Archive for May 6th, 2014

Revisiting the need for Industrial Policy..

May 6, 2014

Life is coming a full circle atleast in economics. Things which were seen a strict no-no are making a comeback. And that too from organisations/experts who considered even mentioning such things as a huge taboo.  One such thing making a sort of comeback is Industrial Policy, a kind of action where government intervenes to  create certain indsutries.

Andres Velasco of HKS says that it is indeed making a comeback in LatAm Inter-American Development Bank  in its recent report is suggesting to use IP to push growth and development in the region.  He agrees that it seems to the best hope for the region. Earlier IP was ridiculed for removing market incentives. Now it is being promoted as addressing market failures. Velasco takes back to classical arguments over the need for state investments in areas where private sector will not be interested (kind of public goods).

Interesting times.. 

The Maruti Story – a book most people interested in Indian economy should read

May 6, 2014

Came across this amazing book – The Maruti Story by R. C. Bhargava and  Seetha. RC Bhargava obviously headed Maruti in its initial years and even does now. I had heard about the book but could only read it now.

This book has most (if not all) things to make it a classic. It gives you this really interesting political economy case of setting this really successful car company in India. It was a case of a really successful Public Private Partnership with the private player being a Japanese company. The success of this car company exceeded all expectations even the most optimistic ones. But it is both surprising and disappointing that there are not many reviews etc of the book. The book should have generated the kind of road shows which happens in the West selling their books (a la Piketty currently).

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How has Canada managed to always exempt itself from financial crises?

May 6, 2014

Renee Haltom of Richmond Fed has a nice short note on the topic. Though much was covered by Bordo et al in this paper and the Halton summarises their idea broadly.

The main thing is that Canada’s banking system evolved very differently. The banks were large and relatively well divsrsfied which meant that if one sector went down, the banks would remain fine. In Us banks were much smaller and large in number as there was restriction on branching in other states.  Even Fed did not address this issue of unit banking and it went all the way till 1990s when this restriction was removed.

Other things in Canada were:

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Dependence of states on central transfers: State-wise analysis..

May 6, 2014

Just love such papers from NIPFP stable. The core purpose of NIPFP is to understand public finance in India and such occasional papers really help figuring the maze of public finance in India. It is a huge interest area of this blogger. One can also see this primer  written by the blogger in his earlier role to get some feel of the topic.

This paper is written by C. Bhujanga Rao and D.K. Srivastava and analyses how much States rely on Centre for its finances. The authors first classify the 28 states into five categories and then use different ways to understand the dependence of states on centre:

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