Centre for Development Economics
Department of Economics, Delhi School of Economics


The mechanism of long-term growth in India


Pulapre Balakrishnan

Centre for Development Studies, Trivandrum

Friday, 22nd August 2014 at 3:00 PM

Venue : Seminar Room (First Floor)
Department of Economics, Delhi School of Economics

All are cordially invited

A stylised fact of recent Indian economic history is that once the rate of growth of the economy accelerated circa 1980 it has risen periodically and across policy regimes. In this paper we present a mechanism that can account for this behavior. We propose that the theory of cumulative causation in the presence of increasing returns can be the basis for such an explanation. Next, we write down a theoretical model that generates the observed behavior, i.e., periodic acceleration. The model’s implication is tested using the methodology of co-integration analysis.  It is not rejected by the data. We conclude that Indian economic growth is better understood in terms of its internal dynamics than in terms of shifts in the policy regime. The paper is able to reconcile the respective roles of economic policy in early independent India and the reforms launched in 1991 within a single framework.  

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