This report examines subnational productivity divergence across India, Indonesia, and the Philippines—three of developing Asia’s largest economies, each characterized by extreme internal variation in economic performance. The comparative analysis reveals that subnational divergence is driven by a common set of determinants, namely, infrastructure connectivity, human capital accumulation, institutional quality, structural composition of economic activity, and access to markets,  but that the specific mechanisms and magnitudes differ significantly across countries, reflecting differences in geography, governance structure, and development strategy.

The report pays particular attention to “turnaround” cases (read states, provinces, or regions that have achieved significant productivity catch-up from low baselines) and examines the policy interventions, institutional reforms, and structural changes that enabled their improvement.

Executive Summary
Chapter 1: Introduction — Why Subnational Divergence Matters for Productivity
Chapter 2: The Scale of Subnational Productivity Divergence
2.1 Cross-Country Comparison
2.2 The Convergence Question
Chapter 3: India — States That Turned Around and States That Didn’t
3.1 The Divergence Story
3.2 The Turnaround Cases
3.3 States That Have Not Turned Around
Chapter 4: Indonesia — Java vs. the Outer Islands
4.1 The Geographic Concentration Problem
4.2 Decentralization: Promise and Reality
Chapter 5: Philippines — Metro Manila and the Rest
5.1 The Manila Dominance
5.2 Why Manila Dominance Persists
Chapter 6: Cross-Country Determinants of Subnational Divergence
6.1 Infrastructure Connectivity
6.2 Human Capital
6.3 Institutional Quality and Governance
6.4 Economic Structure and Market Access
Chapter 7: Policy Responses — What Has Worked?
7.1 India: The Turnaround Ingredients
7.2 Indonesia: Decentralization Successes and Failures
7.3 Philippines: The Centralization Trap
Chapter 8: Conclusions and Recommendations
References