Regional Diversity and Inclusive Growth in Indian Cities

This paper examines the employment
growth of Indian districts from 2000 to 2010 in the
manufacturing and services sectors. Specialization and
diversity metrics that combine industries in both sectors
are calculated and related to subsequent job growth. The
analysis finds robust and consistent evidence that the
diversity of industries in the district across the two
sectors links to subsequent job growth. Somewhat
surprisingly, this link finds its strongest expression
outside typical stories about the role of diversity. For
example, the growth is strongest in rural areas of districts
and in districts with low population density. Diversity
correlates with disproportionately higher employment growth
in the informal sector and plays a role in generating
employment in the district's smaller industries. These
findings point toward the "inclusive" nature of
diversity-driven growth and highlight a potentially
important agenda item for policy makers concerned with
inclusive development.