Madanmohan Rao | April 27, 2014, YOURSTORY
Guess what? The world’s largest company in value-added spices, one of the world’s Top 10 publishing BPOs, India’s biggest exporter of hand-knotted carpets, largest machine tool manufacturer, largest honey exporter, and largest leather exporter all started up in small towns in India, not the big metros.
Over the decades, big ideas and successful entrepreneurs have made a mark in small-town India, as shown by the 20 profiles in the new book by Rashmi Bansal, Take Me Home.
By Ejaz Ghani, Arti Grover Goswami, and William R. Kerr NBER Working Paper No. 17992
This paper investigates the urbanization of the Indian manufacturing sector by combining enterprise data from formal and informal sectors. We find that plants in the formal sector are moving away from urban and into rural locations, while the informal sector is moving from rural to urban locations. While the secular trend for India’s manufacturing urbanization has slowed down, the localized importance of education and infrastructure have not. Our results suggest that districts with better education and infrastructure have experienced a faster pace of urbanization, although higher urban-rural cost ratios cause movement out of urban areas. This process is associated with improvements in the spatial allocation of plants across urban and rural locations. Spatial location of plants has implications for policy on investments in education, infrastructure, and the livability of cities. The high share of urbanization occurring in the informal sector suggests that urbanization policies that contain inclusionary approaches may be more successful in promoting local development and managing its strains than those focused only on the formal sector.