Economic Times ⁽²¹⁸⁾

This month marks the end of the first decade of India’s economic reforms. What have we accomplished? In this feel-good piece, I demonstrate that the focus on incremental reforms in individual years results in an understatement of the totality of India's achievements. Economic Times, July 18 2001 THIS month marks the end of the first decade of India’s economic reforms. What have we accomplished? During the last two years, I have written critically about the pace and content of the reforms. But today is different: in this feel-good piece, I wish to demonstrate that the focus on incremental reforms in individual years results in an understatement of the totality of our achievements. The analogy is with the hour hand of the clock, which looks completely static, and yet completes a full circle every twelve hours. Begin by recalling the industrial policy prevailing prior to the launching of the reforms. The heavy industry was a state monopoly. Other industry was either subject to strict industrial licensing or reserved for the small-scale sector. The tight control of the government on the industry…

Singapore and Hong Kong have been the most open economies in the world during the past fifty years. How do we explain this success of the two economies during a period when all other developing countries found themselves resorting to protection? Economic Times, June 20 2001 Singapore and Hong Kong have been the most open economies in the world during the past fifty years. While the former went through a brief import-substitution period during 1960s, the latter has been entirely free of trade barriers throughout this period. How do we explain this success of the two economies during a period when all other developing countries found themselves resorting to protection? The commonest answer to this question is that the domestic market in Singapore and Hong Kong was too small. Reliance on exports was a natural response to this small size of the internal market. Though plausible sounding, the late economist Bela Balassa correctly argued that it fails to stand closer scrutiny. Balassa reminded that with a population of 2 million in 1950 and relatively high per capita income derived from trading…

Can the Indian Diaspora play the same role in the economic transformation of India that the Chinese Diaspora has played in the People’s Republic of China (PRC)? Economic Times, May 23 2001 Can the Indian Diaspora play the same role in the economic transformation of India that the Chinese Diaspora has played in the People’s Republic of China (PRC)? At first blush, the answer would seem to be “no”. By early 1980s, when PRC began to open its economy to foreign investors, the Chinese Diaspora in Hong Kong and Taipei, China was already among the most successful exporters of labour-intensive manufactures in the world. The Indian Diaspora lacks this expertise. Nevertheless, it is easy to underestimate the potential of the Indian Diaspora. Thus, focusing exclusively on the Indians living in the United States, consider a few salient facts. Based on median income, Indian-born residents in the United States comprise the highest-paid group in the country. They are represented in virtually all professions including agriculture, biotechnology, business, economics, finance, information technology, journalism, management, medicine and various sciences. As a visit to…

The contribution of infant industry protection to Korea’s growth is at best controversial and at worst negative. But even if one accepts it to be positive, there are two reasons why it is safer today to err on the side of non-intervention. Economic Times, April 25 2001 IN THE 1950s, India and South Korea had approximately similar levels of per capita incomes. In the following two decades, Korea grew at rates far exceeding those of India, achieving a much higher per capita income level than the latter. During the same decades, Singapore, Taiwan and Hong Kong grew at rates even higher than that of Korea. Precise source of the success of these countries, sometimes called the Asian tigers, has been a subject of considerable controversy among scholars. At least three alternative views have emerged. Jagdish Bhagwati, Anne Krueger, Ian Little, T N Srinivasan and late Bela Balassa have taken the view that outward orientation and pro-market policies were the primary forces behind the stellar performance of these economies. These authors generally downplay the role of interventionist policies and argue that…

Last month, when I wrote that public-sector monopoly in India had been abolished in virtually all sectors except railways, I made one major error of omission: higher education. Economic Times, March 28, 2001 Last month, when I wrote that public-sector monopoly in India had been abolished in virtually all sectors except railways, I made one major error of omission: higher education. Under the University Grants Commission (UGC) Act, 1956, an institution can award degrees only if it is established under an act of Parliament or a State Legislature, or specially empowered to award degrees through legislation, or deemed to be a university by the Commission. Accordingly, the institutions of higher learning fall into four categories: (i) universities established by an Act of Parliament or State Legislature; (ii) degree-awarding institutions of national importance, such as the Indian Institutes of Technology (IIT), which are established under Acts of Parliament; (iii) institutions “deemed” to be universities, which are given university status under a provision in the UGC Act; and (iv) diploma-awarding institutions such as the Indian Institutes of Management that are neither established by…