Why Growth Matters
Jagdish Bhagwati & Arvind Panagariya
PublicAffairs, 2013 (2013)
Reviewed by Bob Walch
n this volume subtitled '
How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries
', the authors argue that until recently India's development strategies have failed in one way or another. But with the acceptance of a pro-growth approach there is a real opportunity to alleviate the subcontinent's poverty while growing the economy.
oth economists and Columbia University professors, Jagdish Bhagwati and Arvind Panagariya explain that since independence in 1947 India has experimented with many economic approaches from Jawaharlal Nehru's pragmatism to Indira Gandi's rigid state socialism to the recent liberalism of the 1990s. But, by and large, until now the end product did not come close to achieving the desired changes and economic stability the country needed, nor did these approaches alleviate the plight of the poor.
fter debunking the myths and clearing '
the debris of ex cathedra critiques of India's reforms
' in the first section of their book, the authors then move on to delve into what they term Track I and Track II reforms that are intended to produce growth while impacting poverty in a positive sense.
ot advocates of redistribution, the two economists recommend a policy that fosters a greater role for markets and globalization which, in turn, would encourage growth, more jobs, and opportunities for additional government revenues. Once this happens, the theory maintains that more would be spent on social programs for health care and education which would further help the poor.
We hope to demonstrate that the task of delivering the poor from poverty therefore has many dimensions, but they all center on using growth as the core strategy,
' write Bhagwati and Panagariya.
India offers a role model for reform today. Growth follows Track I reforms. Increased revenues, thanks to democracy, are spent on Track II reforms. In this way, growth works its twofold magic: through a happy and necessary marriage of economics and politics. Here is a model for other developing countries, indeed.
book that has implications for any developing country, not just India,
Why Growth Matters
is not light reading matter but it presents an interesting case for why market reform is essential to economic growth and the alleviation of poverty.
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