• About

Economics for India

~ Research & Reflections on Indian Economy

Economics for India

Monthly Archives: November 2008

Arthakranti

24 Monday Nov 2008

Posted by paragwaknis in diverse perspectives

≈ Leave a comment

Tags

arthakranti

Simplitstic ideas abound and there is no reason why economics should be an exception. Arthakranti (economic revolution) would defintely count as one of such ideas. Here is why I think so.

Education and Growth

20 Thursday Nov 2008

Posted by paragwaknis in education, growth

≈ 2 Comments

Peter Lindert argues that there is a relationship between democracy and economic growth. However, very few studies confirm this link empirically. One of the reasons why this is the case is that they do not specify the political process in enough details. The nature of policies that will be chosen and implemented in equilibrium will depend on whether voters have ‘voice’ or not. If voters have voice then government will spend more on public goods that benefit masses rather than elites. Does having a democracy or extensive franchise ensure that voters will have voice? Not necessarily.

Let us measure the elitist bias in government spending policies. If voters have voice then the government will spend more schools than on higher education and we will find the proportion of spending on schools in total spending higher relative to a situation where voters do not have voice. Thus, higher voice means more spending on primary education and hence lower elitist bias. How do various democracies fare on this count? All the economically successful democracies spend significant portion of their education expenditure on primary education than higher education. This signifies lower elitist bias and hence better human capital and hence growth. What is the catch? Yes, you got it right-its India.

India is the biggest but also poorest democracies in the world. It turns out that among million reasons why India is poor, the elitist bias in its spending policies infact might be a significant one. We have an impressive list of higher education institutions but our primary schools remain of abysmal quality and quantity. As a result we have some 200 million people with access to somewhat decent higher education but remaining 800 million or so have to survive on schools with one class room and absent teachers!

Lindert argues that even though India is a full fledged democracy by all standards, its voters do not have voice or voice is distributed more unequally than votes. So while other economically successful democracies got it right in terms of primary education, India lags behind because of a massive illiterate and undereducated human pool. So whats the moral of the story? Massively expand and improve schooling in India.

This is important because all other policies of ensuring equal access do not work or work only in the limited sense if basic education is not right. For example in a recent article in EPW, Chakravarty and Somananthan found that SC/ST students earn significantly lower wages in IIMA’s placements. However, the difference between the wages of SC/ST and open category candidates vanishes once controlled for the GPA. Thus, the wage differentials account for differences in human capital endowments of the SC/ST versus the open category students. These inequalitties in endowments can be taken care of only if all the castes have access to quality education and a way to do that is to spend more on schools than on universities and colleges.

Chakravarty S and S Somanathan (2008), Discrimination in an Elite Labor Market? Job Placements at IIM-Ahmedabad, Economic and Political Weekly, November 1.

Lindert P (2003), Voice and Growth: Was Churchill Right?, The Journal of Economic History, 63, 2, 315-350.

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 864 other followers

Follow me on Twitter

My Tweets

Blogroll

  • Ajay Shah's blog
  • EconAcademics blog aggregator
  • Musings of the Sorts!

Links on Indian Economy

  • An Alternative View of India's Economic Policies
  • Business Cycles in India
  • Centre for Monitoring Indian Economy
  • Economic and Political Weekly
  • eSocialSciences
  • FT's India Page
  • Ideas for India
  • IGIDR Finance Group
  • India at LSE
  • India Knowledge@Wharton
  • India Macroeconomics Annual
  • India Policy Forum
  • Indian data at FRED
  • Indian Economc Review
  • Indian Economic & Social History Review
  • LSE: EOPP Indian State Data
  • National Institute of Public Finance and Policy
  • NIPFP Macro-Finance Group
  • Parliament Research Services
  • People's Archive of Rural India
  • Reserve Bank of India
  • The Economist's India Page

Categories

  • affirmative action
  • Agrarian Issues
  • book review
  • business cycles
  • comparative development
  • diverse perspectives
  • economic history
  • economic reforms
  • economics and governance
  • education
  • Financial Crisis
  • growth
  • inflation
  • Infrastructure
  • legal reforms
  • macroeconomics
  • monetary policy
  • policy
  • politcal economy
  • politics
  • public policy
  • RBI
  • regional imbalance
  • socioeconomic perspectives
  • Uncategorized
  • Unemployment
  • voting behavior

Archives

  • June 2017
  • April 2017
  • November 2016
  • September 2016
  • July 2016
  • June 2016
  • November 2014
  • May 2014
  • March 2014
  • January 2014
  • December 2013
  • November 2013
  • September 2013
  • August 2013
  • April 2013
  • February 2013
  • October 2012
  • September 2012
  • July 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • June 2011
  • April 2011
  • February 2011
  • January 2011
  • October 2010
  • August 2010
  • March 2010
  • December 2009
  • November 2009
  • October 2009
  • September 2009
  • August 2009
  • July 2009
  • February 2009
  • December 2008
  • November 2008
  • August 2008
  • July 2008
  • April 2008
  • March 2008
  • January 2008

Goodreads

Top Clicks

  • None

Meta

  • Register
  • Log in
  • Entries feed
  • Comments feed
  • WordPress.com

Create a free website or blog at WordPress.com.

Privacy & Cookies: This site uses cookies. By continuing to use this website, you agree to their use.
To find out more, including how to control cookies, see here: Cookie Policy