Historical trajectories of local government in India and China

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After doing a round of India-China comparisons that focused on commonly cited macro indicators like manufacturing, investment and literacy (see last month’s post “India and the invidious comparison with China“), I wanted to highlight a lower-profile but perhaps even more interesting contrast: the structure of government and the nature of decentralization in large countries. One of the coolest China-India charts I have seen is in a 2020 article in the Journal of Economic Perspectives by Devesh Kapur, “Why Does the Indian State Both Fail and Succeed?” It shows how public employees in India, China and the US are distributed across different levels of government: Notably, India has many more of its public servants at the state level than China does at the equivalent provincial level, and many fewer at the local (i.e. cities and towns) level than China does. (The China numbers come from an interesting paper by Yuen Yuen Ang; the data sources unfortunately stop in 1998). On this measure, state capacity at the local level looks much stronger in China than in India, which helps explain some of the long-running economic differences between them. (The structural similarity of China and the US in public employment is also pretty interesting!) Some of the major indicators of India’s poor state capacity are its failures in delivering public services like health and education, which happen at the local level. China does much better in basic service delivery–and its local governments have also played a very obvious and important in driving growth, thanks to the competition and experimenta…