India’s potential for leading global growth:

India’s potential for leading global growth: (Live Mint, Editorial)

(India’s dominance over the coming decades)

Context: India took over from its neighbour as the “economic pole of global growth” over the past few years and will remain so at least through the decade to 2050.

Introduction: India fell behind China in the last quarter of financial year 2017 after showing the good performance of three years as the fastest growing major economy in the world.

Description: According to the growth projections released last month by researchers at the Centre for International Development (CID) at Harvard University, based on 2015 data, the reversal is an inconsequential blip. The economic logic underlying those projections raises some intriguing questions about India’s growth trajectory. These projections are based on CID’s new 2015 Economic Complexity Index- part of the Atlas of Economic Complexity, a brainchild of economist Ricardo Hausmann and physicist César A. Hidalgo. In 2009 paper, The Building Blocks of Economic Complexity, Hausmann and Hidalgo laid out their reasoning for this new model to judge economic growth.

Reasons for India’s reversal trend:

• The rural poor in several districts of India lack the physical infrastructure to travel far or communicate with more than a limited set of people. This results into limited knowledge and productive capabilities and ultimately in economic opportunities.
• Richer countries will export a greater variety of products exported by few other countries, while poorer countries will export fewer, simpler products that are also exported by many other countries.
• For instance, if Japan, ranked at the top of the index, has vehicles, machinery and electrical machinery as its top exports, Ghana, ranked near the bottom, relies on crude petroleum, gold and cocoa beans.
• While, the areas where India has done good performance includes information technology sector.

Conclusion: Investment in education and innovation for improving human capital is required for achieving inclusive growth.

CID’s work has given us useful new tools to measure growth and economic potential, there are no shortcuts to developing the capabilities that form the building blocks of economic complexity.