Sep 14, 2012

What Makes Cities More Competitive?

Entrepreneurship is vital to economic growth. While India has historically had low entrepreneurship rates, this weakness is improving and will be an important stepping stone to further development. This paper explores the spatial determinants of local entrepreneurship in India for both manufacturing and services. At the district level, our strongest evidence points to the roles that local education levels and physical infrastructure quality play in promoting entry. We also find evidence that strict labor regulations discourage formal sector entry, and better household banking environments encourage entry in the unorganized sector. Policy makers wishing to encourage entrepreneurship in their local areas have several policy levers that can be exploited.
Source: "What Makes Cities More Competitive? Spatial Determinants of Entrepreneurship in India," by Ghani, Kerr, and O’Connell (September 2012). 
It is interesting that the authors did not include crime as an explanatory variable.

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