UCLA

Globalization presents challenges to emerging economies, as exports from such countries typically consist of standardized outputs. In response, the new orthodoxy of market liberalization shows mixed technological upgrading results because it fails to account for cross-national, let alone, sub-national variations in institutional capacities. Literature highlights the central role of regional (subnational) economies in driving the global economy through productivity and innovation boosts from agglomerative forces. In emerging countries, the effectiveness of regional agglomerations is hampered by the negative impacts of over-urbanization. This problem is worsened in urban-primate settlement patterns involving very large primary cities and no comparable secondary urban areas. Thus, national reforms may have unequal subnational upgrading impacts because of the inter-regional heterogeneity in agglomerative, urbanization and institutional capacities. In this dissertation consisting of three papers, I explore the above issues through the case of India's manufacturing sector in the post-1991 `delicensing' reforms era (1990 to 2005). In the first paper, I construct and employ a unique indicator of technological sophistication to track regional trends in technological upgrading. I find that technological levels for delicensed industries have converged at the state-level but to lower levels of sophistication. In the second paper, I find evidence that falling technological levels coincide with the dispersion of manufacturing activities from urban centers. Urbanization agglomeration economies (variety) are positively correlated with upgrading in conjunction with capital-intensity and imported inputs into production. However, localization agglomeration economies (own industry concentration) are found to have negative impacts on upgrading across the board, pointing to issues pertaining to limited supply of regional infrastructure. In the third paper, I examine the impact of urbanization on agglomeration economies. I find that urban size thresholds - larger to largest urban areas -- play a positive mediating role on the effectiveness of agglomeration economies on upgrading. Further, very large secondary urban areas influence upgrading by attracting skilled migration. In investigating regional political contexts, I find that the reasons why political majorities and lengthy tenures choose growth in secondary urban areas do not associate with upgrading. This may indicate competing policy priorities to the neglect of the manufacturing sector.