Dec 23, 2011

What is distinct about India's experience?

This from another interesting paper, Economic Liberalization and Indian Economic Growth: What's the evidence? from the new number of the JEL.
It is clear from the earlier sections that the growth episode in India since the 1980’s is not another instance of State driven growth in Asia. Instead, it is the co-incidence of the ready availability of new technologies and having the skilled manpower that would be necessary to take advantage of these new technologies. Technology transfers in the 1980s and early 1990s took place mostly through easier and cheaper access to imported machinery that was made possible by trade liberalization. Improved communications (especially cell phones) and the diffusion of internet were other technologies that played a big role in driving growth from the mid-1990s on. It is inconceivable that without the breakup of government monopolies and the advent of competition in the communication sector, there would have been a revolution in communication technology in India. And, without such a revolution, the fastest growing sectors (e.g., business services) would not have taken off in India. The sustained growth that we have seen since the mid 1990’s would clearly not have been possible without the liberalizing reforms of 1991. The importance of liberalization measures can be appreciated by imagining the counterfactual that India had stayed in its pre-reform state of constraints on entrepreneurial freedoms to invest and import. New technologies would not have diffused at such a speed and growth would have been much slower. 
Two graphs for the paper:

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