Yasheng Huang is the professor of political economy and international management and holds the international program professorship in Chinese economy and business at Sloan School of Management, Massachusetts Institute of Technology (MIT). Professor Huang has authored several books on the role played by FDI, investment controls and financial reforms in the Chinese economy. At MIT Sloan School, Professor Huang founded and runs China Lab and India Lab, which aim to help entrepreneurs in China and India improve their management.
China and India are unambiguous success stories of economic reforms and globalisation. This much we know and agree upon. Although scholars debate about the relative importance of different economic policies, to the extent there is any consensus, most would agree that the cumulative effects of the policy package adopted in the two countries have worked in delivering growth.
(This story appears in the 04 June, 2010 issue of Forbes India. To visit our Archives, click here.)
Professor Huang,<br /> <br /> I think you cover many important points, especially the decidedly mixed track record of authoritarianism in successfully promoting economic growth. There are cases of economic failure under authoritarianism in other parts of the world as well, and along with your examples, they serve to illustrate that authoritarianism, like democracy, can manifest in different forms.<br /> <br /> A couple of comments I wanted to make:<br /> <br /> 1. Theoretically speaking, while democracy and capitalistic economic growth require/promote many of the same characteristics, it is important not to gloss over the tensions between the two. For example, while democracy relies on political and social equality within society, it could be argued that capitalism propagates economic inequality between different strata of society. This tension and others suggest that the connection between democracy and capitalism/economic growth is not so self-evident.<br /> <br /> 2. You did not really discuss the issue of causality between democracy and growth. They may certainly be compatible, but can we draw, for example, a causal connection between India's illiberal democracy in the 1970s and its low rate of growth during that same period?<br /> <br /> 3. A bit of a nitpick, but I think you overstate your case when you say "..."if you live under 1 dollar a day, pretty much everything is about economics". For instance, Ben Olken at MIT has a forthcoming paper demonstrating that Indonesian villagers who directly participated in selecting development projects for their villages reported substantially higher satisfaction across a variety of measures. This finding would suggest that economics is not the only thing that matters to poor people, and fits nicely with Sen's capability framework. <br /> <br /> Again, enjoyed reading your piece!
on Jun 6, 2010This is really a very interesting way of looking at democracy as a means to economic growth. This is a must know for any Indian who is doubting the credibility of democracy in economic growth.
on Jun 5, 2010