Sustaining growth: Interests versus institutions

Ashima Goyal

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: Nations that were able to sustain high catch-up growth followed flexible and contextual policies. Inclusive institutions make correct policy choices more likely. India started out with highly inclusive political institutions since it adopted democracy with universal suffrage at independence. But extractive economic institutions, inherited from the British, were made more so by economic controls. In addition, a heterogeneous electorate allowed politicians to cultivate vote-banks and populist schemes instead of delivering better public services and governance. India's opening out was adequately nuanced and flexible but was sometimes used as a substitute for harder domestic reforms. It, however, added to the growing constituencies that benefit from growth, and are pushing for more inclusive economic institutions, that enable productivity, not just redistribution. Broader interest groups create better institutions and incentives. Examples from general governance, the regulation of industry, and agricultural marketing show the process, although messy and prolonged, is in the right direction.

Keywords: catch-up growth; institutions: political and economic; democracy; vote-banks; governance; active inclusion (search for similar items in EconPapers)
JEL-codes: D78 F54 O43 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-01
New Economics Papers: this item is included in nep-cdm and nep-pol
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Citations: View citations in EconPapers (5)

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