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Growth in South Asia

ACCELERATING GROWTH AND JOB CREATION IN SOUTH ASIA: Edited by Ejaz Ghani and Sadiq Ahmed; Oxford University Press, YMCA Library Building, Jai Singh Road, New Delhi-110001. Rs. 795.

The prevailing global economic crisis characterised by an uninhibited economic meltdown has fuelled scepticism about the market’s role in development almost in a manner that the collapse of former communist bloc did about the role of state. One may get the impression, at the outset, that this book is a renewed attempt to preach discredited wisdom about free market, but the fact is that several of its chapters share arguments that are empirically well grounded and adv ance the study of South Asian political economy beyond the conventional discourse of market and state. At a time when it is quite fashionable in the political arena as well as in academia to compare and contrast India and China, it is indeed refreshing to have a volume that moves beyond this orthodoxy, locates Indian economy in the larger context of South Asian economy, and seeks to compare and contrast India with nations such as Pakistan and Bangladesh, with which it has deeper cultural similarities and historical associations.

This book is a product of a conference jointly organised by the World Bank’s South Asia regional office and SAARC. It presents the material under three broad heads: growth opportunities for South Asia; sources of growth; and finally regional cooperation to promote growth.

Sadiq Ahmed and Ejaz Ghani, in their jointly authored paper, argue that India should seek to achieve the status of a middle income nation. They recommend measures like improvement of infrastructure, building of new institutions, and inclusion of regional public goods in the national development for the growth of the South Asian economy. In another paper, Jaffrey Sachs identifies four areas of action for South Asia. They are: investment in rural areas, regional trade and integration, paying attention to the natural environment — especially water — and greater role for business leaders to influence political outcomes. His paper is rather too short for a volume like this and it is based on one of his lectures. It is obvious that the editors have failed to persuade Sachs to contribute an extended paper, which would have definitely added to the quality of the overall analysis. Another contributor, Volker recognises the critical role of good governance in promoting growth and inclusiveness. The papers of both Sachs and Volker, though not comprehensive, provide valuable insights, considering that they have sustained interest in the subject.

The second part of the book focusses on the sources of strength for the future and analyses the policies and institutions required to accelerate growth. Considering that unemployment has been a major problem dogging the South Asian nations, it ought to receive much greater attention if these economies are to be transformed. Some papers in this section discuss various ways of addressing employment-related issues. Howard Pack talks about industrialisation, but argues that the path East Asia took is not viable for South Asia because of difficulties in market penetration. Kaushik Basu and Annemie Maertens argue that a key feature of South Asia is its large labour force. What has been a contentious issue here is whether the region could generate adequate employment to cater to such a vast work force. But a major hurdle standing in the way is the stringent labour law regime, which the authors argue needs to be changed and made industry-friendly. Such recommendations should take into account that a country like India which has a vast population of poor needs an effective safety net, without which labour flexibility could be highly exploitative.

The third and final part raises questions that have a critical bearing on efforts at boosting growth and equity in the region. Some chapters make the point that the barriers to trade and investment among South Asian countries are stronger than those faced by the rest of the world. L. Alan Winters looks into the benefits from deepening regional trade arrangements. The chapter concludes that through trade and integration they would move South Asia closer to emerging as a political and economic entity. Integration of energy and services also can give further boost to regional cooperation. Vladislav Vucetic and Venkataraman Krishnaswamy contribute to this analysis.

There is an attempt to explain the content of second generation reforms. Some papers recognise, but rather casually, that political tension among South Asian nations need to be tackled in order to further economic objectives. The editors should have addressed more seriously the question why the ruling elite of a region that accounts for a big chunk of the world’s poor is driven by an urge for political confrontation rather than economic cooperation. This is a big void which clearly weakens the context and undermines the central narrative. A couple of scholarly papers on such themes as the inter-connection between politics and economics would have given a realistic assessment of developmental challenges before South Asian nations. It is high time that the balance between politics and economics was restored in the study of political economy.

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