Monday, November 02, 2009

The Human Cost of Delayed Economic Reform in India?

Above is a photo of a family I took in India in 2003. Below is another photo from the same trip at a leper colony near Hdyderabad.

Some sobering statistics from Swaminathan S. Anklesaria Aiyar:
For three decades after its independence in 1947, India strove for self-sufficiency instead of the gains of international trade, and gave the state an ever-increasing role in controlling the means of production. These policies yielded economic growth of 3.5 percent per year, which was half that of export-oriented Asian countries, and yielded slow progress in social indicators, too. Growth per capita in India was even slower, at 1.49 percent per year. It accelerated after reforms started tentatively in 1981, and shot up to 6.78 percent per year after reforms deepened in the current decade...

[W]ith earlier reform, 14.5 million more children would have survived, 261 million more Indians would have become literate, and 109 million more people would have risen above the poverty line. The delay in economic reform represents an enormous social tragedy. It drives home the point that India's socialist era, which claimed it would deliver growth with social justice, delivered neither.

You can download Aiyar's entire paper on this here. [PDF]

The magnitude of these numbers is a poignant reminder of the impact winning the battle of ideas has among economists. Choose poorly and millions of lives could be needlessly lost and even more may find themselves living in avoidable poverty. To my fellow economists, this should be a call to sharpen our pencils and our wits, and to take our roles as educators very seriously. (It might also be a call to step beyond the bounds of the academy and the US in our efforts to educate.)

(HT Don Boudreaux)

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