Some simple rules of the road, rather than some sweeping theory about institutions or geography, will determine India’s economic success over the visible time horizon.
This is the question which draws a lot of attention not only from academic point of view, but also for the stakeholders related to a nation. Stakeholders may be businessmen, corporate houses, policy makers, international relations, etc. At times we come across people talking a lot about single key to economic success. In such cases we find that they focus mainly on investment, geography, demographics, culture or fashionably of late on institutions. These theories are often called as the one-dimensional theories which are often based on historical records going back decades and looking forward for equally-long periods.
This process of looking backward only to project the future development results in missing what is going to happen over the next few years. We see that after the implementation of open economy policy by majority of the nation the global growth is slowing, and so is growth in emerging nations, with wider gaps between winners and losers. Rich are getting richer and poor are becoming poorer thus widening the gap between the two sectors of the society.
If we start spotting a winner in this era, we will be required to look at numerous factors. Apart from this we need to travel only to observe the ground level development taking place instead of relying on theory or numbers alone.
If we talk about the Indian economy becoming one of the break-out nations we see:
A popular argument stating China’s growth is possible only because it’s authoritarian system which can push tough reforms more easily as compared to India. However the fact remains different altogether. A close look at the countries posting high economic growth over the last three decades showed that over 52% were democracies.
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For growth of a nation, the system (be it democratic or capitalist) does not matter much, what matters is whether the political leaders understand economic reforms and are eager to work for the same. In case of Indian economy, this is something which is of mixed color owing to the fact of faltering leadership at the national level is balanced by the rise of dynamic state leaders.
From the above it can be said that for India, the strong growth for a period of over a decade might not sustain in time to come and the country might not be able to retain its position in the International market.
Read on GWI Reasons why we think India will be the Best Performing BRIC Country in 2013.