India and the invidious comparison with China

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In June I went to India for the first time. It was a quick trip, just a week, but I still got a pretty intense introduction to current debates on the Indian economy at the India Policy Forum in Delhi. As a China specialist with only a newspaper-reading level of familiarity with India, I was quite intimidated by the prospect of joining a roomful of people who have spent their entire lives working on tough economic questions of India. It turned out, though, that if you’re going into the equivalent of a high-level graduate seminar on Indian economics as an outsider, having a background in China is not the worst preparation. Almost every paper and every talk about India’s economic problems seemed to be motivated by some implicit comparison with China. At first I thought I was over-interpreting things because I am biased to look at things from a China perspective, so I asked around to check my perceptions. The answer was: Yes, all this is in fact about China. It’s because the Indian elite has assumed for decades that India is destined to be the next global economic superpower after China, so the overriding question for them is why that hasn’t happened and what needs to be done to make it happen. The comparison with China seems to revolve around a number of generally accepted stylized facts, which form the basis for identifying policy issues and posing research questions. To me (as, again, an outsider to these debates), the key ones seemed to be around manufacturing, investment, human capital and state capacity. One of the most obvious economic contrasts between India and China i…