This article by Raghuram Rajan seems to explain some of India's problems. Excerpt:
"In sum, even in a society where political institutions ensure that citizens' preferences matter, initial inequalities (in education and wealth) may be self-perpetuating. Citizens, fearing that the advantage gained by one group may come at the expense of the meager rents of the other, become like crabs in a bucket, preventing each other from getting out. Uncertainty about who will get the benefits of reforms can further compound resistance. Underdevelopment can persist with the full connivance of the exploited, even with reasonably well-functioning political institutions. Finally, while stylized, the example is consistent with the evidence that far too many poor economies, like India, have underemphasized universal education while overemphasizing higher education and that the poor and uneducated in a number of countries in Latin America have turned against (partial) economic liberalization because they see few of the new opportunities while bearing additional costs."
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swarup garu,
thanks for linking to this article..i've read it and find it very illuminating..some points that he makes are especially gratifying to hear because...i've been trying to make the same points on my blog and elsewhere.
'Finally, while stylized, the example is consistent with the evidence that far too many poor economies, like India, have underemphasized universal education while overemphasizing higher education..'
that part was something i agree with substantially.. in india, the 'overemphasis' on higher education hasbeen at the cost of universal education. even now, the govt seems to believe more in 'franchising' out higher education rather than withdrawing from it...and play a facilitating role.
universal education has also been sacrificed at the altar of a lot of other so-called welfare (leakage-prone) measures..and in propping up the public part of our mixed economy.
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