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Sustaining growth: Interests versus institutions

Author

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  • Ashima Goyal

    (Indira Gandhi Institute of Development Research)

Abstract

Nations that were able to sustain high catch-up growth followed flexible and contextual policies. Inclusive institutions make correct policy choices more likely. India started out with highly inclusive political institutions since it adopted democracy with universal suffrage at independence. But extractive economic institutions, inherited from the British, were made more so by economic controls. In addition, a heterogeneous electorate allowed politicians to cultivate vote-banks and populist schemes instead of delivering better public services and governance. India's opening out was adequately nuanced and flexible but was sometimes used as a substitute for harder domestic reforms. It, however, added to the growing constituencies that benefit from growth, and are pushing for more inclusive economic institutions, that enable productivity, not just redistribution. Broader interest groups create better institutions and incentives. Examples from general governance, the regulation of industry, and agricultural marketing show the process, although messy and prolonged, is in the right direction.

Suggested Citation

  • Ashima Goyal, 2013. "Sustaining growth: Interests versus institutions," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-001, Indira Gandhi Institute of Development Research, Mumbai, India.
  • Handle: RePEc:ind:igiwpp:2013-001
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2013-001.pdf
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    References listed on IDEAS

    as
    1. Ashima Goyal, 2014. "History of Monetary Policy in India Since Independence," SpringerBriefs in Economics, Springer, edition 127, number 978-81-322-1961-3, September.
    2. Ashima Goyal & Sanchit Arora, 2012. "Deriving India's Potential growth from theory and structure," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2012-018, Indira Gandhi Institute of Development Research, Mumbai, India.
    3. Michael D. Bordo & Lars Jonung & Agnieszka Markiewicz, 2013. "A Fiscal Union for the Euro: Some Lessons from History ," CESifo Economic Studies, CESifo, vol. 59(3), pages 449-488, September.
    4. Goyal, Ashima, 1999. "The Political Economy of the Revenue Deficit," MPRA Paper 29980, University Library of Munich, Germany.
    5. Goyal, Ashima, 2005. "Puzzles in Indian performance: deficits without disasters," MPRA Paper 29201, University Library of Munich, Germany.
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    Cited by:

    1. Ashima Goyal, 2019. "What Explains the Volatility of India's Catch-up Growth?," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2019-008, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. Ashima Goyal, 2018. "Indian Banks and the Prevention of Corruption Act: Freedom and Discipline," Working Papers id:12944, eSocialSciences.
    3. Ashima Goyal, 2019. "What Explains the Volatility of India’s Catch-up Growth?," Working Papers id:13026, eSocialSciences.

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    More about this item

    Keywords

    catch-up growth; institutions: political and economic; democracy; vote-banks; governance; active inclusion;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism

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