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Economic Growth, Development and Environment

Paper Session

Friday, Jan. 5, 2018 10:15 AM - 12:15 PM

Pennsylvania Convention Center, 203-B
Hosted By: Association of Indian Economic and Financial Studies
  • Chair: Chandana Chakraborty, Montclair State University

Cleaning the Ganges in Varanasi to Attract Tourists: A Stochastic Analysis

Amitrajeet A. Batabyal
Rochester Institute of Technology
Hamid Beladi
University of Texas


The clean-up of the Ganges has been discussed many times in the past but this discussion
has led to very little change in the extremely polluted status of the river. However, the Ganges now appears to have a champion in Narendra Modi who is not only a devout Hindu but also the current Prime Minister of India. Bhandari (2015) points out that Modi contested the 2014 election from Varanasi and that he has promised to convert Varanasi into a vibrant city for tourists by launching a major campaign to clean the Ganges.

Despite the salience of this campaign from both environmental and touristic standpoints, to
the best of our knowledge, the extant literature contains no theoretical studies of the clean-up of the Ganges and its connection to the promotion of tourism. Given this lacuna, we use a simple model to provide the first stochastic analysis of the Ganges river clean-up process and the attraction of tourists to Varanasi.

Communicating Clean Technology, Green Premium, Competition and Ecolabels

Aditi Sengupta
Auburn University


In markets where differences in environmental performance of competing firms arise due
to differences in technology that cannot be altered in the short run and firms have private
information about their own current technology, ecolabels can allow clean firms to directly and
credibly communicate this private information to environmentally conscious consumers. Though
direct communication through ecolabels can ameliorate the distortions that occur when firms
need to signal their private information indirectly, I show that market competition creates a
strategic disincentive for adopting ecolabels (even if the cost of adoption is negligible). Firms
adopt ecolabels only if the green premium that buyers are willing to pay is large relative to the
production cost advantage of dirty firms. In the latter case, ecolabels reduce market power,
increase the market share of clean firms, and reduce expected environmental damage. I analyze
the strategic (long run) incentive of firms to invest in the development of clean technology where
the outcome of such investment is uncertain. Relative to a benchmark with no ecolabels, the
availability of an ecolabel to directly communicate private information about the technology
outcome (resulting from investment) actually reduces the ex ante strategic incentive to invest
and eventually lowers industry investment in cleaner technology.

FDI and Economic Growth: An External Debt Threshold Effect

Sailesh Tanna
Coventry University
Chengchun Li
Coventry University


This paper investigates the relevance of external debt as a factor inhibiting economic growth gains to be accrued from foreign direct investment (FDI). We develop a model which formalises a mechanism to allow for the influence of external debt in the transmission of FDI-generated externalities and conduct threshold regressions to show the existence of a debt contingency effect which limits the positive impact of inward FDI on growth. Using annual as well as five-year averaged data for 39 developing countries over the period 1984-2010, our findings support the hypothesis that the FDI-induced growth effect is dependent on the external debt constraint. In particular, high indebtedness can constrain economies from reaping growth benefits from FDI as they seek to reduce their debt levels. In this scenario, the evidence shows that increasing financial development can mitigate the negative influence of debt thresholds in the FDI-growth nexus.

Household Income Mobility in India

Mehtabul Azam
Oklahoma State University


Using nationally representative longitudinal survey, we examine the income mobility among
rural (urban) Indian households over 1993-2004 and 2004-2011 (2004-2011). We find mobility
estimates that mirror the social hierarchy: Forward Hindu Caste (FHC) households experienced
the highest (lowest) upward (downward) mobility. Considerable gaps between FHC
households and households from the disadvantaged social groups remain in upward/downward
mobility even after controlling for households characteristics. We find lower conditional gaps
in both upward/downward mobility in rural India for the disadvantaged groups (except
for Muslims) over 2004-2011 compared to 1993-2004. For Muslims, the gaps in downward
mobility increased over 2004-11 compared to 1993-2004.

Data Mining 'UIP' and Immunization Coverage in India

Dweepobotee Brahma
Western Michigan University
Debasri Mukherjee
Western Michigan University


This paper examines the effect of Universal Immunization Program (UIP) on the coverage of essential vaccines in various Indian states. Our empirical findings confirm that UIP by itself does not always significantly affect the coverage, however, the effect of UIP on coverage becomes significantly positive in the presence of good health infrastructure. Health infrastructure not only helps the coverage by itself, but it also raises the effectiveness of vaccination funds on the coverage. Health infrastructure combined with UIP funds also serve as good predictors of immunization coverage based on application of LASSO and LARS variable selection techniques. We also compare the nonparametric kernel densities of response variable to that of its in-sample prediction and find that our model fits the data almost perfectly for each vaccine measures considered. The policy prescription that follows from our study is that the immunization program should focus on promoting the required infrastructure in addition to providing funds in order to facilitate effective usage of funds.

Theories of Redistribution and Share of Labor Income

Keshab Bhattarai
University of Hull


The functional and size theories of income distribution are found significant in the context of growing inequality around the world. The causes for the observed patterns on the shares of labour and capital income in classical, neoclassical, Marxian, structuralists or general equilibrium theories are reviewed. Each of these theory is found helpful in explaining the inequality of in income observed in the OECD, emerging and developing economies. Significant empirical evidence exists for declining labour share as shown by panel data estimation of 127 countries from 1990 to 2011.
Rama Seth
Indian Institute of Management-Calcutta
Meenakshi Rishi
Seattle University
Banani Nandi
Basanta Chaudhuri
Rutgers University
Saktinil Roy
Athabasca University
Valerie Cerra
International Monetary Fund
JEL Classifications
  • Y9 - Other
  • Y9 - Other