SOAS Research Online

Abstract

This thesis begins my making a critique of the orthodox approach to analysing economic growth. In particular using medium-run averages hides an important empirical reality of growth in developing countries. These are the episodes of growth and stagnation that actually characterise such growth. In addition there are severe empirical and theoretical problems with uncovering any such link through cross-country regressions. This thesis makes the case for using case-studies and looks at the specific case of India since independence. The thesis uses an empirical approach to define a number of episodes of growth or stagnation. The quantitative aspects relate to changes in average growth of GDP or its components, agriculture, industry or services, or at an even more disaggregated level such as heavy industry. The qualitative aspects relate to issues relevant for the sustainability of growth and stagnation, these include productivity, and the diversification and volatility of output growth. Episodes of growth or stagnation are here defined as a significant change in both the quantitative and qualitative nature of growth relative to a developing country's (India's) own history. This thesis finds that there are four aggregate episodes of growth and stagnation in post-Independence India. These are, the break in economic growth from colonial stagnation after 1951, industrial stagnation from 1965 to 1980, the increase in economic growth after the late 1970s/early 1980s, and a continued episode of growth after reforms beginning in 1991. These are the four case studies focused on in the main empirical section of this thesis. In order to analyse these four episodes of growth and stagnation this thesis makes a case that there is a crucial role for the state either in promoting and sustaining an episode of growth, or the constraints on it leading to an episode of stagnation. These are firstly, the financial role of the state is in allocating the economic surplus to those able to invest productively. Secondly, the role of the state with regard production is to ensure financial resources so allocated are used productively, to either raise productivity in an existing market niche (learning) or upgrade to a higher technology market niche. Finally there are the institutions necessary to mediate the relationship between conflict and economic growth. In this thesis a broad institutional perspective is considered. A repressive state, an inclusive state or an ideological state can help reduce the negative implications of conflict on development. These three factors, the financial and productive roles of the state and institutions are used to frame the analysis of each of the four episodes of growth and stagnation in the post-independence Indian economy.