I have argued on this blog here and other posts that India and China represent a natural experiment that will help to answer the question about the place of democracy and authoritarianism in longer term development. In short, my claim has been that in spite of a slower rate of growth and a smaller economy, India is bound to catch up soon and will over time become a large economy owing to its more open political system. In sum, the argument is that democracy is not necessarily a hindrance to India's long term growth and that China will of necessity have to go through bumps that may derail it substantially.
In spite of my being bullish about India, reading stories such as this in the NYT makes me really frustrated at India's political leadership. Granted that the Congress party has to navigate in order to keep its coalition in place, I cannot avoid the argument that India's growth is slowing and that it does not show any signs of catching up with China at all. Indeed, in spite of China's own domestic political and economic difficulties, India's leaders still have an inferior record of economic management. In many respects, the benefits that India gained from the bold economic reforms initiated under Manmohan Singh two decades ago are exhausted now and he lacks either the courage or the ability to make another long-overdue round of reforms to open up the economy.
Given the state of affairs, it is just possible that India's catch up period will be unduly extended because of the delays in cutting back red tape and substantial regulatory and tax reforms. On the political side, India's bungling, in spite of the fact that it has an indubitably bright man as prime minister will embolden those who consider democracy as a liability for fast growth. Please get up and sprint!
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