Economic Development in India
ECONOMIC DEVELOPMENT IN INDIA: THE ROLE OF INDIVIDUAL ENTERPRISE (AND ENTREPRENEURIAL SPIRIT)
Anil K. Lal* and Ronald W. Clement**
The Indian economy provides a revealing contrast between how individuals react under a government-controlled environment and how they respond to a market-based environment. Evidence suggests that recent market reforms that encouraged individual enterprise have led to higher economic growth in that country. India can generate additional economic growth by fostering entrepreneurial activity within its borders. To pursue further the entrepreneurial approach to economic growth, India must now provide opportunities for (1) education directed specifically at entrepreneurial skills, (2) financing of entrepreneurial efforts, and (3) networking among potential entrepreneurs and their experienced counterparts. Further, although the Indian government should establish policies supportive of entrepreneurial efforts, its role overall should be minimized so that the influence of the free market and individual self-interest can be fully realized.
Economic development, achieved largely through productivity growth, is very important to both developed and developing nations. However, even though we know that higher productivity leads to improved economic outcomes (for example, higher income, more choices to the consumers, better quality products, etc.), there has been no consensus among researchers about either the desired path of development or the role of state in economic development. Concerning the path of development, Lall (2001) says that the appropriate strategy for any country depends not only on its objective economic situation but also on its government policies and national views regarding the appropriate role of the state.
* **
Associate Professor of Economics, Pittsburg State University, Pittsburg, Kansas, U.S.A. Professor of Management, Pittsburg State University, Pittsburg, Kansas, U.S.A.
81
Asia-Pacific Development Journal
Vol. 12,
Anil K. Lal* and Ronald W. Clement**
The Indian economy provides a revealing contrast between how individuals react under a government-controlled environment and how they respond to a market-based environment. Evidence suggests that recent market reforms that encouraged individual enterprise have led to higher economic growth in that country. India can generate additional economic growth by fostering entrepreneurial activity within its borders. To pursue further the entrepreneurial approach to economic growth, India must now provide opportunities for (1) education directed specifically at entrepreneurial skills, (2) financing of entrepreneurial efforts, and (3) networking among potential entrepreneurs and their experienced counterparts. Further, although the Indian government should establish policies supportive of entrepreneurial efforts, its role overall should be minimized so that the influence of the free market and individual self-interest can be fully realized.
Economic development, achieved largely through productivity growth, is very important to both developed and developing nations. However, even though we know that higher productivity leads to improved economic outcomes (for example, higher income, more choices to the consumers, better quality products, etc.), there has been no consensus among researchers about either the desired path of development or the role of state in economic development. Concerning the path of development, Lall (2001) says that the appropriate strategy for any country depends not only on its objective economic situation but also on its government policies and national views regarding the appropriate role of the state.
* **
Associate Professor of Economics, Pittsburg State University, Pittsburg, Kansas, U.S.A. Professor of Management, Pittsburg State University, Pittsburg, Kansas, U.S.A.
81
Asia-Pacific Development Journal
Vol. 12,
References: Acharya, Shankar, 2001. India’s Macroeconomic Management in the Nineties (New Delhi, Indian Council for Research on International Economic Relations). Ahluwalia, I.J., 1985. Industrial Growth in India: Stagnation Since the Mid- Sixties (London, Oxford University Press). Bardhan, Pranab, 1997. “Corruption and development: a review of issues,” Journal of Economic Literature, vol. 35, September, pp. 1320-1346. Bhalla, G.S., 2000. “Political economy of Indian development in the 20th century: India’s road to freedom and growth,” Presidential Address at the 83 rd Annual Conference of the Indian Economic Association, University of Jammu, Jammu and Kashmir, 30 December. Di Lodovico, Amadeo M., William W. Lewis, Vincent Palmade and Shirish Sankhe, 2001. “India-from emerging to surging,” The McKinsey Quarterly, http://www.mckinsey quarterly.com/article_abstract.aspx?ar=1117&L2=7&L3=8 Government of India, 1984. Committee on Trade Policies (New Delhi, Ministry of Commerce). Gupta, Rajat, 2001. “Creating Indian entrepreneurs,” India Today, February 12. Gupta, S.P., 1999. “Development experience of the nineties and search for a new paradigm,” A.K. Dasgupta Memorial Lecture at the 82nd Annual Conference of the Indian Economic Association, Guru Nanak Dev University, Amritsar, December 29. Joshi, Vijay, 2001. “Capital controls and the national advantage: India in the 1990s and beyond,” Oxford Development Studies, vol. 29, 3, pp. 305-320. Karunaratne, Neil Dias, 2001. “Revisiting capital account convertibility in the aftermath of the Currency Crisis,” Intereconomics, vol. 36, 5 September/October, pp. 264-271. Kayne, Jay, 1999. State Entrepreneurship Policies and Programs (Kansas City, Kauffman Center for Entrepreneurial Leadership). Krueger, Anne O., 1993. Political Economy of Policy Reform in Developing Countries (Cambridge, MIT Press). Lall, Sanjaya, 2001. Competitiveness, Technology, and Skills (Northampton, MA, Edward Elgar). Lewis, William, 2001. “Unlocking potential: remove barriers to India’s growth,” The Wall Street Journal, September 11. Nayar, Baldev Raj, 2001. Globalization and Nationalism: The Changing Balance in India’s Economic Policy, 1950-2000 (London, Sage Publications). Panagariya, Arvind, 1994. “India: a new tiger on the block?” Contemporary Issues in World Trade, vol. 48, 1 Summer, pp. 193-221. Pursell, Gary, 1992. “Trade Policies in India,” in Dominick Salvatore, ed National Trade Policies: Handbook of Comparative Economic Policies, vol. 2 (New York, Greenwood Press). Rao, M. Govinda, 2000. “Tax reform in India: achievements and challenges,” Asia-Pacific Development Journal, vol. 7, No. 2, December 2000, pp. 59-74. Reynolds, Paul D., Michael Hay, William D. Bygrave, S. Michael Camp and Erkko Autio, 2000. Global Entrepreneurship Monitor: 2000 Executive Report (Kansas City, Kauffman Center for Entrepreneurial Leadership). 98 Asia-Pacific Development Journal Vol. 12, No. 2, December 2005 Rodrik, Dani, 1996. “Understanding economic policy reform,” Journal of Economic Literature, vol. XXXIV, March, pp. 9-41. Solomon, Jay, 2003. “India”s elephantine economy may be poised to run,” The Wall Street Journal, 25 September, p. A17. Wade, Robert, 1985. “The market for public office: Why the Indian State is not better at development,” World Development, vol. 13, 4, April, pp. 467-497. World Economic Indicators 2001, 2001. (Washington, D.C., The World Bank). 99