The Paradox of Indian Growth: A comment on Kochar et al

The paradox of India’s current success, we learn from Kochar et al., is that it is rooted in what were once seen as some of its most egregious policy failures. In particular, in the 1980s and even the 1990s, one always heard complaints about how India invested so much more in tertiary education compared to countries at similar levels of development, and how primary education, by comparison, was under-funded and not enough of a priority. And it did look like the critics were right: Highly qualified engineers, educated at great public expense, worked as bank officers or sales representatives for large multinationals, or cooled their heels as minor functionaries in the overfilled bureaucracies of large public companies. If they were exceptionally brilliant or fortunate, they won a scholarship to do an advanced degree somewhere in the west. Few came back. If there was one thing that has worse press in the community of economists today than India’s education policy, it was its policy of self-reliance. This meant making everything at home, often behind gargantuan walls of tariffs and quotas. This created an industrial sector that was enormously diversified, at least compared to other economies at the same level of development, and probably in many ways quite inefficient