The Effects of Agglomeration on Socio-economic Outcomes: A District Level Panel Study of Punjab

Annus Azhar, Shahid Adil

Abstract


This paper examines the variation of agglomeration across
districts over time in Punjab and analyses the effects of agglomeration
on socio-economic outcomes in terms of social inclusion and efficiency
of firms at the district level in Punjab. Earlier studies in this regard
faced multiple problems since they used cross-sectional data. To bridge
the gap, a newly constructed panel data from CMI is used. Factor
Analysis technique is used to analyse socialinclusion variable, in
addition to some other control variables as well. Data Envelopment
Analysis (DEA) with bootstrap technique (performed in R) is used to
calculate district-wise firm efficiency. The study argues that
agglomeration is a logical consequence of China Pakistan Economic
Corridor (CPEC) through an increase in the economic activity in various
districts of the province. The results show that district agglomeration
has a positive effect on the average district-wise efficiency of firms
and has a positive statistically significant relation with social
inclusion. Interesting implications arise from results, setting up
clusters in urbanised rather than highly urbanised areas under CPEC can
be a game changer for the economy of Pakistan especially Punjab since it
has significant potential positive effects on the economy of Punjab. JEL
Classification: D62, I38, L52, R13 Keywords: Agglomeration, CPEC, Social
Inclusion, Factor Analysis, Data Envelopment Analysis, Efficiency

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DOI: https://doi.org/10.30541/v58i2pp.159-176

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