Place-based Policies, Investment and Innovation in India – Alina Mulyukova

Speaker

Alina Mulyukova (University of Göttingen; Kiel Institut)

Abstract

Understanding the drivers of innovation is central to economic growth, with capital constraints widely regarded as a major barrier to innovation in developing economies. We exploit the staggered establishment of Special Economic Zones (SEZs) across India to examine whether relaxing local capital constraints stimulates innovation. Combining geocoded investment projects, patents and SEZs data, we compare economic activity in areas near SEZs with that in more distant areas in a difference-in-differences framework. Investment projects increase following SEZ establishment, with effects that attenuate with distance and are concentrated primarily in infrastructure, housing, and high-tech projects. Patenting activity and inventor count respond more gradually, increasing several years later, and are driven by IT SEZs. These findings suggest that place-based policies can relax local capital constraints and, in turn, stimulate innovation. 

Authors

Apoorva Gupta (TU Dortmund) — Alina Mulyukova (University of Göttingen; Kiel Institut)

Room

Media Room (A-211)