In the midst of sputtering economic growth and idiotic policies like demonetization there is a consistent infrastructure buildup, rising economic complexity, a startup boom and large FDI flows.
Demonetisation, PLI schemes, and Infra boom I think are the 3 big things the govt did that has and will boost India’s economic growth. Confused for demonetisation? Demonetisation led to India having more % of population with bank accounts than China. It allowed us to save billions of dollars in corruption and do DBT (Direct Benefit Transfer) for poverty alleviation, Land Acquisition, crop procurement, among much more. That meant the middleman can no longer eat up Govt money meant for crops, welfare schemes or lane.
It is unbelievable that educated folk that can write coherent sentences as well as you can think demonetization was necessarily needed to achieve any of the above achievements.
Lol demonetisation WAS A DISASTER. No sane person can support demonetisation u less ome is an illiterate andhbhakt like 90% bjp supporters are. Regarding growth indias GDP growth has been DECLINING ever since modi came to power. From 8% in 2016 to 6% in 2018 to 3.4% in 2019 to -6. 6% in 2020. Indias Average GDP growth rate under fascist illiterate modi from 2014-2022 has been just 5% Vs 8.3% in Congress era from 2004-2014.
India's gdp boomed 4TIMES b/w 2000-2011 from just $468B in 2000 to more than $1.8 Trillion by 2011. After that?? Just 2X increase in next 12 years.
Indian exports were $60B in 2000 which again increased more than 7 TIMES to more than $447B by 2011. What happens after that??? India had $499B of exports in 2020. 9 years of NEAR 0% Growth. Indian exports which boomed 7X from 2000-2011 BECAME STAGNANT from 2011 to 2020.
Tiny Vietnam does more goods exports than 140 Crore India.
Nicely done! Glad to see a popular economist taking interest in these countries that rarely get mainstream attention other than US foreign policy.
The contrast between Pakistan, India, and Bangladesh should be studied more given it is a true "natural experiment" with the arbitrary lines drawn by the British. Similar governments, resource endowments, and cultures.
The instability point is interesting. It's easy to engage in buck-passing and blaming the last guy which is certainly the case.
From what I've seen, Pakistan's TFR has also remained elevated above its neighbors' which I imagine would drive up consumption, especially in the absence of any investment in its people, and drive down GDP per capita.
The potential for Bangladesh-envy is a great read of the situation, because it really has worked this way in this country in the past. Once narratives about how more immediate neighbors are overtaking us start to dominate, course corrective actions may be near.
Unfortunately that is not the case, YET. Rentier elite and pakistan military have fanned Pan-Islamism to unite multiple nations that have been artificially put together into a single country. Religion trumps any notion of country.
Dear Noah, nice piece. As an economist, I contribute to leading newspapers in Pakistan on this issue. You may be interested in reading this piece to understanding a bit more about the failure of economic policies in Pakistan https://www.dawn.com/news/1571735/pakistans-economic-policies Cheers
You know what economy I'm surprised no one is talking about? Malaysia. In PPP terms it's just about caught up with Greece, which admittedly is not that impressive, but who would have predicted this 15 years ago?
A lot of European growth was driven by the rising cost and complexity of warfare. Gunpowder made technology and organization more important with cannons, then muskets and then automatic weapons. Throw in the railroads and steamships and war is less and less about personal bravery and more and more about technology, training and logistics. All of that required a more educated populace. One reason the tsar freed the serfs was because serfs made lousy soldiers.
Nuclear weapons turned this on its head. The weapons are so powerful that any attack can be met with an incredibly deadly counterattack making civilian populations hostages. If you could get nuclear weapons, all that other stuff, technology, training and logistics become less important. It's like the "family atomics" in Herbert's book "Dune". No one in the book seemed to have the technological base to build them any more than they could reasonably build starships, but there they were as a last resort and still a defining element of the political scene.
You entirely miss the main cause which stop Pakistan from growing economically is proxy war of India, Afghanistan and Iran against Pakistan in Two of their provinces kpk and Balochistan and USSR Invasion of Afghanistan which initiated Afghan Jihad before this Pakistan was growing economically better than many Asian countries both India and Bangladesh were behind Pakistan but war in Afghanistan and than global war on terrorism make economic conditions even worse causing Billions of dollars loss to Pakistan.So missing all these events to studying Pakistan economic conditions is not on reality .
Interesting you mentioned that Pakistan behaves like a natural resource exporter when its not. There was a paper by Ehtisham Ahmad and Azizali Mohammed titled: Pakistan, the United States and the IMF: Great game or a curious case of Dutch Disease without the oil? Interesting read!
You entirely miss the main cause which stop Pakistan from growing economically is proxy war of India, Afghanistan and Iran against Pakistan in Two of their provinces kpk and Balochistan and USSR Invasion of Afghanistan which initiated Afghan Jihad before this Pakistan was growing economically better than many Asian countries both India and Bangladesh were behind Pakistan but war in Afghanistan and than global war on terrorism make economic conditions even worse causing Billions of dollars loss to Pakistan.So missing all these events to studying Pakistan economic conditions is not on reality .
Long-term civil rulership is the only option here we have. Policies should not be changed despite political differences. Produce the more home consumed products in large scale, encourage little investments and returns.
Nice article, but it muddles the reason in citing political "incentives". These incentives were always there.
There is also something that people overlook. Religion, culture and macro-habits of the populace also play a significant role in further developing the nation in the direction of advanced industrialization. Seeing God in everything is okay, but if that becomes part of the national identity, the motivation to get to the point of materialising every macro-habit of individuals gets beaten to pulp by the factors such as culture and/or religion. There is a need firstly for a social reform. The encouragement of scientific temper among the populace is higher in urban India whereas Pakistan and Bangladesh do not simply have this.
Noah I'm curious - why haven't you written a piece on the development of India/China yet? Would be super cool to get a deep dive into the developmental trajectories of these goliaths and see where they currently stand
The million dollar question is that how Optics and Fundamentals of economy has been better during military dictatorships in Pakistan.. Middle Class growth has been maximum during the era of Ayub Khan and Musharraf.. Zia's era though source of all miseries..like religious fundamentalism etc.. but economically it wasn't bad..
Sir, The facts and GDP growth numbers don’t support your opinion. So many educated Pakistanis with a Lot of POA assertions!! Is it because of ideological indoctrination by military and religion!!. Infact the civilian 3 time ELECTED PM Nawaz Sharif gave the most growth and prudent economic management. GDP grew organically at 5% In the last years of NS before he was deposed by the military generals and a puppet PM Imran Khan was appointed or selected by army selectorate.
This post is a great example of why I love political economy but merely like economics.
Good read. Would be interesting to see your take on India’s economy at least in medium term. Complete the trifecta if you will.
Will do.
In the midst of sputtering economic growth and idiotic policies like demonetization there is a consistent infrastructure buildup, rising economic complexity, a startup boom and large FDI flows.
Demonetisation, PLI schemes, and Infra boom I think are the 3 big things the govt did that has and will boost India’s economic growth. Confused for demonetisation? Demonetisation led to India having more % of population with bank accounts than China. It allowed us to save billions of dollars in corruption and do DBT (Direct Benefit Transfer) for poverty alleviation, Land Acquisition, crop procurement, among much more. That meant the middleman can no longer eat up Govt money meant for crops, welfare schemes or lane.
It is unbelievable that educated folk that can write coherent sentences as well as you can think demonetization was necessarily needed to achieve any of the above achievements.
Well said. Ideology has infected the Indian polity.
Lol demonetisation WAS A DISASTER. No sane person can support demonetisation u less ome is an illiterate andhbhakt like 90% bjp supporters are. Regarding growth indias GDP growth has been DECLINING ever since modi came to power. From 8% in 2016 to 6% in 2018 to 3.4% in 2019 to -6. 6% in 2020. Indias Average GDP growth rate under fascist illiterate modi from 2014-2022 has been just 5% Vs 8.3% in Congress era from 2004-2014.
Indias economy has been faltering since 2010. Future is very dangerous for indian economy.
another bs.
How is it faltering out
Just care to look at facts yourself.
India's gdp boomed 4TIMES b/w 2000-2011 from just $468B in 2000 to more than $1.8 Trillion by 2011. After that?? Just 2X increase in next 12 years.
Indian exports were $60B in 2000 which again increased more than 7 TIMES to more than $447B by 2011. What happens after that??? India had $499B of exports in 2020. 9 years of NEAR 0% Growth. Indian exports which boomed 7X from 2000-2011 BECAME STAGNANT from 2011 to 2020.
Tiny Vietnam does more goods exports than 140 Crore India.
That's naive.
You are just looking at the stats without context.
The 2000s was in a hyper-globalisation period.
Check emerging economies growth rates & India in 2000s & 2024 respectively.
The slow growth in 2010s was because of reforms like demonetisation but a bunch of useful reforms too.
Then corona came with ate 3 years of time.
But the reforms & infrastructure build-up push by the govt since 2014 & reforms with PLI has started paying off.
After corona economy is on a good healthy growth path which is expected to continue for this decade atleast with the current push.
More new reforms are coming & the goal should be good healthy long growth until the 2040s
Check how little the govt was investing in infrastructure in the 2000s.
The reforms should be to improve infrastructure (already happening), laws for Ease of doing business ( in process) & institutional reforms(pending).
Covid is just a poor excuse.
India's economy was faltering before covid tbh since 2016 when demonetisation struck India.
Again Bullshit.
Vietnam, Bangladesh and even CHINA grew faster than India under Modi regime from 2014-2024.
Demonetisation was a DISASTER. It destroyed Indian Msmes.
Perhaps u don't know India slipped below Bangladesh and Vietnam in Textile exports.
Vietnam does $130B of electronic exports Vs $30B by India despite being not even 1/10th of India.
India was ahead of Vietnam in 2009. So the so called low growth era is the one where India slipped behind major other countries.
India also became POORER than Bangladesh for the first time under Modi regime.
"But the reforms & infrastructure build-up push by the govt since 2014 & reforms with PLI has started paying off"
🤣🤣🤣 What a joke.
Unemployment broke all records under Modi.
India had near 0% real wages growth under Modi.
Ease of doing business?? Lmao 🤣🤣🤣 FDI to GDP ratio of India is lower than what it was before Modi came.
India's agricultural exports, textile exports are stagnant since 2014.
Nicely done! Glad to see a popular economist taking interest in these countries that rarely get mainstream attention other than US foreign policy.
The contrast between Pakistan, India, and Bangladesh should be studied more given it is a true "natural experiment" with the arbitrary lines drawn by the British. Similar governments, resource endowments, and cultures.
The instability point is interesting. It's easy to engage in buck-passing and blaming the last guy which is certainly the case.
From what I've seen, Pakistan's TFR has also remained elevated above its neighbors' which I imagine would drive up consumption, especially in the absence of any investment in its people, and drive down GDP per capita.
TFR is the key. Bangladesh is down to replacement. It boils down to population control..which is an anathema in clergy controlled Pakistan
The potential for Bangladesh-envy is a great read of the situation, because it really has worked this way in this country in the past. Once narratives about how more immediate neighbors are overtaking us start to dominate, course corrective actions may be near.
Unfortunately that is not the case, YET. Rentier elite and pakistan military have fanned Pan-Islamism to unite multiple nations that have been artificially put together into a single country. Religion trumps any notion of country.
Dear Noah, nice piece. As an economist, I contribute to leading newspapers in Pakistan on this issue. You may be interested in reading this piece to understanding a bit more about the failure of economic policies in Pakistan https://www.dawn.com/news/1571735/pakistans-economic-policies Cheers
Thank you!!
Sounds like it would be an interesting compare and contrast with Argentina.
I would put Egypt in there as well.
You know what economy I'm surprised no one is talking about? Malaysia. In PPP terms it's just about caught up with Greece, which admittedly is not that impressive, but who would have predicted this 15 years ago?
Oh. Noah has been talking about it.
A lot of European growth was driven by the rising cost and complexity of warfare. Gunpowder made technology and organization more important with cannons, then muskets and then automatic weapons. Throw in the railroads and steamships and war is less and less about personal bravery and more and more about technology, training and logistics. All of that required a more educated populace. One reason the tsar freed the serfs was because serfs made lousy soldiers.
Nuclear weapons turned this on its head. The weapons are so powerful that any attack can be met with an incredibly deadly counterattack making civilian populations hostages. If you could get nuclear weapons, all that other stuff, technology, training and logistics become less important. It's like the "family atomics" in Herbert's book "Dune". No one in the book seemed to have the technological base to build them any more than they could reasonably build starships, but there they were as a last resort and still a defining element of the political scene.
You entirely miss the main cause which stop Pakistan from growing economically is proxy war of India, Afghanistan and Iran against Pakistan in Two of their provinces kpk and Balochistan and USSR Invasion of Afghanistan which initiated Afghan Jihad before this Pakistan was growing economically better than many Asian countries both India and Bangladesh were behind Pakistan but war in Afghanistan and than global war on terrorism make economic conditions even worse causing Billions of dollars loss to Pakistan.So missing all these events to studying Pakistan economic conditions is not on reality .
Interesting you mentioned that Pakistan behaves like a natural resource exporter when its not. There was a paper by Ehtisham Ahmad and Azizali Mohammed titled: Pakistan, the United States and the IMF: Great game or a curious case of Dutch Disease without the oil? Interesting read!
You entirely miss the main cause which stop Pakistan from growing economically is proxy war of India, Afghanistan and Iran against Pakistan in Two of their provinces kpk and Balochistan and USSR Invasion of Afghanistan which initiated Afghan Jihad before this Pakistan was growing economically better than many Asian countries both India and Bangladesh were behind Pakistan but war in Afghanistan and than global war on terrorism make economic conditions even worse causing Billions of dollars loss to Pakistan.So missing all these events to studying Pakistan economic conditions is not on reality .
Again Bullshit.
Vietnam, Bangladesh and even CHINA grew faster than India under Modi regime from 2014-2024.
Demonetisation was a DISASTER. It destroyed Indian Msmes.
Perhaps u don't know India slipped below Bangladesh and Vietnam in Textile exports.
Vietnam does $130B of electronic exports Vs $30B by India despite being not even 1/10th of India.
India was ahead of Vietnam in 2009. So the so called low growth era is the one where India slipped behind major other countries.
India also became POORER than Bangladesh for the first time under Modi regime.
"But the reforms & infrastructure build-up push by the govt since 2014 & reforms with PLI has started paying off"
🤣🤣🤣 What a joke.
Unemployment broke all records under Modi.
India had near 0% real wages growth under Modi.
Ease of doing business?? Lmao 🤣🤣🤣 FDI to GDP ratio of India is lower than what it was before Modi came.
India's agricultural exports, textile exports are since 2014.
An update to this with the current IMF bailout and complete currency collapse would be good to read if you write one.
Long-term civil rulership is the only option here we have. Policies should not be changed despite political differences. Produce the more home consumed products in large scale, encourage little investments and returns.
Nice article, but it muddles the reason in citing political "incentives". These incentives were always there.
There is also something that people overlook. Religion, culture and macro-habits of the populace also play a significant role in further developing the nation in the direction of advanced industrialization. Seeing God in everything is okay, but if that becomes part of the national identity, the motivation to get to the point of materialising every macro-habit of individuals gets beaten to pulp by the factors such as culture and/or religion. There is a need firstly for a social reform. The encouragement of scientific temper among the populace is higher in urban India whereas Pakistan and Bangladesh do not simply have this.
Noah I'm curious - why haven't you written a piece on the development of India/China yet? Would be super cool to get a deep dive into the developmental trajectories of these goliaths and see where they currently stand
The million dollar question is that how Optics and Fundamentals of economy has been better during military dictatorships in Pakistan.. Middle Class growth has been maximum during the era of Ayub Khan and Musharraf.. Zia's era though source of all miseries..like religious fundamentalism etc.. but economically it wasn't bad..
Sir, The facts and GDP growth numbers don’t support your opinion. So many educated Pakistanis with a Lot of POA assertions!! Is it because of ideological indoctrination by military and religion!!. Infact the civilian 3 time ELECTED PM Nawaz Sharif gave the most growth and prudent economic management. GDP grew organically at 5% In the last years of NS before he was deposed by the military generals and a puppet PM Imran Khan was appointed or selected by army selectorate.