Economic Development and India's Journey to Prosperity
The debate on how countries can transition to wealth is significant globally, with India focusing on becoming a developed nation by 2047, as per the slogan Viksit Bharat. The World Bank categorizes nations into different income brackets, revealing a disparity where only 70% of the world is not considered rich.
Income Classifications and Historical Context
- High-Income: 58 countries, primarily in Europe, North America, and East Asia.
- Low-Income: 26 countries, mostly in Africa and Asia, like Congo and Afghanistan, often termed as failed states.
- Lower Middle-Income: Includes India, Bangladesh, Myanmar, etc.
- Upper Middle-Income: Countries like China striving to avoid the middle-income trap.
Historically, only a few nations have moved up income brackets over decades, with exceptions like Taiwan, South Korea, Japan, and Singapore achieving high-income status post-World War II.
Paths to Economic Growth
- The Washington Consensus promotes fiscal discipline, trade liberalization, and competition but lacks proven success.
- Acemoglu and Robinson highlight the role of inclusive institutions in economic prosperity.
- Economic nationalism, involving protectionism, technology imports, and fostering competition, has driven the rapid growth of countries like Japan and China.
India's Challenges and Lessons
India has adopted parts of economic policies but often without full commitment. Some key issues include:
- Lack of competitive local markets due to industrial protection.
- Failure to execute export-processing zones effectively.
- Need for accountability, feedback, and course correction, as seen in the success of South Korea's Pohang Iron and Steel Plant.
To achieve high growth, India must learn from past mistakes and adopt a flexible approach to policy implementation, focusing on efficiency and innovation.
