Rule and reform: China vs India

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Wednesday, December 05, 2007 at 2327 hrs argued that India lags China because of its institutions and its different interest group structure: democracy versus authoritarianism, fragmentation versus relative homogeneity. Kapur, director of the Center for the Advanced Study of India at the University of Pennsylvania, added ideas explicitly to the usual mix of interests and institutions, suggesting a new way of thinking about the difference between Chinese and Indian reforms.

My reading of the role of ideas (not necessarily completely in line with Kapur’s) is that China saw a much sharper shift in the conception of what forces drive material progress. China’s experience with central control of all facets of society and economy, the sharp discontinuities it had already undergone, and the ability of the Communist Party to reach down to the local level, meant that the country’s ideational shift was comprehensive and far-reaching. In India, on the other hand, economic reform has not been accompanied by a similar sea change in perceptions. Liberalisation has been seen by many in the bureaucracy or political leadership as a necessary evil, to be implemented grudgingly on an as-needed basis, rather than as a fundamentally new approach to organising the economy. It is important to realise that this is not a difference between elite and masses—it is large segments of the elite that have failed to change their attitudes, despite the failures of the old Indian model of supposedly state-led development. The result is a false equation of concern for distributive justice with a preservation of the ancien régime, or with restoration of some non-existent golden age of governance.

Perhaps it has been inevitable that ideas have been slow to change in India—it has had no Cultural Revolution, no proletarian or peasant revolution, no fundamental shaking up of social relations. This may be the critical difference between the two giants, but through its implications for ideational change or stability rather than through resulting differences in institutions and interest groups. India may need to see a more thorough shift in ideas about governance and markets if economic reform is to succeed in the long run. Kapur points out that new ideas are entering Indian discourse and policymaking, through the Indian Diaspora, and through a rise in entrepreneurship. These attitudinal changes may need to diffuse throughout society if India is to match China in its long run growth.