The fact that China succeeded in spite of strong state involvement means that we have to think differently in terms of development theory. Given this, what do we learn from from the comparative study of China and India’s growth experiences? This is the theme of Kaushik Basu’s recent paper published in the Economic and Political Weekly.
Thinking about state’s role in China, it seems that there are multiple equilibria possible when it comes to state’s involvement in economic development. It would be interesting to characterize this equilibria and associated conditions in a theoretical model. Any takers for this ?