Place-based preferential tax policy and industrial development: Evidence from India’s program on industrially backward districts

Rana Hasan, Yi Jiang and Radine Michelle Rafols

Journal of Development Economics, 2021, vol. 150, issue C

Abstract: We evaluate a tax-exemption program initiated by the Indian government in 1994 to promote manufacturing in districts designated as industrially backward on the basis of a continuous gradation score that reflected district characteristics in early 1990s. Employing a regression discontinuity design, we find that the program led to a significant increase in firm entry and employment, especially in light manufacturing industries of the better-off backward districts in the short run. However, this was partly driven by spatial displacement of economic activity from neighboring districts that narrowly missed qualifying for the program. ​Further, we do not find the effects of the program to persist after it ended.

Keywords: Place-based policy; Spatial spillovers; Preferential tax; Backward districts; Regression discontinuity; Informality (search for similar items in EconPapers)
JEL-codes: H32 O14 R12 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304387820301966
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:150:y:2021:i:c:s0304387820301966

DOI: 10.1016/j.jdeveco.2020.102621

Access Statistics for this article

Journal of Development Economics is currently edited by M. R. Rosenzweig

More articles in Journal of Development Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().