Cultural diversity, human capital, and regional economic growth in India

Abstract

The interaction of cultural diversity and human capital and their combined and conditional impacts on regional economic growth have not been explored in depth. The present study shows that India’s cultural diversity and human capital have significant impacts on regional economic growth, but the impact of cultural diversity declines with an increase in human capital stock and level of initial regional incomes. These findings are akin to the findings of other studies reporting varying impacts of human capital on economic growth with differing levels of economic development. This implies that the less developed regions, being farther from the technological frontier (Vandenbussche et al., 2006), display a stronger diversity‐led catch‐up effect.

Linking Migration, Diversity and Regional Development in India

“…The relation of income and human capital has also been widely discussed in the literature. Human capital growth positively affects income (Shaban & Khan, 2022). The diversity index measured by the FI shows an increase from 1991 to 2011, with a slight dip for some states in 2001.…”

“…Human capital is essential for the economic development of a region and is also an indicator of the potential skilled population. This has been considered as the proportion of the population with an education level of higher secondary and above, and the data are available from the Census of India (1991, 2001, 2011) (Shaban & Khan, 2022). Urbanisation is considered to be an important factor for migration (Rodríguez-Pose & Hardy, 2015).…”

“…Additionally, as a proxy for the social condition of a state, the murder rate which is defined as the number of murders recorded under the Indian Penal Code per 100,000 persons, was taken from the National Crime Records Bureau. It is assumed that violence resulting in a high murder rate is a proxy for social instability (Shaban & Khan, 2022) and would adversely affect the economic progress of a state. Socially unstable regions bear the threat of conflict and violence and hence would be a deterrent for industrial activity and migrants.…”

“…Positive economic benefits will attract migrants with new ideas who will also bring their own experiences (Bove & Elia, 2017). This is also true for the 'creative class' in the cities (Flew, 2010;Florida, 2002Florida, , 2008Peck, 2005;Pedroni & Sheppard, 2013;Shaban & Khan, 2022).…”

“…Diversity is described as a ‘double-edged sword’ (Horwitz & Horwitz, 2007, p. 988). While diversity aids in knowledge spillovers (Audretsch et al, 2010) and positively affects economic growth (Alesina & La Ferrara, 2005; Shaban & Khan, 2022), heterogeneity can result in coordination problems and hence increase transactional costs (Bove & Elia, 2017). However, recent studies suggest that for developing economies like India the inherent diversity can become resourceful (Shaban & Khan, 2022).…”