Diversity in Economic Growth
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Diversity in Economic Growth

Global Insights and Explanations

Edited by Gary McMahon, Hadi Salehi Esfahani and Lyn Squire

Economists have long relied on cross-country regression analysis to identify the determinants of continued growth, but with only limited success. This book demonstrates the value of a different approach.
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Chapter 3: Explaining Growth in South Asia

Siddiqur Osmani


Siddiqur Osmani Economic growth is very much a post-colonial phenomenon in South Asia. The first half of the twentieth century, that spanned the final era of British colonial rule in the Indian subcontinent, witnessed the emergence of a nascent modern industry and some improvement in physical infrastructure, but overall economic growth was still very slow. During the period from 1990 to 1946, the gross domestic product (GDP) of British India1 crawled at the rate of 0.8 per cent per year. With population growing at about the same rate, this meant complete stagnation in terms of per capita real income. The final 15 years of the colonial era, starting from the onset of the Great Depression, was especially difficult. Per capita income actually fell during this period at the rate of 0.5 per cent per year, culminating in a devastating famine in 1943 which claimed at least 1.5 million lives in Bengal.2 The end of colonial rule in 1947 marked the beginning of modern economic growth in South Asia. The governments of the newly independent countries made a determined effort to lift their economies to a higher growth path by altering the colonial structure of production with the help of a series of economic plans. The results have been quite impressive, even if they are not as spectacular as those achieved by some high-performing countries of East and Southeast Asia. The GDP of South Asia grew at 4.7 per cent per year in the 45 years during 1960–2005, far higher...

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