further, empirical results show that the effect of geographical concentration on highly localized industries seems to diverge in rural and urban areas. Besides, results exhibit that the higher employment industry has a low employment-to-establishment ratio (EER) at the establishment level in rural and urban areas. Nevertheless, using cartograms, we find that the spatial concentration of highly employable industries and the EER is highly skewed and asymmetrically concentrated in a few districts of only four to five states in India. Therefore, the results suggest that policymakers could focus mainly on industries with massive potential for employment opportunities at the regional level.