Why India has fared better than Africa

INDIA, which has lagged well behind Africa in economic reform, has nevertheless fared much better. Most Indian reforms occurred well before the spurt in GDP growth from 6% to 9%. British academic James Manor says that thoughtful people in Ghana and South Africa have asked him “How do the Indians do it? They have liberalised less than we have, but they have higher growth rates — and plenty of social stability.”

Let me attempt an answer. Economic success depends not just on economic reform but on institutional strength and historical skills — what economists call ‘initial conditions’. India and China are historical superpowers that accounted for 70% of world industrial production before the Industrial Revolution .

They declined during 300 years of western colonialism, but are now clawing themselves back to their initial high position. Indian bankers and traders in the 17th century were bigger than the East India Company .

Robert Clive thought that Murshidabad, which he entered after the Battle of Plassey, was richer than London in his time. Shajahan had the money and skills to build the Taj Mahal: his European contemporaries did not.

Seen in this light, the decline of India and China in the last 300 years was a temporary blip. Africa and Latin America will find it difficult to replicate the growth spurt in China and India because of very different initial conditions.

Lumping nations of Africa and Asia together into something called ‘developing countries’ is a political gimmick. In Africa, most agriculture was still slash-and-burn cultivation as recently as the 1970s. But most of Asia moved from slash-and-burn to permanent cultivation 3,000 years ago.

This provided leisure and opportunity for the ruling classes to develop considerable engineering and other skills. The exploited peasantry of 3,000 years also developed a cornucopia of skills and innovative techniques for survival. Africans emerging from slash-and-burn cultivators lack such skills: their economy had no markets or mercantile skills. Indians are not inherently superior in any way.

This is proved dramatically in India's tribal areas, which have just evolved from shifting to permanent cultivation. As in Africa, Indian tribal belts lack skills and mercantile attitudes. Plainsmen can easily dupe tribals into giving up their land.

The whole of Africa is not historically disadvantaged. Ancient agricultural countries like Egypt , Tunisia and Algeria are fully on par with India in growth potential, and in fact, are much richer than India today. But sub-Saharan Africa is disadvantaged compared to both India and Egypt. Progress in Indian tribal belts has been as difficult as in Africa. It is said that if a village committee in a tribal area has 11 tribals and one non-tribal, the non-tribal will dominate all decisionmaking: he alone will have the skills and resources.

It will take a couple of generations of good education and skill-building to close the gap. Many African countries are ahead of India in literacy. But they lag behind in institutional strength: many have been ruled and ruined by thugs.

The Nehruvian era was one of chronic economic underperformance. But it was also an era when institutional strength developed — democracy, independent judiciary, limits on arbitrary state action, high quality varsities and technical institutes.