The interplay between growth and development: evidence from Indian districts

In this paper we examine the nexus between growth and development using a recursive structural equation system which, to the best of our knowledge, has not been tried so far to examine such relationships in the Indian context. Another novel feature of our study is that we use district-level data to capture greater heterogeneity at a substate level. We use the growth rate of per capita income (PCI) as an indicator of economic growth, and the infant mortality rate (IMR) and literacy rate as the development outcomes. We find that IMR and literacy rate have a positive and statistically significant effect on the growth rate of PCI. Our results also show that the growth rate of PCI has a positive and statistically significant effect on IMR and the literacy rate. Further sensitivity analysis is performed to test the robustness of these findings.