Indian leaders and economic planners focused on eradicating poverty by "growing the pie rather than slicing it," and fueled the country's growth with market-based policies, write economists Jagdish Bhagwati and Arvind Panagariya in Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries, a new Council on Foreign Relations (CFR) book.
Bhagwati, CFR senior fellow, and Panagariya, Columbia University professor, demonstrate how growth was the strategy successfully deployed to reduce poverty in India. Official poverty estimates provided by India's Planning Commission show the proportion of the population below the poverty line in India decreased 17 percent in two decades, from 44.5 percent in 1983 to 27.5 percent in 2004-2005. "We cannot emphasize enough that our analysis, while it is addressed to India's development experience and underlines the centrality of growth in reducing poverty, has clear lessons for aid and development agencies, as well as NGOs that continually work to affect poverty all over the world," conclude Bhagwati and Panagariya.
The authors acknowledge that further reforms in labor and land markets are essential to make growth even more inclusive. They stress that growth must precede spending on healthcare and education for the poor, as only growth will generate the revenues necessary for such spending. Moreover, they emphasize that both growth and the efficacy of spending on the poor require that "doors … be opened wider to the private sector."
To order the book, visit http://www.cfr.org/why_growth_matters.
ADVANCE PRAISE FOR WHY GROWTH MATTERS:
"Could not have come at a better time."
—Real Clear Markets
"Almost a manifesto for policymakers."
"The authors' deep compassion for the poor, gimlet-eyed view of India's checkered economic past and genuine concern for its future shine through on every page."
—Wall Street Journal
"Jagdish Bhagwati and Arvind Panagariya are two of the great intellectual lights behind one of the greatest miracles of economic history: the economic reform of India, and its subsequent takeoff. It is not just the well-to-do who have benefited, but, especially, the poor. The lessons from the spirit of 1991 are not just relevant for India today; they are also of prime importance for the billions of citizens of low income countries around the globe."
—George A. Akerlof, Nobel Laureate in Economics, 2001
"In this important book the two leading experts on India's economy refute the claims of those who reject pro-growth policies in favor of redistribution schemes. India's experience in the past two decades shows how a nation's economic growth reduces poverty and improves the well-being of disadvantaged groups. Bhagwati and Panagariya explain what India needs to do now and how other countries can learn from India's experience."
—Martin Feldstein, George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research
"Assembling reams of evidence from India's astonishing economic success story, Bhagwati and Panagariya make an unbeatable case for why market reforms are essential to economic growth—and improving the lives of the poor. Serious reformers throughout the developing world cannot ignore this book or Bhagwati's work throughout the years."
—Hernando de Soto, President of the Institute for Liberty and Democracy and author of The Mystery of Capital
"Every important developing country should be the subject of a masterful book like this. Bhagwati and Panagariya have paid a great service to India—and actually other emerging countries—by writing it. If it's a must read for scholars and practitioners of economic development, it should be absolutely mandatory for the Indian political leaders."
—Ernesto Zedillo, Director of the Yale Center for the Study of Globalization and former President of Mexico
Jagdish Bhagwati is CFR senior fellow and university professor of economics at Columbia University. A native of India, Bhagwati studied at Cambridge University, MIT, and Oxford before returning to India in 1961 as professor of economics at the Indian Statistical Institute. He is the author of many books, including In Defense of Globalization.
Arvind Panagariya is professor of Indian economics at Columbia University. He is a nonresident senior fellow at the Brookings Institution. Panagariya has been the chief economist of the Asian Development Bank and a professor of economics and codirector of the Center for International Economics at the University of Maryland at College Park. He is the author of, among other books, India: The Emerging Giant.