Globalizing India

Dev NathanInstitute for Human Development

New DelhiDuke University, USA

Why Economic Growth?

• For itself?• As means to human development?

• Two measures– Economic development – GDP or GDP per capita– Human development – HDI

• Is there a relation between GDP (GNI) and HDI?

HDI

Three components of HDI1. Income2. Educational attainment3. Health /nutrition status

Is there a relation between income (GDP) and human development (HDI)? - As component- As instrumental variable

0 10000 20000 30000 40000 50000 60000 70000 80000 90000 100000 110000 1200000.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

0.547

0.687

f(x) = 0.125806024013024 ln(x) − 0.438635290574086R² = 0.884282247321597

Human Development Index as a function of per capita GNI

GNI Per Capita

HDI

China HDI = 0.687 India HDI = 0.547

GNI and HDI

• Low HDI – Avg. 0.456 – High elasticity of HDI with respect to GNI (>1)

• Medium HDI – Avg. 0.630– Medium elasticity (0.75 to < 1)

• High HDI – Avg. 0.741– Low elasticity (between 0.50 to 0.75)

• Very High HDI – Avg. 0.889– Very low elasticity

HDI of Regions

• Arab States - 0.641

• East Asia and the Pacific - 0.671• Europe and Central Asia - 0.751• LA and C -

0.731• South Asia -

0.548• Sub-Saharan Africa - 0.463• LDCs -

0.439

Does we need economic growth for human development?

• Distinguish between countries at different HDI levels

• Need for growth falls with increase in HDI

• Our need for growth as instrumental to human development is different from the need of capital to grow

Structure of world economy

• Developing economies – middle to low income, including emerging economies

• Developed economies – high income

• Asia, Africa and Latin America• Market of about $12 trillion, or 36 percent of

global gross domestic product in 2012, up from 10 percent in 1980

Projected Income for India by OECD

Size of economies

• GDP - per capita income and population size

• With population more than thrice that of USA, at one-third the per capita income, the Chinese and Indian economies will be larger than that of the US

• In PPP terms even earlier

Growing Openness of the Indian Economy?

Key External Debt Indicators

India: Poverty Ratio among Social Groups, 1993-94, 2004-05 and projected to 2015-16