BREAD Working Paper No. 209, March 2009

Asian Century: A Comnparative Analysis of Growth in China, India and other Asian Economies

Kaushik Basu

Abstract

The paper argues that if the Chinese economy had failed, mainstream economics would have described this as completely predictable, given the extent and nature of involvement of the Chinese state in the functioning of markets and the economy. The fact that China has succeeded therefore should lead us to question our textbook doctrines of development. Much of this paper is presented as a comparative study of India, China and, briefly, other Asian nations. It is shown that the mainsprings of development in these nations are widely different, even though their trajectories of growth are converging. The paper argues that social and political priming plays a major role in determining which policies will work. In the case of China, while the liberalization from 1978 onwards is important, the social preconditioning achieved during the high-noon of the Maoist period, up to 1978, is equally significant. In judging the sustainability of growth in Asia it is essential to keep these social and political factors in mind.

Keywords: China, India, growth, politics, social priming

JEL classification codes: O11, O43, O53

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