Letís not wait for a saviour

Ashoka Mody and Michael Walton

In the long run, it is democracy that must be leveraged for social and economic progress.

As a despondent year ends, there appear rays of hope. A healing world economy should help economic growth pick up. At home, a new Central government can only be better than the current one. And in Delhi, the democratic revolt against the daily humiliation of corruption could be the harbinger of more sweeping change.

But the challenges ó economic and political ó are great. GDP growth has slipped below 5 per cent a year ó a critical threshold. Harvard economists Lant Pritchett and Larry Summers report that countries rarely grow much faster than the world economy for extended periods. They suggest that India could enter a phase with GDP growth stuck in the 3 to 5 per cent a year range. Maintaining prolonged high growth rates is unusual because it requires uninterrupted forward-looking investment in infrastructure, education, and economic and social governance. The few countries that have broken free from regular relapses into low growth, mostly in East Asia, have worked hard to ensure such investment.

China, which Pritchett and Summers say faces the same risk as India, has bucked this tendency by continually investing in its future. Its world-class infrastructure is much admired. Today, China is staking a claim to the 21st century based on the quality of its human capital. Shanghai, a city of over 20 million, was at the top of the OECD's 2012 Programme of International Student Assessment of 15-year-olds (PISA) in maths, science and reading, giving its students a two-and-a-half year educational lead over American peers. Recent studies show that the cognitive skills being imparted by Chinese schools are robust predictors of GDP growth. China is racing ahead in R&D investment and the number of patents that the Chinese register in the US has increased from virtually nothing 20 years ago to almost on par with France.

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