India Plays Catch-Up

I agree with Yasheng Huang ("The Next Asian Miracle," July/August 2008) that there need not be a conflict between economic growth and democracy, that India’s recent economic miracle is an extremely important, hopeful development, and that China can learn from India’s political experience. But I don’t agree that his comparison of the development experiences of India and China during the past 30 years "tells us much about the relationship between democracy and growth, governance and prosperity."

Huang points out that it is not so much the level of democracy in a country that influences economic growth, but the direction of change in the political system. This useful philosophical point has little practical value in explaining differences in economic performance, however. Even India’s experience shows that political liberalization does not generate growth unless it is accompanied by sound economic policies — which in India’s case means economic liberalization.

His argument that China’s political clampdown after the Tiananmen crisis underlies the economic slowdown and growing social inequality in the 1990s falls far short of acceptable empiricism. China’s growth actually accelerated in the 1990s due to economic liberalization before the Asian financial crisis of 1997–98 triggered a temporary slowdown.

Huang also misinterprets China’s recentralization of economic management in the early 1990s, its infrastructure investment policies (which on the whole have been farsighted and well-balanced), and the emphasis on high-rise construction in urban development. Where else can China’s cities go, but up?

One may not like China’s political system, but the country’s growth and development experience during the past three decades, even in social dimensions, has been unquestionably superior to India’s. India may eventually catch up. But so far, all we can say is that the rate at which it is falling behind China in terms of economic development has slowed down.

— Pieter Botellier
School of Advanced International Studies
Johns Hopkins University
Washington, D.C.

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Huang persuasively argues that China’s growth rate is favorable to India’s not because of some "authoritarian edge," and his reminder that democratic India is doing very well is a welcome one. But while India’s performance is impressive in areas where the private sector has a free hand, those areas are few and far between. The dysfunction of India’s public sector in addressing such core responsibilities as law and order, infrastructure, and healthcare, is striking.

Indira Gandhi’s biggest fault was not reliance on patronage but the conversion of the Congress Party into a family business and the creation of a political dynasty to lead it. Over time, other Indian politicians saw how easy and lucrative it was to establish political parties of their own. Consequently, political dynasties have become the norm in India, seriously undermining the government’s effective delivery of services.

Corrupted as they are by the party system, India’s institutions are incapable of enforcing accountability. India’s elites tolerate a level of poor governance and abuse of power that has led to the collapse of democracy elsewhere. When politicians amass wealth by misusing their office, when politicians with criminal records (for crimes including kidnapping, rape, and murder) are elected to Parliament and even become cabinet ministers, or when ministers fail abysmally, the public responds with a collective yawn. Not surprisingly, India has failed to reach its potential.

— Appu Soman
Research Fellow
The Belfer Center for Science
and International Affairs
Harvard University
Cambridge, Mass

Yasheng Huang replies:

Contrary to Pieter Botellier, I did not say that Chinese GDP growth suffered in the 1990s; I pointed out that its distribution worsened and that household income growth slowed down. And while we’re on the subject, GDP actually grew slightly faster in the 1980s than in the 1990s. A reasonable reader cannot possibly infer from my article that I discount the impact of liberal economic policies. Quite the opposite, political liberalism is conducive to economic liberalism in both China and India. The research I compiled for my most recent book shows that the reversal of liberal reforms during the 1990s was far more drastic than Botellier’s rosy view.

I am puzzled by Botellier’s comment about urban skylines. I was not expressing a personal opinion on the height of buildings. (In fact, I like tall buildings.) What I argue is that a country should invest more in education and healthcare rather than in skyscrapers, a point tragically illustrated during the recent earthquake. I would welcome a more serious debate on this issue.

Appu Soman rightly points to the dysfunctional aspects of the Indian system. Nowhere do I argue that Indian democracy is perfect. My argument is a dynamic one — India today is more democratic than it was in the 1970s, and economic growth began when the country improved governance. India must improve its public-sector performance. A bigger problem, though, is not that the system is intrinsically incapable of supplying accountability, but that its population chooses not to demand it.

Look no further than the current prime minister, Manmohan Singh. Hand-picked by Indira Gandhi’s family and never forced to face elections on his own, he remains a weak and ineffective leader. India would be much better off if it weaned itself from its unhealthy addiction to Gandhi’s legacy, which Soman and I agree has had disastrous consequences for India’s economic performance.