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Why Growth Matters: How Economic Growth in India Reduced Poverty and the Lessons for Other Developing Countries Hardcover – April 9, 2013

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Product Details

  • Hardcover: 304 pages
  • Publisher: PublicAffairs; 1 edition (April 9, 2013)
  • Language: English
  • ISBN-10: 161039271X
  • ISBN-13: 978-1610392716
  • Product Dimensions: 9.4 x 6.4 x 1.3 inches
  • Shipping Weight: 1.2 pounds
  • Average Customer Review: 4.4 out of 5 stars  See all reviews (11 customer reviews)
  • Amazon Best Sellers Rank: #742,394 in Books (See Top 100 in Books)

Editorial Reviews


George A. Akerlof, Nobel Laureate in Economics, 2001
“Jagdish Bhagwati and Arvind Panagariya are two of the great intellectual lights behind one of the greatest miracles of economic history: the economic reform of India, and its subsequent takeoff.  It is not just the well-to-do who have benefited, but, especially, the poor.  The lessons from the spirit of 1991 are not just relevant for India today; they are also of prime importance for the billions of citizens of low income countries around the globe.”

Martin Feldstein, George F. Baker Professor of Economics at Harvard University and president emeritus of the National Bureau of Economic Research
“In this important book the two leading experts on India’s economy refute the claims of those who reject pro-growth policies in favor of redistribution schemes. India’s experience in the past two decades shows how a nation’s economic growth reduces poverty and improves the well-being of disadvantaged groups. Bhagwati and Panagariya explain what India needs to do now and how other countries can learn from India’s experience.”

Hernando de Soto, economist and author of The Mystery of Capital
“Assembling reams of evidence from India’s astonishing economic success story, Bhagwati & Panagariya make an unbeatable case for why market reforms are essential to economic growth—and improving the lives of the poor. Serious reformers throughout the developing world cannot ignore this book or Bhagwati’s work throughout the years.”

Ernesto Zedillo, director of the Yale Center for the Study of Globalization and former president of Mexico“Every important developing country should be the subject of a masterful book like this. Bhagwati and Panagariya have paid a great service to India—and actually other emerging countries—by writing it. If it’s a must read for scholars and practitioners of economic development, it should be absolutely mandatory for the Indian political leaders."

Pankaj Mishra, New York Review of Books
“A passionate case for more privatization and liberalization, and less protection for labor…Bhagwati has provided intellectual authority and sustenance to those who think that India, by prioritizing wealth-creation over health and education, can become a ‘role model’ for ‘other developing nations.’”

Publishers Weekly
“[Bhagwati and Panagariya] assert that India’s economic development is relevant to the developing world as a whole, and, in lively fashion, rebut myths of growth and poverty under the Jawharlal Nehru and Indira Gandhi administrations… As much of the world struggles with elevated debt levels, the vision of India as ‘a role model for reform today’ has applications reaching beyond the developing world.”

Washington Examiner
“All economic correlations are complex, and many factors are at play, but Why Growth Matters shows how the poor benefit from economic development and which regulations still stand in the way. As Pope Francis opens a discussion on reducing poverty, the book could not have come at a better time.”

James Crabtree, Financial Times
“This latest contribution from Jagdish Bhagwati and Arvind Panagariya, two Indian-born economists at Columbia University, is welcome. In Why Growth Matters, the duo provide perhaps the most full-throated defence to date of India’s economic liberalisation, which began in 1991 and is widely understood to have led to a period of fast growth over the past decade.“

Finance and Development (International Monetary Fund)
“For those who have followed India’s recent growth story, Why Growth Matters is a useful summary of both the history of economic reform in India and of the controversies these reforms have generated, as well as a detailed and practical explication of what is necessary for the future.”

Global Asia
“What are the secrets behind India’s economic growth and poverty reduction for the past two decades?... The answer offered in this book is simple and straightforward… [Bhagwati and Panagariya] present a convincing, orthodox growth model of India.”

Prospect magazine
“The book is written with zest and confidence… the evidence they have collected is deployed effectively.”

“An excellent read for students and faculty of economic and international development as well as anyone involved in the nonprofit humanitarian industry… Highly recommended.”

About the Author

Jagdish Bhagwati is university professor of economics at Columbia, and a long time fellow at the Council on Foreign Relations. A native of India, Professor Bhagwati studied at Cambridge University, MIT, and Oxford before returning to India in 1961 as professor of economics at the Indian Statistical Institute. He is the author of many books, among them In Defense of Globalization. Arvind Panagariya is Professor of Indian Economics at Columbia. He is a non-resident senior fellow at the Brookings Institution. He has been the chief economist of the Asian Development Bank and a professor of economics and co-director, Center for International Economics, University of Maryland at College Park. He is the author of, among other books, India: The Emerging Giant.

Customer Reviews

4.4 out of 5 stars
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See all 11 customer reviews
The authors provide lots of concrete examples here.
Thomas Bengtson
Some policies are more contentious than others and the authors arguments are not equally convincing but there is much to think about in this book.
A. Menon
Anyone concerned about the future of the world's largest democracy (1.350 billion and counting) should read this book.
Charles Dillingham

Most Helpful Customer Reviews

12 of 14 people found the following review helpful By Charles Dillingham on May 23, 2013
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Anyone concerned about the future of the world's largest democracy (1.350 billion and counting) should read this book. It is a detailed analysis of the country's economic past, present and future, but written in language that can be easily understood by anyone who can understand The Economist of WSJ.

My wife and I recently spent a month in India and fell in love with the country. We bacame familiar with how far they have come economically since they started to loosen the restrictions of the "license/permit raj" as they call it, but also of the enormous problems still facing the country and their current politicfal stalemate. This book doesn't deal with the political problems, except to refute one by one the positions of the Left on the effectiveness of the partial dismantling of the scolialist structure built by Nehru and his Congress party after freedom in '47.
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5 of 5 people found the following review helpful By A. Menon on August 21, 2013
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This book comes out at the perfect time. With US interest rates on the rise and capital harder to come by for emerging markets India is struggling to grow at anywhere near the growth rates from pre-financial crisis. Currently the debate is raging about what India needs to do to continue growing. The debate is more or less in two camps with those focusing on maximising growth and focusing on improving efficiency and those focusing on reducing inequality via redistribution and basic resource provision so as to be focusing on creating an environment for "inclusive growth". The authors fall into the first camp and argue that it will be growth that pulls India out of poverty and that redistribution in a constrained growth environment will be to the detriment of all. The book is split into 3 parts, Debunking hte Myths, The New Challenges: Track I reforms for faster and broader growth, Moderate Effective and Inclusive Redistribution: Track II.

The first part is a response to various issues the authors see as disruptive criticism of liberalizing India's markets. They discuss early stage developement economics, how growth has improved livelihoods across the board and not substantially impacted the Gini coefficient. It discusses specific health initiatives and schooling issues, in particular private vs public and the outcomes of student exam results. Many of these issues are very specific responses to criticisms voiced in newspapers hence for the reader they can seem a bit unnecessary- for example there is some argument about genetically modified seeds increasing farmer suicides. Part of this section seemed written directly for certain critics rather than a general audience.

The second part of the book focuses on reforms.
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3 of 3 people found the following review helpful By Gadget Wallah on November 23, 2013
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he first explanation of why India has done so terribly in attracting manufacturing that made any sense to me (it always astonished me that a low wage country like India would be afraid of the WTO - I understand job loss in high-wage countries). This book, though, is written as a response to Amartya Sen and Jean Dreze and reads a little oddly for that reason - there is a hidden opponent who is sometimes not mentioned explicitly.

From my reading of both books, the big difference in analysis is that Bhagwati analyzes progress between India pre-liberalization and India post-liberalization (mid 80's to early 90's as he identifies it, rather than just 1991). Dreze and Sen though choose to compare India to other 'comparable' countries. They come to different conclusions because the 'control' for each of them is quite different, arguably chosen to satisfy their pre-existing arguments. Personally, though, I find the comparison with other countries completely unconvincing. India is not a 'country' in the sense that most other countries are - it is much more like a continent such as Europe in its diversity of language and history (China and Russia might be similar, but are now very capitalistic states without the cumulative, unchangeable laws in the way that India has).

What was particularly interesting was the fact that (a) the cumulative nature of laws makes for a completely unwieldy and potentially contradictory set of rules (b) democracy forces populist rather than good economic solutions. Economically obvious solutions become impossible and (c) some of the destructive laws are really old - from British times even. In spite of growing up in India I had no idea that so much had carried over from pre-independance.

Bhagwati is clear and convincing.
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2 of 2 people found the following review helpful By William H. Overholt on November 19, 2013
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Bhagwati persuasively confronts socialist and Luddite myths about economic growth, while not quite persuading us that Indian democracy can spread the fruits of growth fairly.
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3 of 4 people found the following review helpful By Thomas Bengtson on August 14, 2013
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India was mired in low economic growth until reforms were implemented in 1991. Low growth led to persistently high levels of poverty. Once economic growth became real, significant reductions in poverty followed. In short, a poor country can't do much to alleviate poverty. There are lots of nice ideas - every child should have a good education - but if the country can't afford them, they remain just ideas.
The problem is that the reforms un-did things that sounded good on paper. For example, companies of a certain size should provide certain benefits to their employees. The authors provide lots of concrete examples here. The conundrum is that laws and policies designed to achieve certain good aims can actually backfire. (The authors cite laws pertaining to India's textile workers as an example.) Political realities make it tough to work through reforms that sound bad today but can reduce poverty tomorrow.
The book would have been more fun to read if I had known more about India and India's recent political and economic history. However my lack of knowledge didn't detract from this eye-opening book.
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