Newspaper article International Herald Tribune

Why India Trails China

Newspaper article International Herald Tribune

Why India Trails China

Article excerpt

Failing to invest in the health and education of the poor is a drag on economic growth.

Modern India is, in many ways, a success. Its claim to be the world's largest democracy is not hollow. Its media is vibrant and free; Indians buy more newspapers every day than any other nation. Since independence in 1947, life expectancy at birth has more than doubled, to 66 years from 32, and per-capita income has grown fivefold. In recent decades, reforms pushed up the country's once sluggish growth rate to around 8 percent per year, before it fell back a couple of percentage points over the last two years. For years, India's economic growth rate ranked second among the world's large economies, after China, which it has consistently trailed by at least one percentage point.

The hope that India might overtake China one day in economic growth now seems a distant one. But that comparison is not what should worry Indians most. The far greater gap between India and China is in the provision of essential public services -- a failing that depresses living standards and is a persistent drag on growth.

Inequality is high in both countries, but China has done far more than India to raise life expectancy, expand general education and secure health care for its people. India has elite schools of varying degrees of excellence for the privileged, but among all Indians 7 or older, nearly one in every five males and one in every three females are illiterate. And most schools are of low quality; less than half the children can divide 20 by 5, even after four years of schooling.

India may be the world's largest producer of generic medicine, but its health care system is an unregulated mess. The poor have to rely on low-quality -- and sometimes exploitative -- private medical care, because there isn't enough decent public care. While China devotes 2.7 percent of its gross domestic product to government spending on health care, India allots 1.2 percent.

India's underperformance can be traced to a failure to learn from the examples of so-called Asian economic development, in which rapid expansion of human capability is both a goal in itself and an integral element in achieving rapid growth. Japan pioneered that approach, starting after the Meiji Restoration in 1868, when it resolved to achieve a fully literate society within a few decades. As Kido Takayoshi, a leader of that reform, explained: "Our people are no different from the Americans or Europeans of today; it is all a matter of education or lack of education." Through investments in education and health care, Japan enhanced living standards and labor productivity -- the government collaborating with the market.

Despite the catastrophe of Japan's war years, the lessons of its development experience remained and were followed, in the postwar period, by South Korea, Taiwan, Singapore and other economies in East Asia. …

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