IT Clusters in India

One of the facilitating factors that enabled the rise of IT industry in India is the evolution of IT clusters. A study of these clusters can provide interesting insights. The rise of the Banglaore IT cluster was due, among other things, to some of the policies the Indian government took three decades or earlier. It would be difficult to talk of "benign neglect" of the government towards this sector. Different factors worked in the case of Hyderabad. A comparison between the IT clusters in India has much to tell the new emerging IT clusters in India as well as those outside of it.

Election Studies in India

The election system is the pillar of Indian democracy. The system consists of various levels of elections to the Lok Sabha (the House of Representatives of the Union), State Legislative Assemblies, and Panchayati Raj Institutions (local self-governing bodies under State Governments). This article includes a review of studies related to the elections of Lok Sabha and State Legislative Assemblies conducted up to the present time. Studies are divided into those based on aggregate data and those based on survey data of the individual electorate. This division has the advantage of providing data that may be used in different analytical areas. Voter turnout and votes polled by party are the two main variables to be explained. This review article thus shows what has been explained in voting behaviour in India up to the present time.

Industrial Clusters in India: Evidence from Automobile Clusters in Chennai and the National Capital Region

This study analyzes the patterns of agglomeration of some modern manufacturing sectors in India, and in particular the Indian automobile sector. It also examines and contrasts the factors that have led to different patterns of cluster development in two leading auto clusters in India-Chennai and the National Capital Region (NCR). Moreover, the study analyzes whether firms in clusters perform better than those that are excluded and whether the relative importance of variables that determine the behavior of firms differs among clusters. Our analyses, which employ a combination of quantitative and qualitative methods, show that Indian industrial clusters are largely concentrated in the three clustered regions: NCR, Mumbai-Pune, and Chennai-Bangalore, across different manufacturing sectors. Our study of the auto clusters in Chennai and the NCR find considerable differences in the patterns of cluster formation, due partly to the historical and policy conditions under which firms, particularly, the lead firms must operate. Moreover, our econometric analyses confirmed that being part of a cluster positively influences the performance of the auto component firms and those belonging to a cluster perform better.

Monetary Systems in Developing Countries: An Unorthodox View

This paper analyzes some recent theoretical and practical evidence in terms of economic results of different exchange rate systems. It begins with a historical review and a summary of fixed versus flexible exchange rate systems. Then it compares the experiences of recent currency unions, mostly unilateral, and their relative economic performance during the past currency crises in Latin America, East Asia and Eastern Europe. A set of issues is discussed in order to weigh the overall costs and benefits for several economies. These issues include exchange rates, GDP performance, inflation rates and foreign reserves. The case of Argentina is also considered separately, comparing mostly seigniorage costs and interest-rate savings. The benefits and costs of the producers (central banks/governments) and the consumers (citizens) of money are discussed separately. Free banking is also considered in a fast-changing world where there will probably be fewer but better currencies. Not just the euro is a reality now, but maybe the "amero" and the "worldo" or the "mondo" very soon.

An empirical analysis of the money demand function in India

This paper empirically analyzes India’s money demand function during the period of 1980 to 2007 using monthly data and the period of 1976 to 2007 using annual data. Cointegration test results indicated that when money supply is represented by M1 and M2, a cointegrating vector is detected among real money balances, interest rates, and output. In contrast, it was found that when money supply is represented by M3, there is no long-run equilibrium relationship in the　money demand function. Moreover, when the money demand function was estimated using　dynamic OLS, the sign onditions of the coefficients of output and interest rates were found to be　consistent with theoretical rationale, and statistical significance was confirmed when money supply was represented by either M1 or M2. Consequently, though India’s central bank presently uses M3 as an indicator of future price movements, it is thought appropriate to focus on M1 or M2, rather than M3, in managing monetary policy.

The causal relationships in mean and variance between stock returns and foreign institutional investment in India

This paper examines the causalities in mean and variance between stock returns and Foreign Institutional Investment (FII) in India. The analysis in this paper applies the Cross Correlation Function approach from Cheung and Ng (1996), and uses daily data for the timeframe of January 1999 to March 2008 divided into two periods before and after May 2003. Empirical results showed that there are uni-directional causalities in mean and variance from stock returns to FII flows irrelevant of the sample periods, while the reverse causalities in mean and variance are only found in the period beginning with 2003. These results point to FII flows having exerted an impact on the movement of Indian stock prices during the more recent period.

An Empirical Analysis of the Monetary Policy Reaction Function in India

This paper empirically analyzes India’s monetary policy reaction function by applying the Taylor (1993) rule and its open-economy version which employs dynamic OLS. The analysis uses monthly data from the period of April 1998 to December 2007. When the simple Taylor rule was estimated for India, the output gap coefficient was statistically significant, and its sign condition was found to be consistent with theoretical rationale; however, the same was not true of the inflation coefficient. When the Taylor rule with exchange rate was estimated, the coefficients of output gap and exchange rate had statistical significance with the expected signs, whereas the results of inflation remained the same as before. Therefore, the inflation rate has not played a role in the conduct of India’s monetary policy, and it is inappropriate for India to adopt an inflation-target type policy framework.

How has financial deepening affected poverty reduction in India? : empirical analysis using state-level panel data

This paper examines empirically whether financial deepening has contributed to poverty reduction in India. Using unbalanced panel data for 28 states and union territories between 1973 and 2004, we estimate models in which the poverty ratio is explained by financial deepening, controlling for international openness, inflation rate, and economic growth. From the dynamic generalised method of moments (GMM) estimation, we find that financial deepening and economic growth alleviate poverty, while international openness and the inflation rate have the opposite effect. These results are robust to changes in the poverty ratios in rural areas, urban areas, and the whole economy.

Establishing electoral administration systems in new democracies

The difficulty of holding fair elections continues to be a critical problem in many newly democratized countries. The core of the problem is the electoral administration's lack of political autonomy and capability to regulate fraud. This paper seeks to identify the conditions for establishing an autonomous and capable electoral administration system. An electoral administration system has two main functions: to disclose the nature of elections and to prevent fraud. We argue in this paper that an autonomous and capable electoral administration system exists if the major political players have the incentive to disclose the information on the elections and to secure the ruler's credible commitment to fair elections. We examine this argument through comparative case studies of Korea and the Philippines. Despite similar historical and institutional settings, their election commissions exhibit contrasting features. The difference in the incentive structures of the major political players seems to have caused the divergence in the institutional evolution of the election commissions in the two countries.