How India’s politicians have been the main force behind economic reforms?

I was really surprised to read this note from John Echeverri-Gent of Univ of Virginia.

He says something surprising to most but not really to political economy/political science students. It is politicians/politics which matters for anything economic whether reforms or degeneration. So much so, the reforms in India under wither Rajeev Gandhi or 1991 reforms under PV Narasimha Rao etc came under some interesting political complusion/situation:

Economic reform in India presents a paradox for theories of the politics of economic reform. Recent work concerning the impact of globalization on the politics of adjustment contends that globalization creates opportunity costs which motivate economic interest groups to pressure the state for reform. Yet in India, the impetus for reform has not come from economic interest groups. India=s politicians have played a key role in initiating the process with virtually no pressure from economic interests in society. Secondly, the literature on the politics of economic reform asserts that the economic reforms will advance furthest by strong states with cohesive party systems. Yet reform initiatives were largely stifled under the apparently Astrong government@ of Rajiv Gandhi who won a mandate for change by leading the Congress party to victory capturing 415 of 541 seats in the lower house of parliament, the largest share of parliamentary seats in Indian history. In contrast, reform was more sustained under the weak minority government of P.V. Narasimha Rao after Rao was rescued from political obscurity in 1991 by a divided Congress party with only 226 of 501 parliamentary seats. Only a bit less perplexing is the limited progress achieved by the fractious center-left, thirteen party minority government that was known as the United Front from 1996-98.

This essay explains the paradox of India=s economic reform in an effort to advance broader theories of the politics of economic adjustment. It will use the Indian case to critically examine the contention developed in Keohane and Milner=s Internationalization and Domestic Politics that globalization creates opportunity costs that shape the domestic political process. It will advance their analysis by showing that it inadequately conceptualizes the politicians= incentives to reform. Globalization not only creates opportunity costs that motivate various economic sectors to press the state to implement economic reform, as they suggest. In some cases, it creates incentives for politicians to initiate reforms even without pressures from groups in society. The sequencing of economic opening and globalization appears to affect the mechanism through which globalization shapes domestic politics. In countries whose opening to the international economy preceded globalization, interest groups benefitting from the opportunities presented by globalization are likely to be more prominent in promoting economic reform. In countries such as India, whose economies remained relatively closed, the economic interests benefitting most from globalization may not exist or may lack the power to promote economic reform. In such cases, political leaders play a prominent role in initiating reforms when globalization presents them with opportunities to increase the resources under their control.

Leaving the essay and its dissection to the visitors…

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One Response to “How India’s politicians have been the main force behind economic reforms?”

  1. Reforms Phase I | Palak Mathur Says:

    [...] How India’s politicians have been the main force behind economic reforms? (mostlyeconomics.wordpress.com) [...]

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