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Divergent Policies for Convergence Clubs: A Study of PostReform Indian States

Sabyasachi Kar and Debajit Jha ()
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Debajit Jha: Institute of Economic Growth, Delhi

No 449, IEG Working Papers from Institute of Economic Growth

Abstract: Should economies attempting to break out of low-growth convergence clubs adopt policies distinctly different from those in high-growth clubs? This paper proposes a framework that helps answer this question. To do this, we extend the logic of policy divergence from the growth transitions literature to the analysis of club convergence. We then test this framework by applying it to an analysis of regional growth in India in the postreform period. Our framework identifies sixteen sub-national regions in India belonging to two low-growth clubs that should focus on improving their investment climate. Another fifteen such regions from two high-growth clubs however, need urgent institutional reforms."

Keywords: Club Convergence; Growth Transition; Policy Divergence; Investment Climate; Institutional Reform; Indian Economy" (search for similar items in EconPapers)
JEL-codes: E65 O10 O18 O43 O47 O53 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2021-11
New Economics Papers: this item is included in nep-ban and nep-ene
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Published as Institute of Economic Growth, Delhi, November 2021, pages 1-36

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