SHADES OF GROWTH
A historical narrative explains why countries like India have a long way to go
T his is an interesting book that leaves you dissatisfied. Other than a prologue and an epilogue, there are two parts––one (two chapters) on developing countries falling behind and a second (five chapters) on developing countries catching up. The falling-behind section is historical and is dated to 1820, though using the economic historian Angus Maddison’s work, data is also given for 1000 ACE. To state a figure often bandied around, in 1000 ACE, India accounted for 28.1 per cent of the world’s population and 27.8 per cent of the world’s GDP. Note both sets of figures. The share of world GDP is invariably mentioned, share of population rarely so. In 1000 ACE, India’s per capita GDP was $450, lower than the world average. To return to Deepak Nayyar, from 1820, North America and West Europe industrialised and the developing world (primarily Asia) de-industrialised. Why was there this divergence? This is ground trodden on earlier and Nayyar mentions culture, geography and institutions more as reviews of literature rather than mono-causal explanations. This is a less compelling account than something like Niall Ferguson’s ( Civilization: The West and the Rest, 2011).
One thus moves on to the convergence or catching-up part, expressed as shares of world GDP, per capita GDP, shares of world trade (exports/imports), shares of global flows of capital and labour. This kind of listing illustrates one of the problems with this book, again understandable because of the volume’s limited scope. These numbers are manifestations. One would like to know what drove them. The only chapter which attempts to do this is the one on industrialisation. But this too doesn’t probe deep enough into what caused industrialisation in some developing countries. This leads to another reason for dissatisfaction. What is a “developing” country? It is an expression invariably used, but rarely defined. The World Bank no longer uses it and uses per capita income for classification. In addition to per capita income, some other criteria (diversification of economy) can be used to define LDCs. OECD countries can be presumed to be developed. That leaves developing countries as an amorphous and undefined category. The point is this: Developing countries are extremely heterogeneous now, especially since the 1950s. Does it help to examine progress with the developed/developing prism?
This is recognised in Chapter 7, where the author specifically focuses on 14 developing countries that have been relatively more successful than others––Argentina, Brazil, Chile, Mexico, China, India, Indonesia, Malaysia, South Korea, Taiwan, Thailand, Turkey, Egypt and South Africa. This is one of the more interesting chapters, since it teases out some ingredients for success––initial conditions, enabling institutions and supportive governments. There is some research not only on institutions, education and land markets, but also on use of inputs (capital, labour) vis-à-vis productivity but this too is a tentative kind of teasing out. The final chapter is on exclusion, defined as global inequality and poverty. This raises several statistical problems and questions about the way data have been used. Some data (not just inequality/poverty) end in 2010. Post-2010 and post-global financial crisis, would Deepak Nayyar have looked at the listing of countries differently? How would he have looked at growth numbers in Sub-Saharan Africa? Would he still have been that optimistic about India, and BRICS (other than China), as compared to several non- BRICS countries that have performed well? However, to return to the core point, this is an interesting book, largely historical. Even the catching-up part is largely historical. Since explanations are not probed, or at least not probed sufficiently, there is reason for dissatisfaction.
“Yet, the beginnings of a shift in the balance of power are discernible. And the past could be a pointer to the future.” Those are the closing sentences. Who can contest that statement? It is innocuous, with no great insight––a characteristic of the book in general.
CATCH UP: DEVELOPING COUNTRIES IN THE WORLD ECONOMY by Deepak Nayyar Oxford University Press Price: RS 695 Pages: 221