One Polity, Many Countries: Economic Growth in India, 1873-2000

We argue, based on Indian experience, that the major determinants of economic growth are not political and economic institutions. Through the laissez faire Colonial regime, and the interventionist economy of Independent India income per capita declined relative to advanced economies until the 1980s. And though economic growth has been impressive since 1986, the upturn pre-dates even the modest economic reforms of 1991. Further there is increasing regional variation in income per capita across states in India despite the dominance of national economic policies. Some states ’ growth rates have declined since the reforms. Yet labor has moved little within India from the regions of persistent low incomes to those of high incomes. The experience of Europe and the USA suggests that encouraging migration of workers to high productivity areas within India is the only policy we know will improve overall income per capita