China haven't[[New Economic Powers: China & India Flashcards
Similarity of India and China
Both were leading economies in the early modern times but failed to grow rapidly until 1980s
What attributed to India’s slow economic growth?
Large but low productive agricultural sector
High regulation of economy in post-war era until liberalisation reforms in the 1980s
The impact of colonialism
Why has India grown
Greater growth in services
Why has China rapidly grown since 1978?
Economic reforms
Increased role of market in economy
Decreased role of state
Greater growth in industry
India in a nutshell
- One of the key manufacturing regions during the early modern period
- Industrialisation process was long and protected
Outcome: large proportion of population is still in agriculture
Why was India’s industrialisation process long and protracted?
Key factor: sectoral analysis (why India fell further behind economies like UK after 1870)
Data: Broadberry and Gupta (2010)
1870s: Indian agricultural productivity @ 10% of UK level
1990s: fallen to 1%
Late 1990s: 65% of workforce was in the agricultural sector
2000s: industry’s share returned to 15% of UK level
1870s-1990s: services had an upward trend, growing from 15% to 30% of UK level
Why was there reassessment on the effects of colonialism in India?
1947-1977: India failed to catch-up with more developed economies (influenced by adopting policies that were market-hostile, especially heavy economy regulation and central planning)
1980s: liberalisation shows rapid economic performance
What were the observations of British Raj by Roy (2012)?
British Raj:
-policies consistent with Washington consensus
-market friendly, investing in railway networks to create a large integrated market
-civil srvices were relatively free of corruption
But India’s economic performance during colonial times were disappointing and catch-up theory suggests that growth should’ve been rapid
Observing British Raj by Roy (2012):
-they were weaker than they showed (only small number of officials were on the ground)
-legal system reform had issues due to difficulties combining western laws with local legal traditions (institutions were not ideal to foster economic development)
What were the issues with the policies of the colonial state according to Gupta (2018)?
Colonial state’s policy issue according to Gupta (2018):
-lack of investment in public goods
-lack of investment in agriculture (particularly irrigation) leading to fall in yield per acre, explaining slow productivity in Indian agriculture compared to UK
-there was also slow expansion of primary education compared to east Asian countries (focused on expanding higher education which gave an advantage for services but harmed other sectors)
What role did India play in the British Empire from 1850-1920?
- Specialised in international trade (particularly raw materials)
- Important place for capital, which was then directed to railways, tea, jute and banking
- Had colonial global firms such as Mackinnon, Mackenzie or Jardine Matheson
- 1850-1900: had the 5th larget railway network globally but infrastructure was poor
- Became a source of mobile labour, working in other parts of the British Empire (especially plantations)
India in the interwar period
- Expanded manufacturing and urban services, caused by insulation of domestic and regional markets
Indian-owned firms performed better supplying domestic and regional markets than foreign-owned firms supplying world markets - Indian banks experienced large drop in prices during the Great Depression
- Countryside still stagnated since exports were affected by commodity prices falling down due to the Great Depression
Countryside had more pressure because of population growth accelerating
