Sunday, June 22, 2025

India/Africa Development???

Claim that India has fared much better than Africa???.  India has the fifth highest poverty rate in the world. 

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INDIA, which has lagged well behind Africa in economic reform, has nevertheless fared much better. Most Indian reforms occurred well before the spurt in GDP growth from 6% to 9%. British academic James Manor says that thoughtful people in Ghana and South Africa have asked him “How do the Indians do it? They have liberalised less than we have, but they have higher growth rates — and plenty of social stability.”

Let me attempt an answer. Economic success depends not just on economic reform but on institutional strength and historical skills — what economists call ‘initial conditions’. India and China are historical superpowers that accounted for 70% of world industrial production before the Industrial Revolution.


They declined during 300 years of western colonialism, but are now clawing themselves back to their initial high position. Indian bankers and traders in the 17th century were bigger than the East India Company.

obert Clive thought that Murshidabad, which he entered after the Battle of Plassey, was richer than London in his time. Shajahan had the money and skills to build the Taj Mahal: his European contemporaries did not.

Seen in this light, the decline of India and China in the last 300 years was a temporary blip. Africa and Latin America will find it difficult to replicate the growth spurt in China and India because of very different initial conditions.

Lumping nations of Africa and Asia together into something called ‘developing countries’ is a political gimmick. In Africa, most agriculture was still slash-and-burn cultivation as recently as the 1970s. But most of Asia moved from slash-and-burn to permanent cultivation 3,000 years ago.


This provided leisure and opportunity for the ruling classes to develop considerable engineering and other skills. The exploited peasantry of 3,000 years also developed a cornucopia of skills and innovative techniques for survival. Africans emerging from slash-and-burn cultivators lack such skills: their economy had no markets or mercantile skills. Indians are not inherently superior in any way.

This is proved dramatically in India's tribal areas, which have just evolved from shifting to permanent cultivation. As in Africa, Indian tribal belts lack skills and mercantile attitudes. Plainsmen can easily dupe tribals into giving up their land.

The whole of Africa is not historically disadvantaged. Ancient agricultural countries like Egypt, Tunisia and Algeria are fully on par with India in growth potential, and in fact, are much richer than India today. But sub-Saharan Africa is disadvantaged compared to both India and Egypt. Progress in Indian tribal belts has been as difficult as in Africa. It is said that if a village committee in a tribal area has 11 tribals and one non-tribal, the non-tribal will dominate all decisionmaking: he alone will have the skills and resources.

It will take a couple of generations of good education and skill-building to close the gap. Many African countries are ahead of India in literacy. But they lag behind in institutional strength: many have been ruled and ruined by thugs.

The Nehruvian era was one of chronic economic underperformance. But it was also an era when institutional strength developed — democracy, independent judiciary, limits on arbitrary state action, high quality varsities and technical institutes.

THE private sector remained vibrant even when the state dominated the commanding heights of the economy. Businessmen who survived the licence-permit raj developed such skills of functioning in difficult conditions that they were able to skyrocket once they were liberated from the shackles of industrial and import licensing.

Most African and Latin American countries lack not only institutional strength but India’s scale economies, too. India has a thin upper crust of world class innovators and managers, overlying a huge poorly educated and skilled mass. But an upper crust of 1% in India means 12 million people, enough to spark an economic miracle. No African or Latin American country can produce 500,000 engineers a year, as India does. Of these 500,000, half are substandard, but a quarter are usable and another quar ..


Economic reform in Africa was driven mainly by donors of aid, and resisted stiffly by local elites. So, much political effort went into sabotaging rather than embracing reform. In India, however, Narasimha Rao was serious about reform. This ownership of reform meant the pace was gradual and erratic, but reform was nevertheless home grown. The early success of industrial and trade reform gave reform a good name, and made it irreversible.

Narasimha Rao implemented radical reforms although he lacked a parliamentary majority, and faced opposition parties swearing to reverse the reforms when they came to power. This showed immense institutional strength on India's part.

Donor-driven reform in Africa was wholesale, creating a host of losers outnumbering winners. This gave reform a bad name. By contrast, Indian politicians sought liberalisation that minimised losers.

But Rao followed political democratic priorities, not those of foreign economists. He focused on areas where he could get quick gains while creating few losers — abolishing industrial licensing and monopolies clearance, reducing import duties gradually, moving to a market determined exchange rate that eventually killed the black market in foreign exchange.

The World Bank later concluded that its own policies in Africa and Latin America had been wrong in seeking wholesale reforms across the board: instead it should have focused on removing just the binding constraints. This was close to the policy Rao followed, not through academic research but because it flowed from the institutional imperatives of democracy.

In sum, India's 8-9% growth is not just the result of recent reforms. Its strong initial conditions range from skills developed over 3,000 years to institutional strength developed over the last 60 years. Countries without these initial conditions will find it difficult to replicate India’s performance.



Comments:  I now and then come across Indians who think that Africa is worse off than South Asia. Truth is that some African countries have a lot of money and if you look at the average of the whole continent then since 1947, they had a higher GDP per capita than us. It's only in 2017-18 that now we can say we have a higher GDP per capita. For much of the last century, South Asia has been the poorest region in the world.


Comments:  though people of Algeria and Tunisia are rich because of both the nations are oil rich but I seriously feel doubt that same is true for Egypt.Egypt does not have much oil resource and import oil like India. Though ancient Egypt was far advance in all fields, at present, it is lagging in technical and scientific field and poverty is much visible in this country.

"Shajahan had the money and skills to build the Taj Mahal"?? writer is one sided and lacks the facts like the LABOR WAS FREE OF COST for the emperors in India at that time. India has a history of slavery and if you see thru the history and conclude any thing, don't forget all the facts. On the other side, the europeans who didn't build the taj mahal had no free labor as they always respected the human life in full. (Not quite true.)

The author forgot to mention, we also have an institution called corruption fine-tuned by the politicians and the government officials. If not for corruption there would not have been poverty in India

India too received quite of lot of grants, soft loans and aid in kind from developed countries in the 60s to 80s. Remember PL 170? It receives some aid even now. The only difference we outgrew our dependence on it whereas most of the African countries are pathetically dependent on it even now.

iMuch of its n strenghth lies in its SMEs.  

India strength also lies in its jugaad and culture. it is not the entire india is growing or glowing. Only few parts or some states. That due because of individual brilliance (Tata, birla, tvs, infosys etc.,) even in india people suffer for basic amenities
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