Services globalization and sub-national demand linkages: The case of India

The role of services globalization in inclusive growth is already getting attention in the literature. We add to this literature using India as a case study. India's state-level services value added and employment data studied in this paper reveal that globalization-induced opportunities are filtering down to the country's high per capita income states. More significantly, our empirical analysis, motivated by the New Economic Geography literature and the work of Davis and Weinstein (1996, 1999, 2003), suggests that these opportunities are also creating demand linkages throughout the country. Moreover, the wider network of sub-national demand linkages may be getting formed independently of historical income, skill or locational advantages, which has potentially generalizable implications for other services-globalization-led economies.