Geography Reference
In-Depth Information
this market bigger, allowing economies of scale for the great industries. This
does not mean spreading out all kinds of industries to all regions, but moving
towards a more dynamic economy in each region.
Interpretations
Comparing with Argentina, the history of economic development efforts in India
is similar, with emphasis on mass industrialization, which was to be undertaken
by the state to ensure its fulfilment. But whereas Argentina is characterized by
heavy centralization in one city, India has many large cities, and a very large
rural population. India, however, is not a success story, and its level of income
GNP per capita at around $300 in the early 1990s, compared with Argentina's
$7000, is an order of magnitude lower. Nor has there been any period of rapid
growth of this income level to show change. Evidently, it is possible to be poor
over a well-distributed system, to share the poverty, as much as it is possible to
concentrate wealth in Argentina. One major difference between the two countries
is the rapid population growth in India, which makes it much harder to attain per
capita growth of income. A 2 per cent population growth rate means that
production change has to include this 2 per cent before achieving any positive
per capita changes.
The problem to be explained with India is its very poor performance in terms
of the growth of per capita income, still lying at around $300 in the 1990s. This
is one of the poor countries, not a candidate for election to the middle-income
group. A first answer is its concentration on heavy industries, which would take
a long time to finance and bring into production (Auty 1994). But this is not a
full answer, for India has concentrated on heavy industry since Nehru's initiative
in the late 1950s under the Second Five-year Plan. By now it should be reaping
full benefits from these industries. A related point is India's following of the isi
route of industrialization, protecting many infant industries, which can be
inefficient. This has much truth, but in such a large country, the markets are big
enough to grow efficient industries of any sector, and to introduce competition
over time. Another kind of answer comes from the relationship of economic
development to demographic change. India's high rural population means that
traditional families of six or more children are common. Population growth is
still over 2 per cent annually, absorbing a lot of the growth of output. Argentina
has not had this problem. Population growth has also clouded the advances that
were achieved with “green revolution” innovations in farming.
A final explanation is that the Five-year Plan type of development has been
subject to constant government intervention, with many public companies (in
1961,6000; in 1993, about 18,000). The public sector employs over 70 per cent of
all workers (Stern 1993:211). Of itself this is not a damning situation, although it
may lead to inefficiencies from lack of market disciplines. But in India, control of
the public sector is by an urban middle-class elite of bureaucrats with English-
language training, a self-perpetuating group not subject to controls themselves.
