Month: January 2005

Economic development is clearly possible. Examples of economies which have developed are not hard to find. Western Europe developed following the industrial revolution first and later the United States also developed rapidly. Japan’s development was closely followed by the development of the East Asian economies, starting with Taiwan. Given so many instances of economies–large and small–developing is persuasive evidence that economic growth and development does belong to the realm of the possible.

Why has not India developed during the last 60-odd years when other economies have during the same period? What have been the impediments? Those sort of questions need to be asked and seriously answered. These scribblings of mine essentially focus on exploring issues that touch upon India’s economic growth and development. Here I will continue where I left off the last time.

India’s development is predicated on rural economic development because over 70 percent of Indians live in rural areas. Rural development is not the same as the development of rural areas. Rural area development is a sufficient condition for rural development but it is not a necessary condition at all. For India, rural development has to focus on the development of rural people rather than development of rural areas.

The distinction between the development of the people of rural areas and the development of the rural area is important. Case in point: the development of rural America.

At the turn of the 20th century, the US population was largely rural. Agriculture and related occupations employed the vast majority of Americans. The government saw the need to make higher education available to the rural populations. That was the birth of the so-called land-grant universities. (The University of California, which I attended for several wonderful years, is one such.)

Providing higher education to the children of the rural families was the need. So did they start very little colleges in the tens of thousands of little rural communities? No. They started large universities for the children of farmers to go to. The idea was that these trained people would then go back to the farms and increase the farm productivity. But what was the actual outcome? The children of the farmers got urbanized and did not want to go back to the rural areas. As luck would have it, technologies developed in urban areas were successful in raising farm productivity which meant that so many were not needed in the farms anyway. And who developed the technologies and labored in all those urban areas? Those children of rural farmers who went to the colleges were the people who supplied all the necessary bits that the rural farmers required.

The point I am trying to make is that it was not rural development that made the difference in the rural areas. It was what happened in the urban areas that changed the rural areas.

The problem with rural development, in my considered opinion, is that the focus has been the village. Nothing wrong with focusing on a village, of course. But you do have a problem if you have to focus on 600,000 villages. The moment you try to focus on 600,000 thousand of anything — villages, songs, books, cars, you name it — you become unfocused and unhinged. That is what happened with rural development.

Where did it all start? I think it was MK Gandhi’s insistence on a village-based economy that started this unhinged process. Indians take very easily to hero-worship. It is easy to just worship someone and then leave all the thinking to them. All the netas (leaders) of India then took up the mantra of village development. Self-reliance was the corner-stone of this grand edifice of the village economy. And therein lay the trap.

{to be continued.}

The story goes that a man goes to a Chinese acupuncturist for treating his headache. The doctor examines the man thoroughly and then starts to stick needles into the patient’s forearm. “Doctor,” the patient complains, “I have a headache. Why are you concentrating on my arm?” The doctor smiles and says, “See arm, see head. See! they are connected!”

Simple story but has a great deal of wisdom. The body is a unity and when one bit hurts, it is a signal that there is something wrong with the system. The pain may be localized but that does not necessarily mean that the cause of the pain is in the same location. In fact, it may even be that treating the pain will merely mask the symptom and not address the deeper cause. Superficial treatments could make things a lot worse because resources may be misdirected and precious time would be lost. In any sufficiently complex system, a holistic approach is a must for diagnosing and treatment of problems.

A personal anecdote. A friend’s wife who was in her late 20’s suddenly started having severe backache. They spent several months going to doctors who concentrated on the muscular-skeletal system and various chiropractors treated her. But unfortunately the back-pain was in fact just a symptom of kidney cancer. By the time they diagnosed that, it was rather too late.

An economy, much like the human body, is a complex system with various interconnected bits and dependencies, both internal and external. A holistic approach to the diagnosis and treatment of underdevelopment of economies is absolutely essential. Any competent development economist realizes the above of course. The catch is that to operationalize that insight is a non-trivial task. Furthermore, while the basic diagnosis and the treatment can be articulated by economists, the implementation (at least in a major part) involves politics, culture, and other such areas that are even more messy than economics.

The point to remember is that the problem we are addressing is not simple and simplistic solutions, however politically feasible, may be inadequate. One of the greatest dangers is posed by an incomplete understanding of the real problem. I call it the “Spurious Pain” problem. The so-called “Digital Divide” is one such. Among the more brain-damaged solutions to that spurious pain: PCs in every village. (I have written about this elsewhere in this blog.) Another example: farmers cannot pay for electricity. Solution to that spurious pain: free electricity for farmers.

The matter with spurious pain solutions is that instead of solving the problem, it actually accentuates the causes of the problem and one is faced with a bigger problem down the road than the one that one started off with.

Now on to the larger matter at hand. India’s development engages a lot of attention. India’s development is predicated—correctly, in my considered opinion—on rural development because around 70 percent of Indians live in rural areas. The first impulse, therefore, is to conclude that for India to develop, rural areas must be developed. For the moment, let us set aside the issue as to what exactly do we mean by “development.” Let us assume that meaning of “development” is common knowledge, knowing full well that it needs to be rigorously defined if we are serious about solving the problem of development.

The question I would like to explore here is this: Is rural development the same as development of rural areas, or is it development of the people who live in rural areas? My contention first is that the two are not the same. The solution to rural underdevelopment (and consequently to the development of the entire economy) would depend on that distinction. Second, I contend that, under certain conditions which exist in India, development of the rural areas may not be feasible at all. I argue that we should be addressing ourselves to the development of rural people, and not rural areas. In fact, I submit that it is the misplaced emphasis on the development of rural areas which is posing an impediment to India’s economic growth.
{Continued here.}