The Efficiency of States and Cities: Is There a Case for Public Land Leasing and Sales to Finance India.s Cities?

In this study an attempt has been made to assess the potential of land as a municipal financing tool in four Indian cities, to enable better public service delivery and attainment of the MDGs. The institutional arrangements for land use are fragmented in India.s cities between the urban development authorities, which are state agencies, and the cities. To determine whether or not transfer of revenues from land to cities from the para-statal entities is justified, stochastic frontier analysis is used to determine the efficiency of Indian cities and the Indian states. The efficiency of service provision is examined taking the case of roads.land lease, efficiency of cities, India, urban infrastructure finance, stochastic frontier analysis

Cities with suburbs: Evidence from India.

For a country like India that contains a large number of Urban Agglomerations (UAs), suburbanisation has drawn little attention of the literature. I focus on this sparsely studied issue in this work. I calculate population, household and employment density gradients for India's UAs, using Mills' two-point technique. Next, I estimate population, household and employment gradient regressions. I find that the size of UA and lagged value of the population gradient explain population suburbanisation, as we would expect. I find evidence from the employment suburbanisation equation that it is the jobs that follow people, and not vice-versa, consistent with what has been found in the literature. In the employment sub-sector regressions, I find that the skills of the labor force are the most important factor explaining suburbanisation of manufacturing, transport, communications and trade/commerce jobs in India's urban areas. I conclude with policy implications.India ; Suburbanisation ; Density gradient ; Population gradient ; Employment gradient ; Household gradient ; Gradient regressions ; Exponential density function

Impact of the enterprise zone.

Enterprise zones are place-oriented policies that are a tool of regional development, and refer to geographically targeted areas chosen for development that are designated on the basis of unemployment, poverty, population, age of housing stock, and other criteria. Firms that locate in the area and create jobs are given tax credits, abatements and exemptions. The underlying assumption is that firms and employees in the zone area benefit because of a reduction in the price of capital and/or labour, and there is expanded investment and employment generation through deregulation. The objective of this work is to answer what is the impact of the enterprise zone (EZ) on the rest of the economy and labour. I develop a theoretical model. In the model I point to the cause of unemployment in the EZ. I show the relationship between the reservation wage and unemployment rate, following Jones (1989). I then show the general equilibrium response to the tax abatement provided in EZs, in a generalised framework incorporating capital mobility, following Harberger (1962). The analytical framework developed indicates that the capital and employment impact of the tax cut on capital in the EZ depends on three sets of parameters: · Relative factor intensities of firms in the two areas. · The elasticity of substitution between capital and labour in firms in the areas. · The price elasticities of demand for goods Z and Y produced by EZ firms and non-EZ firms respectively The analysis also indicates that it is impossible to isolate the incidence of the tax cut given in the EZ just to the EZ alone.Enterprise zones ; Regional development ; Tax incentives

Telecommunications infrastructure and economic growth: Evidence from developing countries.

Often, it has been observed that telecommunication infrastructure development and economic growth proceed together. While this relationship has been studied in the context of developed (OECD) countries, in this study, we investigate this simultaneous relationship between telecommunications and the economic growth, using data for developing countries. Using 3SLS, we estimate a system of equations that endogenize economic growth and telecom penetration (respectively production function and demand for telecom services), along with supply of telecom investment and growth in telecom penetration. We estimate this system of equations separately for main telephone lines and cell phones. We find that while traditional economic factors explain demand for main line phones, they do not explain demand for cell phones. We also find significant impacts of cellular services on national output, when we control for the effects of capital and labour. The impact of telecom penetration on total output is, however, significantly lower for developing countries than that reported for OECD countries, dispelling the convergence hypothesis.Telecommunication ; Infrastructure ; Economic growth ; Reverse causality ; Developing countries

Firm Location Choice in Cities: Evidence from China, India, and Brazil

We use large survey data sets of firms provided by the World Bank for China, India, and Brazil?Investment Climate Surveys?to address the important question: what determines the locational choice of firms among cities in these countries. We find that capital cities in all countries are attractive for firms to locate. In India and China, labour-intensive firms tend not to locate in mid-sized or large cities, when compared with smaller ones, perhaps due to higher wage, training and attrition costs. Labour regulations both in India and China deter firms from locating in the larger cities, but not in Brazil. Exporter firms prefer to locate in large cities in these two countries, but not so in the largest cities of Brazil. Finally, while the size of a firm has no impact on its location decision in China, large firms in India prefer to locate in the largest cities, but not in mid-sized cities. Proximity to inputs within the city has a positive impact on firm location. The post-reform firms in China tend to locate in the large cities whereas in the case of India, post-1991 firms refrain from locating in the mid-sized or large cities. These findings have important policy implications for urban governance in these countries, which are summarized in the paper.India, China, Brazil, location choice, industry location, firm location

Reforming delivery of urban services in developing countries: Evidence from a case study in India.

Given the importance of urban public services in attracting firm location, increasing employment and facilitating economic growth, in this paper, we examine the following questions: Is there a need for reforming public service delivery in Ludhiana (which is a city chosen under India's leading urban initiative), when judged against national benchmarks? Is there a relationship between the city's financial performance and its delivery of urban services? We develop several hypotheses. Next, we examine the potential bottlenecks to reform in service delivery, and finally, the triggers for reform in service delivery, if any. Several measures such as the growth of population and land area, service delivery, and its current finances, suggest a need for reforming public services in this city. We find the general decline in the service level of water supply and sewerage in the city could be attributed to a decline in its capital expenditures on these services. Further, user charges do not adequately cover the production costs of supplying water, or expenditures on sewerage. The major bottlenecks to reforming public service delivery in this city are financial and institutional, as they pertain to existing arrangements for water, sewerage and landuse. Major triggers that could make the reform happen in this city pertain to changes in institutional arrangements for service delivery (privatisation) and public participation, and finances (less of a trigger). Overall, the major lessons for other cities and triggers that could make the reform happen in Ludhiana pertain to changes in institutional arrangements for service delivery, privatisation in service delivery, public participation, and finances.Service delivery ; Public services ; India ; Case studies ; Urban reforms

Impact of growth centres on unemployment and firm location: Evidence from India.

Industrial development ; Incentives ; Infrastructure ; Unemployment ; Firm location