Land Rezoning and Structural Transformation in Rural India
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World Bank, Washington, DC
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Zoning laws that restrict rural land to
agricultural production pose an important institutional
barrier to industrial development. This paper studies the
effects of the Industrial Areas (IA) program in Karnataka,
India, which rezoned agricultural land for industrial use,
but without the economic incentives common with other
place-based policies. This paper finds that the program
caused a large increase in firm creation and employment in
villages overlapping the IAs. Moreover, the surrounding
areas experienced spillover effects, with workers shifting
from agricultural to non-agricultural employment, and
entrepreneurs establishing numerous small-scale service
sector and agricultural firms.
Palabras clave
INDUSTRIAL AREAS, PLACE-BASED POLICY, SPILLOVER EFFECT, LABOR MARKET, LABOR FORCE PARTICIPATION, STRUCTURAL TRANSFORMATION, ZONING LAW