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Do economic reforms promote urbanization in India?

Sabyasachi Tripathi ()

Asia-Pacific Journal of Regional Science, 2019, vol. 3, issue 3, No 1, 647-674

Abstract: Abstract Recent urban population explosion in developing countries demands for several policy considerations. Is India ready for it? In this perspective, we assess the impact of economic reforms on urbanization in India for the period of 1991–2016. It is found that economic reform variables (except import of goods and services as % of GDP) have a positive effect on urbanization. The vector error correction model shows that economic reforms have influenced only on total urban population with a very slower rate with the speed of adjustment of 0.003. The short-run effect is also negligible. Granger causality test shows that there is no causal relationship between them. Therefore, we conclude that economic reforms do not promote urbanization in India. Our results also support the Krugman and Elizondo (J Dev Econ 49:137–150, 1996) hypothesis about the relationship between trade policy and urban agglomerations. Finally, we suggest that we need to promote urbanization through encouraging export for higher and sustainable economic growth in India.

Keywords: Economic reforms; Urbanization; Time series modeling; India (search for similar items in EconPapers)
JEL-codes: O18 C50 R10 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s41685-019-00117-8

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