Do Knowledge and Technology-Intensive Industries Spatially Concentrate in Rural and Urban Areas of India? Evidence from Economic Census Micro-Level Data

Abstract

This paper investigates the geographic concentration of knowledge and technology-intensive (KTI) industries, covering 0.43 million establishments across various districts of rural and urban areas in India. Using the spatially weighted Ellison-Glaeser index, cartogram and choropleth map results show that few KTI industries are highly geographically concentrated in urban and rural areas, specific to certain districts and a few Indian states. Within highly employable states of India, workers are employed in only a particular location of a few districts. Also, we differentiate between urban and rural concentrated and urban and rural dispersed districts within highly employable states. In addition, results validate the extent of the geographical concentration of KTI industries in rural and urban areas of highly employable Indian states. Further, results exhibit that industries spatially concentrate in only a few locations across specific districts in India, indicating natural advantages and other economic forces are pretty strong in certain areas. Besides, results suggest that the demand-based networks and push-and-pull supply chains are well established in a specific location of a few districts, incentivizing other firms to locate their business, which creates a spatial spillover effect and benefits all economic agents. Empirical results suggest that policymakers in India could unleash the resource potential of spatially concentrated districts by implementing a location-based policy and considering multi-level governance and informal and formal institutions, which could further boost regional economic growth.