Drivers of regional development

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agglomeration, transport connectivity and its impact on regional development

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Drivers of regional development

  1. 1. DRIVERS OFREGIONAL DEVELOPMENT
  2. 2. IS CONNECTIVITY A DRIVER OF REGIONAL ECONOMY ??? Study of road transport connectivity pattern & economic development in Vidarbha Maharashtra dr. Sadhana h. Bhendkar (khandar) Objective: To compute road transport connectivity and level of economic development in vidarbha region of Maharashtra and to find out the relationship between connectivity and economic development. Methodology : calculated by two indices, i.e. beta index and cyclomatic number. statistical methods are use to correlated between network and development.By comparing Two figures we find that only Nagpur district record high connectivity and high level of development. And in twodistrict there is low connectivity & low level of development. There are two district where the level of development as well as theorder of connectivity both are medium. This means that in six other districts the level of development do not correspond withtheir degree of connectivity.The level of connectivity and the economic development both are correlated. The rank correlation coefficient between levels ofdevelopment and degree of connectivity is 0.24, which is statistically insignificant. This means that the development of roadconnectivity are not related to the factors governing the regional pattern of economic development.
  3. 3. WHY SPATIAL INEQUALITIES EXISTS ??? Spatial inequalities in economic activity as well as in welfare is largely the result of decisions by individual companies or industries to locate in selected regions of a country. This creates employment, generates incomes and triggers spill overs into rural, services and supplying sectors.Firm’s location decision:1. Natural advantage: where firms tend to locate in areas that have high demand for the good they produce facilitated through good transport infrastructure and thus market access.2. Production externalities: where firms locate in proximity to other firms to benefit, for example, from knowledge or information transfers. Source: Agglomeration, Transport, and Regional Development in Indonesia Uwe Deichmann, Kai Kaiser, Somik V. Lall, Zmarak Shalizi** The World Bank
  4. 4. AGGLOMERATION AND TRANSPORT CONNECTIVITYManufacturing firms tend to locate in regions with larger market demand to realize scale economies and minimizetransportation costs.Low transport/connectivity costs allow larger scale production, which in turn creates investment activities in otherindustries. By increasing demand for each other’s products this process of simultaneous investment raisesprofitability. Source: Agglomeration, Transport, and Regional Development in Indonesia Uwe Deichmann, Kai Kaiser, Somik V. Lall, Zmarak Shalizi** The World Bank
  5. 5. AGGLOMERATION AND TRANSPORT CONNECTIVITY Improved accessibility and connectivity effects in reducing geographic barriers to interaction, which increases specialized labour supply and facilitates information exchange, technology diffusion and other beneficial spill overs. Clusters of firms that are predominantly in the same sector take advantage of localization economies. They include sharing of sector specific inputs, skilled labour and knowledge, intra-industry linkages, and opportunities for efficient subcontracting. If an industry is subject to such externalities, certain firms are likely to locate in a few regions where other producers of that industry are already clustered.Source: Agglomeration, Transport, and Regional Development in Indonesia Uwe Deichmann, Kai Kaiser, Somik V. Lall, Zmarak Shalizi** The World Bank
  6. 6. AGGLOMERATION AND TRANSPORT CONNECTIVITY1. Improvements in transport will enhance regional attractiveness, which increases profits for firms.2. If, potential profits in this region become higher than potential profits in other regions, firms will migrate process continue until there is congestion costs (such as increases in land and labour costs) are high enough to offset net benefits from industry relocation and the system gets back into equilibrium. 3. There may be some relocation of firms to peripheral areas after transport improvements. 4. Highly concentrated and low sensitivity to transport. (leather products and office computing sectors) We find that road transport improvements are unlikely to influence profitability, and thus industry location decisions in these industries 5. Transport improvements has least impact on: • Strong agglomeration economy • Sectors well distributed and serving local market Source: Agglomeration, Transport, and Regional Development in Indonesia Uwe Deichmann, Kai Kaiser, Somik V. Lall, Zmarak Shalizi** The World Bank
  7. 7. Comparison of Indian states with European countries on settlement size6,000,000 Also evenly distributed settlement pattern produces effective development.5,000,0004,000,0003,000,0002,000,0001,000,000 0 1 2 3 4 5 6 7 8 9 10

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