The Indian Economy Blog

February 23, 2007

A Brand New Model?

Filed under: Economic History,Growth — Reuben Abraham @ 7:18 pm

A lot of bandwidth has been used up to discuss what model of development India should adopt: the Chinese model, the American model, the French model etc. I myself have sucked up quite a bit of bandwidth on this issue. However, I was reading an Indian business magazine (I apologize, I cannot remember which one) recently that made an altogether different and valid point. India is, in fact, following a model that has never been tested before. According to the magazine, not once in world history has a large-sized country gone into rapid industrialization mode, while also guaranteeing universal franchise or a vote for all of its citizens. When you think about it, this claim is probably true. Forget China, think about the U.S., Soviet Union, the U.K., France, Germany etc. Not one of those countries actually industrialized while everyone had the vote. In fact, in a country like Switzerland, all cantons gave women the right to vote as late as 1991. Effectively, this means India is following an untested model and the risks associated with such a model are what stand in the way of quicker growth (the stuff we tear our hair over, on this blog).

I have never seen this observation made anyplace else, and I figured I should share it with you. What do you think? Can you think of any prominent countries that industrialized while also being a full democracy?

PS: If any of you have read the piece I am talking about, please post a link so I can make a proper attribution.

1 Comment »

  1. Bibek Debroy had a recent op-ed in the Indian Express arguing that India is sui generis.

    Comment by Nitin — February 23, 2007 @ 7:58 pm

  2. Nitin, post a link, please? Does he make the same point about universal adult franchise and its uniqueness?

    Comment by Reuben — February 23, 2007 @ 8:15 pm

  3. Reuben, I believe you are referring to a Business World cover story froim a late January/ early February issue.

    Comment by Aadisht Khanna — February 24, 2007 @ 12:19 am

  4. Aadisht, you’re probably right. It was definitely an Indian business magazine. If you have the link, please do post.

    Comment by Reuben Abraham — February 24, 2007 @ 2:11 am

  5. Reuben,

    I don’t think Debroy’s piece is the one you were specifically looking for…but it makes a similar argument.

    Comment by Nitin — February 24, 2007 @ 8:54 am

  6. Reuben,
    The Swiss women got to vote in 1971, but essentially the argument holds good. India had followed a different/unique model. I have read somewhere (can’t remember the link) that Nani Phalkivala had said one of our biggest mistakes was Universal Adult franchise. But i can’t imagine it otherwise. A country so divided by caste, creed, language, religion and et all this was only way forward.

    Comment by Krish — February 24, 2007 @ 4:22 pm

  7. We do follow an “unique” model. Manufacturing will provide employment to all semi-skilled and skilled workers; however services will provide employment only to skilled personnel. He can work in pizza delivery, not ask a private banking hiring a 10th grader for its customer support. Still now education in India is a pipedream for the masses since we have about 60 odd percentage of them in agriculture and allied labour – which is manufacturing. For GDP to grow this “manufacturing” sector needs to be released of all its controls, such as ban on exports/ imports, lift subsidies and stop free power.

    Comment by Suresh — February 24, 2007 @ 5:29 pm

  8. Krish,
    I agree that there was a significant change in 1971, but there was one canton that held out, namely Appenzell Inner Rhoden. In 1991, the federal court intervened and forced the canton to give women the right to vote. So yeah, *all* Swiss cantons finally gave women the vote in 1991, not 1971.

    Comment by Reuben Abraham — February 24, 2007 @ 6:29 pm

  9. Link to the issue you’re talking of. Don’t have subscription so can’t access the article -> http://www.businessworld.in/feb1207/index.asp

    Comment by raven — February 24, 2007 @ 10:08 pm

  10. I think it’s fine to think that Indian economic development model is different from development trajectories of other countries. But to think that universal suffrage makes it unique is a stretch. At any given time, there are probably 10, or may be 15, people who control direction of economic development in our country at the highest level. These people can make or break a policy in any economic sphere whether it’s opening up retail or privatizing airports. Even if only Hindu men over 25yrs had the right to vote, it’s hard to case make that the direction of our economy would be any different. Also, in terms of general economic issues like inflation, head of household, presumably a man over 25yrs, can capture the issues in his voting pattern.

    Surely other non-economic policies are influenced by universal suffrage such as women’s rights or religious rights. But I am just not sure that economic development is influenced by universal suffrage.

    It has more to do ossified thought of politicians and bureaucratic controls and is hardly a reflection of what people, universally, want. Political consensus is just mambo-jumbo used by obstructionists to get their way.

    Comment by Chandra — February 25, 2007 @ 6:54 am

  11. An interesting take by Milton Friedman when he was asked to analyze and provide recommendations about Indian economic policy:
    http://www.ccsindia.org/pdf/friedmanindia/03%20Indian%20Economic%20Planning%20-%20Milton%20Friedman.pdf

    Comment by Gaurav — February 26, 2007 @ 6:24 am

  12. [...] The Indian Economy Blog is reporting on very interesting observation: not once in world history has a large-sized country gone into rapid industrialization mode, while also guaranteeing universal franchise or a vote for all of its citizens. When you think about it, this claim is probably true. Forget China, think about the U.S., Soviet Union, the U.K., France, Germany etc. Not one of those countries actually industrialized while everyone had the vote. [...]

    Pingback by smriti.com » The Indian Economy Blog » A Brand New Model? — February 26, 2007 @ 11:23 am

  13. I wish Nehru had the capacity to understand the Milton Friedman’s suggestions. They are very insightful.
    I am happy about our growth model as long as goverment does not try to follow any particular ‘model’. The best thing our govt can do is to not choose any economic models for the people; let the people create whatever model they want.

    Comment by muttan — February 28, 2007 @ 8:32 am

  14. Ashutosh Varshney writes a long article in Foreign Affairs pretty suggesting the same thing as the post. While I am not sure I agree with it, here is the link to the summary:

    http://www.foreignaffairs.org/20070301faessay86207/ashutosh-varshney/india-s-democratic-challenge.html

    “Students of political economy know that market-based policies meant to increase the efficiency of the aggregate economy frequently generate short-term dislocations and resentment. In a democratic polity, this resentment often translates at the ballot box into a halt or a reversal of pro-market reforms. In the West, such tensions have remained moderate for at least three reasons: universal suffrage came to most Western democracies only after the Industrial Revolution, which meant that the poor got the right to vote only after those societies had become relatively rich; a welfare state has attended to the needs of low-income segments of the population; and the educated and the wealthy have tended to vote more than the poor.”

    Comment by Chandra — March 1, 2007 @ 5:01 am

  15. So very true, I have always empahised this in my conversation in parties. Even in the US only land owners were given the right to vote. This left women and blacks out since they could not own land. In the US women got voting rights only after a hard won suffrage movement of 1920s. Even far east countries including Singapore did not have one man one vote until recent times. Nani Palkiwala said ‘One man one vote is tha bane of India’. What a trusim in every sense.
    As a country India is truly pluralistic in every sense of the word. India’s pluralism stands out, so does its vote bank politics.
    However we have travelled far in the serach for an open and ideal democratic system. There is no turning back. I hope enlightened India will find a way.

    Comment by satish joglekar — May 9, 2007 @ 6:56 am

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