I read this with my Indian wife and there were two huge gaps in this story.
1) Environment - I just came from Northeast India and the Air Quality Index was 290. Like we could stare directly at the sun in broad daylight and according to accuweather, "Any exposure to the air, even for a few minutes, can lead to serious health effects on everybody. Avoid outdoor activities." This is an area where the BJP government has done almost nothing.
I can only talk about Assam where we were, but the infrastructure being built in the city was all highways and flyovers. There were no subways or public transport being built, it was the same sort of road focused construction that has caused such sprawl and gridlock in the US.
If India wants to shift to manufacturing, it has to do so in a way that doesn't just pollute and poison everyone. While the BJP is popular, they aren't the CCP. Popular opinion matters. India needs to grow, but it has to grow clean.
2) The effect of Hindutva - An exploration of the ideology of Hindutva and the effects this might have on India's development is sorely lacking. This is Modi's raison d'etre. This is very much a "blood and soil" ideology asserting that India belongs to the 75% - 80% of the population who are Hindu. There has been violence and anti intellectualism associated with this. I don't know what the development literature says, but I seem to recall that the devotion of the American South to maintaining segregation and a racial hierarchy was a significant drag on its ability to industrialize. (Seriously, go read up on "cow protection" and compare it to the history of lynching in the American South.)
You talk persuasively about how America is stronger because of our immigrant history and how our ability to attract/integrate immigrants is a key driver of our success. Now, it is odd that the strong nativist sentiment of the BJP wasn't brought up as a possible obstacle to future growth. There are political prisoners and the crushing of dissent. Similarly, by omitting any mention of the dangers/excesses of the Hindutva, this post very much comes off as a "But Mussolini looks like he is making the trains run on time... so good show."
Your last line has an optimism that I do not share. India has always been, and is condemned to always be, a country of great potential. India as a whole largely fails at the basics- basic healthcare, basic education, basic infrastructure, basic manufacturing, basic governance. It focusses all it's efforts on delivering for the shiny top, whether it's space programs or IITs. It's the product of a caste mentality that elites don't see the need to lift the many, not the few. India is a Singapore floating on an Africa. Perhaps in a few years it will improve into a Germany floating on top of a Africa, but that's about it. There are also stark provincial differences. The deep South of Tamil Nadu and Kerala, have managed to create inclusive identities that subsume caste, and deliver broad human development. Punjab has remittance income. And Gujarat and Maharashtra have an advantage in manufacturing and entrepreneurial culture. But the demographic, cultural, political core of India is the Gangetic plains, which is stagnant and reactionary and post-feudal. This is a part of the world where standards of living rival that of the worst parts of subSaharan Africa. That said, there is time. India's sweet spot of demographic S curve of low dependency ratio is going to be smoother and longer, less sharp and short than China, which was artificially shortened by one-child policy. India will enjoy low dependency ratio till 2050s, and has been enjoying the boosted growth for a while now. Indian infrastructure is improving. There is increasing understanding basic governance needs to improve, though the system of a few thousand IAS officers governing a country of a billion hasn't changed. There is increasing political impetus to improving health and education. But until there is a widespread cultural renaissance that breaks feudal caste identities and molds them into a collective identity, particularly in the Hindi heartland, there won't be a collective uplift. What is needed is a sharp focus on making and exporting clothes, toys, furniture and basic circuits. Massive literacy/numeracy campaigns. Rural roads, health centers and schools. Everyone in India needs to finish 1st grade, before thinking about increasing the numbers of the few who graduate college.
Great post. There are a lot of things people can easily do if they want to but it seems like even political representatives are not that serious about the country's development. India has a sufficient number of intellectuals, good leaders, and even people with better understanding and solutions to its problems. The country is lost in religious politics, biased news/people, and potentially unskilled youths. People and leaders are not ready to face data-based realities and overcome their false beliefs. Everyone seems to be lost in the pride of their cultural past instead of doing something about the present. There are so many things we can easily do to educate and upskill youths and to make them economically productive. India has a deeper penetration of smartphones and the internet and we all know a lot can be achieved using this advantage. Political will as you mentioned is not missing but as long as one party is enjoying the benefits of power they don't do much, just enough. India currently has all the political and other advantages to solve its problems but it seems that there are too many incompetent people running the country.
Hi, there. A very interesting piece and your point that India's path is the big issue seems absolutely clear. I was however really surprised that your analysis made no mention of climate change, where as elsewhere you have made it clear that you see this as a huge issue. Given the size of India, surely it is a crucial issue for the world as to whether India's development path heads to zero carbon or not.
Hi Noah! A detailed and well explained post. I agree that India needs to go much deeper into electronics manufacturing. What other products do you think that India should manufacture more of? One category that comes to my mind is white goods/durable goods like air conditioners, washing machines, and refrigerators. Rising incomes in rural and small town India combined with increased access to water and electricity will create the necessary conditions for rapid adoption of these products as the market penetration of these products is still quite low.
My small company licenses software all around the world to software companies, my customers from India requests the most in tax-related paperwork compared to rest of the world, which needs annual updating. Luckily I only have a couple of customers - I can only imagine the burden if I have hundreds...
This is an excellent post, Noah. Given that I slant left of you - partly because of my background in CPE/IPE of Development and exposure to Robert Wade at a formative age - I'm always pleasantly surprised by your development econ posts. Although you don't mention the Dev State literature here much, aside from Chang, the focus on agglomeration in exactly key and a big part of what Wade means in Governing the Market when he calls out many economists for misunderstanding that trade, per se, isn't the big deal - it's the "internal articulation" of the economy - the formation and diversification of supply chains internal to the economy. That's a reason why ISI was an early success, despite collapsing under the political logic of rent-seeking in most cases, and absolutely a reason why the Keiretsu and Chaebol systems (and similar setups in China, Taiwan, and other Tigers) were so successful.
If you don't mind a suggestion on a couple possible other concepts to explore - maybe some Albert Hirschmann and/or Peter Evans's Embedded Autonomy would be great supplements to this series. (Or, if you already have articles on them in the archive, lmk.)
Narsimh Rao, Vajpayee, MMS and Modi needed to dismantle the decades of Nehruvian socialist failure. Modi is at least getting on with it faster. I always chuckle when non-Indians read about India and the comments are full of "durr Modi bad, whatabout my poor designated victim group".
Thank you for this series. It is the main reason I subscribed. I'm a little sad that this is the last one. I'm sure there will still be occasional posts about developing countries, and I look forward to reading them.
Great piece, Noah. I think it's also worth mentioning that India's *digital* story is as important to understanding its economic trajectory as the 'industrialisation' question you've highlighted above. More here:
I agree with much of your analysis of India, but ...
A necessary condition for a low-income country to achieve the World Bank's "upper middle income" status is a reasonable quality primary education enabling the majority of the population to leave the farm and become productive urban workers.
Your post refers to the post-2000 increase in primary school completion in India. However, most South Asian countries severed certification of graduation from learning. There are two convincing sources of evidence that this is the case in India:
* For nearly two decades the NGO Pratham has organized very large (500,000 sample size) in-home surveys across India of children ages 5 - 16. The key questions of the protocol (ASER) are ability at Grade 5 to read a short Grade 2 story and do simple division. The all-India results in the 2018 survey (the most recent pre-COVID) were as follows: 50% could read the story; 28% could do the division.
* The World Bank has initiated a "learning poverty rate" statistic to measure the ability to read of children ages 10 - 14. In 2022, 56% of Indian rural children are estimated unable to read a simple early grade story. This result is consistent with the ASER outcome. Incidentally, the share unable to read in Bangladesh is 58%, in Pakistan 75%. On the other hand, only 15% in Sri Lanka are unable to read at a basic early grade level.
Whatever the sins and errors of Mao's reign in China, the Chinese were serious about universal basic education, a necessary condition for post-1976 development. The present "learning poverty" rate in China is 18%, same in Vietnam.
I think you are dramatically underestimating how much India's terrible education system is a long-term drag (and limits upside). Years of schooling is not a particularly useful metric here, because half of Indian students learn approximately nothing in school.
To be clear, China's literacy rate was also extremely low (something like ~25% of the population at the end of the civil war) but rose extremely quickly on the back of effective student education. India's next generation will still be barely literate and numerate. Now, half a billion literate people is still more than almost any countries, so there's still tons of room for growth here, but I don't think we can expect a China-level of consistent growth for that reason alone.
Great post. I wonder, however, if Indian companies tried their hand at exporting goods but repeatedly were beaten by their Chinese counterparts. Heck, many consumers have gotten used to imports from China (and other countries) hence Indian companies don't see much of a point. There's also a dearth of knowledge because most Indians who acquire valuable skills generally migrate to a different country.
I do not understand why so many people in comment act like Modi is some minority hater despite the fact that school re-enrollment, health condition, funding of minority development fund has been highest in Modi era.
They just have little bit problem with Muslim being too religious but not the people.
BJP itself uses same DNA that Hindu and Muslim are same people of the land.
Great post! But I'm a bit confused about land reform. In the story of Haiti that you discussed, one of my take-aways was that fragmentation of property rights and intensive farming led to erosion and under-investment, which ultimately contributed to economic stagnation. How does this square with the land reform prescription that Studwell advocates, and that you seem to recommend for India?
I read this with my Indian wife and there were two huge gaps in this story.
1) Environment - I just came from Northeast India and the Air Quality Index was 290. Like we could stare directly at the sun in broad daylight and according to accuweather, "Any exposure to the air, even for a few minutes, can lead to serious health effects on everybody. Avoid outdoor activities." This is an area where the BJP government has done almost nothing.
I can only talk about Assam where we were, but the infrastructure being built in the city was all highways and flyovers. There were no subways or public transport being built, it was the same sort of road focused construction that has caused such sprawl and gridlock in the US.
If India wants to shift to manufacturing, it has to do so in a way that doesn't just pollute and poison everyone. While the BJP is popular, they aren't the CCP. Popular opinion matters. India needs to grow, but it has to grow clean.
2) The effect of Hindutva - An exploration of the ideology of Hindutva and the effects this might have on India's development is sorely lacking. This is Modi's raison d'etre. This is very much a "blood and soil" ideology asserting that India belongs to the 75% - 80% of the population who are Hindu. There has been violence and anti intellectualism associated with this. I don't know what the development literature says, but I seem to recall that the devotion of the American South to maintaining segregation and a racial hierarchy was a significant drag on its ability to industrialize. (Seriously, go read up on "cow protection" and compare it to the history of lynching in the American South.)
You talk persuasively about how America is stronger because of our immigrant history and how our ability to attract/integrate immigrants is a key driver of our success. Now, it is odd that the strong nativist sentiment of the BJP wasn't brought up as a possible obstacle to future growth. There are political prisoners and the crushing of dissent. Similarly, by omitting any mention of the dangers/excesses of the Hindutva, this post very much comes off as a "But Mussolini looks like he is making the trains run on time... so good show."
Your last line has an optimism that I do not share. India has always been, and is condemned to always be, a country of great potential. India as a whole largely fails at the basics- basic healthcare, basic education, basic infrastructure, basic manufacturing, basic governance. It focusses all it's efforts on delivering for the shiny top, whether it's space programs or IITs. It's the product of a caste mentality that elites don't see the need to lift the many, not the few. India is a Singapore floating on an Africa. Perhaps in a few years it will improve into a Germany floating on top of a Africa, but that's about it. There are also stark provincial differences. The deep South of Tamil Nadu and Kerala, have managed to create inclusive identities that subsume caste, and deliver broad human development. Punjab has remittance income. And Gujarat and Maharashtra have an advantage in manufacturing and entrepreneurial culture. But the demographic, cultural, political core of India is the Gangetic plains, which is stagnant and reactionary and post-feudal. This is a part of the world where standards of living rival that of the worst parts of subSaharan Africa. That said, there is time. India's sweet spot of demographic S curve of low dependency ratio is going to be smoother and longer, less sharp and short than China, which was artificially shortened by one-child policy. India will enjoy low dependency ratio till 2050s, and has been enjoying the boosted growth for a while now. Indian infrastructure is improving. There is increasing understanding basic governance needs to improve, though the system of a few thousand IAS officers governing a country of a billion hasn't changed. There is increasing political impetus to improving health and education. But until there is a widespread cultural renaissance that breaks feudal caste identities and molds them into a collective identity, particularly in the Hindi heartland, there won't be a collective uplift. What is needed is a sharp focus on making and exporting clothes, toys, furniture and basic circuits. Massive literacy/numeracy campaigns. Rural roads, health centers and schools. Everyone in India needs to finish 1st grade, before thinking about increasing the numbers of the few who graduate college.
Great post. There are a lot of things people can easily do if they want to but it seems like even political representatives are not that serious about the country's development. India has a sufficient number of intellectuals, good leaders, and even people with better understanding and solutions to its problems. The country is lost in religious politics, biased news/people, and potentially unskilled youths. People and leaders are not ready to face data-based realities and overcome their false beliefs. Everyone seems to be lost in the pride of their cultural past instead of doing something about the present. There are so many things we can easily do to educate and upskill youths and to make them economically productive. India has a deeper penetration of smartphones and the internet and we all know a lot can be achieved using this advantage. Political will as you mentioned is not missing but as long as one party is enjoying the benefits of power they don't do much, just enough. India currently has all the political and other advantages to solve its problems but it seems that there are too many incompetent people running the country.
Hi, there. A very interesting piece and your point that India's path is the big issue seems absolutely clear. I was however really surprised that your analysis made no mention of climate change, where as elsewhere you have made it clear that you see this as a huge issue. Given the size of India, surely it is a crucial issue for the world as to whether India's development path heads to zero carbon or not.
Hi Noah! A detailed and well explained post. I agree that India needs to go much deeper into electronics manufacturing. What other products do you think that India should manufacture more of? One category that comes to my mind is white goods/durable goods like air conditioners, washing machines, and refrigerators. Rising incomes in rural and small town India combined with increased access to water and electricity will create the necessary conditions for rapid adoption of these products as the market penetration of these products is still quite low.
My small company licenses software all around the world to software companies, my customers from India requests the most in tax-related paperwork compared to rest of the world, which needs annual updating. Luckily I only have a couple of customers - I can only imagine the burden if I have hundreds...
This is an excellent post, Noah. Given that I slant left of you - partly because of my background in CPE/IPE of Development and exposure to Robert Wade at a formative age - I'm always pleasantly surprised by your development econ posts. Although you don't mention the Dev State literature here much, aside from Chang, the focus on agglomeration in exactly key and a big part of what Wade means in Governing the Market when he calls out many economists for misunderstanding that trade, per se, isn't the big deal - it's the "internal articulation" of the economy - the formation and diversification of supply chains internal to the economy. That's a reason why ISI was an early success, despite collapsing under the political logic of rent-seeking in most cases, and absolutely a reason why the Keiretsu and Chaebol systems (and similar setups in China, Taiwan, and other Tigers) were so successful.
If you don't mind a suggestion on a couple possible other concepts to explore - maybe some Albert Hirschmann and/or Peter Evans's Embedded Autonomy would be great supplements to this series. (Or, if you already have articles on them in the archive, lmk.)
Narsimh Rao, Vajpayee, MMS and Modi needed to dismantle the decades of Nehruvian socialist failure. Modi is at least getting on with it faster. I always chuckle when non-Indians read about India and the comments are full of "durr Modi bad, whatabout my poor designated victim group".
Thank you for this series. It is the main reason I subscribed. I'm a little sad that this is the last one. I'm sure there will still be occasional posts about developing countries, and I look forward to reading them.
Great piece, Noah. I think it's also worth mentioning that India's *digital* story is as important to understanding its economic trajectory as the 'industrialisation' question you've highlighted above. More here:
https://tigerfeathers.substack.com/p/the-internet-country
I agree with much of your analysis of India, but ...
A necessary condition for a low-income country to achieve the World Bank's "upper middle income" status is a reasonable quality primary education enabling the majority of the population to leave the farm and become productive urban workers.
Your post refers to the post-2000 increase in primary school completion in India. However, most South Asian countries severed certification of graduation from learning. There are two convincing sources of evidence that this is the case in India:
* For nearly two decades the NGO Pratham has organized very large (500,000 sample size) in-home surveys across India of children ages 5 - 16. The key questions of the protocol (ASER) are ability at Grade 5 to read a short Grade 2 story and do simple division. The all-India results in the 2018 survey (the most recent pre-COVID) were as follows: 50% could read the story; 28% could do the division.
* The World Bank has initiated a "learning poverty rate" statistic to measure the ability to read of children ages 10 - 14. In 2022, 56% of Indian rural children are estimated unable to read a simple early grade story. This result is consistent with the ASER outcome. Incidentally, the share unable to read in Bangladesh is 58%, in Pakistan 75%. On the other hand, only 15% in Sri Lanka are unable to read at a basic early grade level.
Whatever the sins and errors of Mao's reign in China, the Chinese were serious about universal basic education, a necessary condition for post-1976 development. The present "learning poverty" rate in China is 18%, same in Vietnam.
I think you are dramatically underestimating how much India's terrible education system is a long-term drag (and limits upside). Years of schooling is not a particularly useful metric here, because half of Indian students learn approximately nothing in school.
Basic literacy and numeracy remain extremely low, despite very high school enrolment, and this is not a cohort effect (https://www.business-standard.com/article/economy-policy/fewer-children-out-of-school-but-basic-skills-stay-out-of-reach-study-119011900784_1.html).
To be clear, China's literacy rate was also extremely low (something like ~25% of the population at the end of the civil war) but rose extremely quickly on the back of effective student education. India's next generation will still be barely literate and numerate. Now, half a billion literate people is still more than almost any countries, so there's still tons of room for growth here, but I don't think we can expect a China-level of consistent growth for that reason alone.
Great post. I wonder, however, if Indian companies tried their hand at exporting goods but repeatedly were beaten by their Chinese counterparts. Heck, many consumers have gotten used to imports from China (and other countries) hence Indian companies don't see much of a point. There's also a dearth of knowledge because most Indians who acquire valuable skills generally migrate to a different country.
I do not understand why so many people in comment act like Modi is some minority hater despite the fact that school re-enrollment, health condition, funding of minority development fund has been highest in Modi era.
They just have little bit problem with Muslim being too religious but not the people.
BJP itself uses same DNA that Hindu and Muslim are same people of the land.
Enjoyed this post
Great post! But I'm a bit confused about land reform. In the story of Haiti that you discussed, one of my take-aways was that fragmentation of property rights and intensive farming led to erosion and under-investment, which ultimately contributed to economic stagnation. How does this square with the land reform prescription that Studwell advocates, and that you seem to recommend for India?