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India's manufacturing growth from 1989 to 2010 displays two intriguing properties: 1) a substantial fraction of absolute and net employment growth is concentrated in informal tradable industries, and 2) much of this growth is connected to the development of one-person establishments. This paper investigates the causes and determinants of these growth patterns. The rapid urbanization of the informal sector plays the strongest role, while there is some evidence for subcontracting by the formal sector and a "push" entrepreneurship story. The paper also finds modest connections of this growth to rising female labor force participation. The connection between the presence of informal manufacturing and local productivity levels is strong, and varies across urban and rural areas in ways that bolster urbanization and subcontracting hypotheses.

Banks and Banking Reform --- Development --- Employment --- Growth --- Labor Markets --- Labor Policies --- Manufacturing --- Pro-Poor Growth --- Trade --- Urban

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Growing research and policy interest focuses on the misallocation of output and factors of production in developing economies. This paper considers the possible misallocation of financial loans. Using plant-level data on the organized and unorganized sectors, the paper describes the temporal, geographic, and industry distributions of financial loans. The focus of the analysis is the hypothesis that land misallocation might be an important determinant of financial misallocation (for example, because of the role of land as collateral against loans). Using district-industry variations, the analysis finds evidence to support this hypothesis, although it does not find a total reduction in the intensity of financial loans or those being given to new entrants. The analysis also considers differences by gender of business owners and workers in firms. Although potential early gaps for businesses with substantial female employment have disappeared in the organized sector, a sizeable and persistent gap remains in the unorganized sector.

Access to banking --- Access to credit --- Access to external finance --- Access to finance --- Access to financial services --- Access to formal credit --- Access to formal finance --- Access to loans --- Asymmetric information --- Bank branches --- Bank credit --- Bank financing --- Bank loan --- Bank loans --- Banking --- Banking services --- Banks --- Banks and banking reform --- Biases --- Borrower --- Borrowers --- Borrowing --- Business owners --- Business plans --- Capital --- Co-operative banks --- Collateral --- Collateral requirements --- Collateral support --- Commercial banks --- Cost of capital --- Credit --- Credit bureaus --- Credit information --- Credit market --- Credit markets --- Credit policy --- Credit registries --- Credit risk --- Credit support --- Credit-worthiness --- Creditworthiness --- Debt collectors --- Debt markets --- Directed credit --- Disparities in access --- Econometrics --- Economic activity --- Economic growth --- Economic policy --- Economics --- Employment --- Enterprise --- Enterprise development --- Entrepreneur --- Entrepreneurs --- Entrepreneurship --- Equity --- Exclusion --- External finance --- External financing --- Finance and financial sector development --- Financial access --- Financial deepening --- Financial depth --- Financial development --- Financial institutions --- Financial integration --- Financial markets --- Financial sector --- Financial sector development --- Financial services --- Financial strength --- Financing --- Fixed assets --- Formal credit --- Formal finance --- Gender --- Gender inequality --- Government policy --- Governments --- Guarantee --- Households --- Housing --- Human capital --- Inequality --- Information sharing --- Infrastructure --- Intangible assets --- Interest expense --- Interest payment --- Interest rate --- Investment --- Issue of access --- Job creation --- Labor --- Labor market --- Labor markets --- Lack of collateral --- Land markets --- Lenders --- Lending --- Liberalization --- Loan --- Loan access --- Loan demand --- Loans --- Macroeconomics --- Marginal revenue --- Market value --- Markets --- Micro enterprises --- Micro-credit --- Micro-enterprises --- Micro-entrepreneurs --- Micro-finance --- Micro-finance institutions --- Microfinance --- Monetary policy --- Money lenders --- Net value --- Outreach --- Outstanding loan --- Outstanding loans --- Overdraft --- Personal assets --- Private enterprise --- Private enterprises --- Profitability --- Property --- Real estate --- Repossession --- Reserve bank of india --- Resource allocation --- Revenue --- Risk --- Risk perception --- Rural bank --- Rural bank branches --- Services --- Sizes of loan --- Small business --- Small business owners --- Small businesses --- Strategies --- Tangible assets --- Taxes --- Trade credit --- Trade credits --- Transport --- Union --- Urban areas --- Value --- Villages --- Water & industry --- Water resources --- Water supply --- Working capital

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This paper quantifies the misallocation of manufacturing output and factors of production between establishments across Indian districts during 1989-2010. It first distills a number of stylized facts about misallocation in India, and demonstrates the validity of misallocation metrics by connecting them to regulatory changes in India that affected real property. With this background, the study next quantifies the implications and determinants of factor and output misallocation. Although more-productive establishments in India tend to produce more output, factors of production are grossly misallocated. A better allocation of output and factors of production is associated with greater output per worker. Misallocation of land plays a particularly important role in these challenges.

Economic Theory & Research --- Labor Policies --- Land Misallocation --- Misallocation Metrics --- Output Misallocation --- Private Sector Development --- Productive Establishments --- Property Markets --- Urban Development --- Urban Housing --- Urban Services to the Poor --- Urban Slums Upgrading