Working Paper: NBER ID: w10376
Authors: Dani Rodrik; Arvind Subramanian
Abstract: Most conventional accounts of India's recent economic performance associate the pick-up in economic growth with the liberalization of 1991. This paper demonstrates that the transition to high growth occured around 1980, a full decade before economic liberalization. We investigate a number of hypotheses about the causes of this growth favorable external environment, fiscal stimulus, trade liberalization, internal liberalization, the green revolution, public investment and find them wanting. We argue that growth was triggered by an attitudinal shift on the part of the national government towards a pro-business (as opposed to pro-liberalization) approach. We provide some evidence that is consistent with this argument. We also find that registered manufacturing built up in previous decades played an important role in influencing the pattern of growth across the Indian states.
Keywords: No keywords provided
JEL Codes: O4; O5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Shift in government attitude towards a pro-business orientation around 1980 (E65) | India's economic growth (O53) |
| Attitudinal shift (D91) | unleashing of private sector growth, particularly in registered manufacturing (O25) |
| Attitudinal shift (D91) | growth in productivity observed post-1980 (O49) |
| Growth in productivity observed post-1980 (O49) | genuine improvement in productivity across sectors (O49) |
| State-level political alliances (H77) | growth rates (O40) |
| States aligned with national government's pro-business stance (P16) | more pronounced growth (O49) |