INSTITUTIONS, MARKETS AND FIRMS: GROWTH AND STRUCTURAL CHANGE IN CHINA AND INDIA Course Instructor: Mritiunjoy Mohanty Objective: The rationale for this course is perhaps mostly aptly put by Bardhan (2010) in explaining the motivation behind his new book: [a]n attempt to look inside these two countries and carry out a comparative assessment of their economic achievements and their still massive problems with a focus on structural and institutional issues in the domestic political economy context. p.2 Differently put the course seeks to explain the choices the two countries have made and how these are shaped by both contingent and structural factors. In addition, it also seeks to explore how firms have been shaped by and shaped these outcomes. To that end, the course is divided into two parts Part I sets out the framework for analysis and Part II is a comparative assessment of the two countries. Course Outline: Part I: The Framework: I: Growth and structural change: an introduction Jones, C. (2006), Introduction to Economic Growth, WW Norton and Co., New York Syrquin, M. and H. Chenery, (1989), Three Decades of Industrialisation, World Bank Economic Review, Vol. 3(2), pp 145-181 II: Different strokes for different people varieties of capitalism: liberal market economies and co-ordinated market economies Boyer, R. (1997), The Varieties and Unequal Performance in really Existing Markets in R. Boyer and J. Rogers Hollingsworth, Contemporary Capitalism: The Embeddedness of Institutions, Cambridge University Press pp 55-93 Boyer, R. and J. Rogers Hollingsworth (1997), The Varieties of Institutional Arrangements and their Complementarity in Modern Economies in R. Boyer and J. Rogers Hollingsworth, Contemporary Capitalism: The Embeddedness of Institutions, Cambridge University Press pp 49-54 Hall, P.A. and D. Soskice, (2001), Introduction to Varieties of Capitalism in P.A Hall and D. Soskice (eds.), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford University Press. pp 1-69 Howell, C. (2003) Varieties of Capitalism: and then There Was One?, Comparative Politics, 36, pp 103 124. Streeck, W, (2001), Introduction: Explorations into the Origins of Non-liberal Capitalism in Germany and Japan in W. Streeck and and K Yamamura, The Origins of Non-liberal Capitalism: Germany and Japan in Comparison, Cornell University Press. pp 1-38
Streeck, W. and K Yamamura, (2003), Introduction: Convergence or Diversity: Stability and Change in German and Japanese Capitalism in W. Streeck and and K Yamamura, The End of Diveristy? Prospects for German and Japanese Capitalism, Cornell University Press. pp 1-50 III: Globalisation and Changing Production Technologies: Modular production technology and the decision to out-source and off-shore The rise of modular production technology; the demise of the vertically integrated firm; modular technology and the decision to outsource; global production networks and the decision to outsource and off-shore; the return of geography; the rise of regional economies; inter-firm competition and cooperation Berger, S., (2005) How We Compete: What Companies Around the World Are Doing to Make it in Today's Global Economy, Random House Dicken, P. and A Malmberg,. (2001) Firms in Territories: a Relational Perspective, Economic Geography, 77, pp 345 363. Herrigel, G. and J. Zeitlin, (2010) Inter-Firm Relations in Global Manufacturing: Disintegrated Production and Its Globalization in G. Morgan,, J. Campbell,, C. Crouch, P. H Kristensen, O. K. Pedersen, and R. Whitley, (eds) The Oxford Handbook of Comparative Institutional Analysis, Oxford, Oxford University Press. Sabel, C. and J. Zeitlin, (2004) Neither Modularity Nor Relational Contracting: Inter-Firm Collaboration in the New Economy, Enterprise and Society, 5, 3pp 88 403. Saxenian, A. (2002) Transnational Communities and the Evolution of Global Production Networks: The Cases of Taiwan, China, and India, Industry and Innovation, 93, pp 183 202. Whitford, J. and C. Potter, (2007) Regional Economies, Open Networks and the Spatial Fragmentation of Production, Socio-Economic Review, 5, pp 497 526. Part II: China and India: a comparison IV Decolonisation and Revolution the institutional framework for growth V Accounting for growth: the demand and supply side Sources of growth; investment; savings Bosworth, B. and S. Collins, (2007), Accounting for Growth: Comparing China and India, NBER Working Paper 12943, National Bureau of Economic Research, Cambridge, USA Brandt. L., C. Hsieh and X. Zhu, (2007), Growth and Structural Transformation in China, in L. Brandt and T.G. Rawski, (eds.) (2007), China s Great Economic Transformation, Cambridge. Pp 683-728 Kuijs, L., (2005), Investment and Saving in China WPS3633, World Bank Mohanty, M. and V.N. Reddy (2010) 'Some Explorations into India s Post-Independence Growth Process, 1950/51-2002/3: the demand side', mimeo, Indian Institute of Management Calcutta
VI Globalisation, Economic and Institutional Reform Imperatives for reform and integrating in the global economy Brandt, L. and T.G. Rawski, (2007), China s Great Economic Transformation, in L. Brandt and T.G. Rawski, (eds.) (2007), China s Great Economic Transformation, Cambridge pp 1-26 Branstetter, L. and N. Lardy. 2006. China s Embrace of Globalization Working Paper 12373, National Bureau of Economic Research, Cambridge, MA. Joshi, V. and I.M.D. Little (2004), India's Economic Reforms, 1991-2001, Oxford University Press VII Agriculture: Growth, Agrarian Crisis and surplus labour Fan, S. and A. Gulati, (2008), The Dragon and the Elephant: Learning from Agricultural and Rural Reforms in China and India, Economic and Political Weekly, June 28 FAO (Food and Agriculture Organization of the United Nations). 2006. Rapid Growth of Selected Asian Economies: Lessons and Implications for Agriculture and Food Security: China and India. Regional Office for Asia and the Pacific. Bangkok: FAO. VIII Industrialisation Industrial policy as an enabler of growth; the possibility of small-industry led development; capitalism and the logic of scale; entrepreneurship and growth; the state as an entrepreneur Chaudhuri, S., (1998), Debates on Industrialisation, in T.J. Byres (ed.), The Indian Economy: Major Debates Since Independence, Oxford University Press, New Delhi Chaudhuri, S., (2005), The WTO and India's Pharmaceuticals Industry: Patent Protection, TRIPS, and Developing Countries, Oxford University Press. Chapter 2. Gokarn, S., A. Sen, and R. Vaidya, eds. 2004. The Structure of Indian Industry. New York: Oxford University Press. Brandt, L. and T.G. Rawski and J. Sutton (2007), China s Industrial Development, Great Economic Transformation, in L. Brandt and T.G. Rawski, (eds.) (2007), China s Great Economic Transformation, Cambridge pp 569-632 Huang, Y., (2008), Capitalism with Chinese Characteristics: Entrepreneurship and the State, Cambridge Putterman, L., (1997), On the Past and Future of China s Township and Village Owned Enterprises, World Development, Vol. 25 (10), pp 1639-55 VIII: Services-led Growth
Arora, A. and A. Gambardella, (2004), The Globalization of the Software Industry: Perspectives and Opportunities for Developed and Developing Countries, Working Paper 10538, National Bureau of Economic Research, Cambridge, MA Arora, A. and S. Athreye, (2001), The Software Industry and India s Economic Development, Discussion Paper 2001/20, United Nations University/World Institute for Development Economics Research, Helsinki Dasgupta. S. and A. Singh, (2005), Will Services be the new engine of Indian economic growth Development and Change. Vol. 36(6) Gordon, J. and P. Gupta, (2005), Understanding India s Services Revolution, in W. Tseng and D. Cowen (eds.) India s and China s Recent Experience with Reform and Growth, Palgrave Macmillan, New York. Singh, N., (2006), Service-led industrialization in India: assessment and lessons, mimeo, University of California, Berkeley IX: Finance: as a driver or a hand-maiden Financial intermediation, reform and growth Allen, F., J. Qian and M. Qian, (2007), China s Financial System: Past, Present and Future in L. Brandt, and T.G. Rawski, (eds.) (2007), China s Great Economic Transformation, Cambridge. pp 506-568 Khanna, Sushil, (1999), 'Financial Reforms and the Industrial Sector in India', Economic and Political Weekly, No.45 Reddy, Y.V. (2009), India and the Global Financial Crisis: Managing Money and Finance, Orient Blackswan, Hyderabad, India. Chaps 5,6 and 19 Reddy, Y.V., (2007), Developing Debt Markets in India: Review an Prospects RBI Monthly Bulletin, December X: Employment, inequality and poverty Texts Chandrasekhar, C.P. and J. Ghosh, (2006), Macroeconomic Policy, Inequality and Poverty Reduction in India and China, The Ideas Working Paper Series, Paper no. 05/2006 Chen, S. and M. Ravallion, (2004), How have the world s poorest fared since the early 1980s?, WPS 3341, World Bank Mohanty, M., (2009), The dynamics of employment generation in post-reform India, Working Paper Series WPS No. 640, IIM Calcutta XI: Firm response to globalization: Cases 1. WuMart Stores 2. Icebraker: China entry decision 3. Ranbaxy
4. Infosys/Wipro XII: The political economy of growth: the choices we make Arrighi, G., (2007), Epilogue in Adam Smith in Beijing: Lineages of the 21 st Century, Verso, London. pp 379-89 Chandra, N.K., (2010), Inclusive growth in neoliberal India: a façade?, Economic and Political Weekly, Vol. XLV, No. 8, pp 43-56 Mohanty, M., (2009), India s tryst with destiny: the choices we make, mimeo, Indian Institute of Management Calcutta Evaluation: mid-term and an end-term examination Registration cap: 50 REFERENCES Allen, F., J. Qian and M. Qian, (2007), China s Financial System: Past, Present and Future in L. Brandt, and T.G. Rawski, (eds.) (2007), China s Great Economic Transformation, Cambridge. pp 506-568 Arora, A. and A. Gambardella, (2004), The Globalization of the Software Industry: Perspectives and Opportunities for Developed and Developing Countries, Working Paper 10538, National Bureau of Economic Research, Cambridge, MA Arora, A. and S. Athreye, (2001), The Software Industry and India s Economic Development, Discussion Paper 2001/20, United Nations University/World Institute for Development Economics Research, Helsinki Arrighi, G., (2007), Epilogue in Adam Smith in Beijing: Lineages of the 21 st Century, Verso, London. pp 379-89 Berger, S., (2005) How We Compete: What Companies Around the World Are Doing to Make it in Today's Global Economy, Random House Bosworth, B. and S. Collins, (2007), Accounting for Growth: Comparing China and India, NBER Working Paper 12943, National Bureau of Economic Research, Cambridge, USA Boyer, R. (1997), The Varieties and Unequal Performance in really Existing Markets in R. Boyer and J. Rogers Hollingsworth, Contemporary Capitalism: The Embeddedness of Institutions, Cambridge University Press pp 55-93 Boyer, R. and J. Rogers Hollingsworth (1997), The Varieties of Institutional Arrangements and their Complementarity in Modern Economies in R. Boyer and J. Rogers Hollingsworth, Contemporary Capitalism: The Embeddedness of Institutions, Cambridge University Press pp 49-54 Brandt, L. and T.G. Rawski, (2007), China s Great Economic Transformation, in L. Brandt and T.G. Rawski, (eds.) (2007), China s Great Economic Transformation, Cambridge pp 1-26 Brandt, L. and T.G. Rawski, (eds.) (2007), China s Great Economic Transformation, Cambridge
Brandt. L., C. Hsieh and X. Zhu, (2007), Growth and Structural Transformation in China, in L. Brandt and T.G. Rawski, (eds.) (2007), China s Great Economic Transformation, Cambridge. Pp 683-728 Branstetter, L. and N. Lardy. 2006. China s Embrace of Globalization Working Paper 12373, National Bureau of Economic Research, Cambridge, MA. Chandra, N.K., (2010), Inclusive growth in neoliberal India: a façade?, Economic and Political Weekly, Vol. XLV, No. 8, pp 43-56 Chandrasekhar, C.P. and J. Ghosh, (2006), Macroeconomic Policy, Inequality and Poverty Reduction in India and China, THE IDEAs WORKING PAPER SERIES, Paper no. 05/2006 Chaudhuri, S., (1998), Debates on Industrialisation, in T.J. Byres (ed.), The Indian Economy: Major Debates Since Independence, Oxford University Press, New Delhi Chaudhuri, S., (2005), The WTO and India's Pharmaceuticals Industry: Patent Protection, TRIPS, and Developing Countries, Oxford University Press. Chapter 2. Dasgupta. S. and A. Singh, (2005), Will Services be the new engine of Indian economic growth Development and Change. Vol. 36(6) Dicken, P. and A Malmberg,. (2001) Firms in Territories: a Relational Perspective, Economic Geography, 77, pp 345 363. Fan, S. and A. Gulati, (2008), The Dragon and the Elephant: Learning from Agricultural and Rural Reforms in China and India, Economic and Political Weekly, June 28 Gokarn, S., A. Sen, and R. Vaidya, eds. 2004. The Structure of Indian Industry. New York: Oxford University Press. Gordon, J. and P. Gupta, (2005), Understanding India s Services Revolution, in W. Tseng and D. Cowen (eds.) India s and China s Recent Experience with Reform and Growth, Palgrave Macmillan, New York. Hall, P.A. and D. Soskice, (2001), Introduction to Varieties of Capitalism in P.A Hall and D. Soskice (eds.), Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, Oxford University Press. pp 1-69 Herrigel, G. and J. Zeitlin, (2010) Inter-Firm Relations in Global Manufacturing: Disintegrated Production and Its Globalization in G. Morgan,, J. Campbell,, C. Crouch, P. H Kristensen, O. K. Pedersen, and R. Whitley, (eds) The Oxford Handbook of Comparative Institutional Analysis, Oxford, Oxford University Press. Howell, C. (2003) Varieties of Capitalism: and then There Was One?, Comparative Politics, 36, pp 103 124. Huang, Y., (2008), Capitalism with Chinese Characteristics: Entrepreneurship and the State, Cambridge Joshi, V. and I.M.D. Little (2004), India's Economic Reforms, 1991-2001, Oxford University Press Khanna, Sushil, (1999), 'Financial Reforms and the Industrial Sector in India', Economic and Political Weekly, No.45 Kuijs, L., (2005), Investment and Saving in China WPS3633, World Bank Mohanty, M., (2009), The dynamics of employment generation in post-reform India, Working Paper Series WPS No. 640, IIM Calcutta Mohanty, M. and V.N. Reddy (2010) 'Some Explorations into India s Post-Independence Growth Process, 1950/51-2002/3: the demand side', mimeo, Indian Institute of Management Calcutta
Putterman, L., (1997), On the Past and Future of China s Township and Village Owned Enterprises, World Development, Vol. 25 (10), pp 1639-55 Reddy, Y.V. (2009), India and the Global Financial Crisis: Managing Money and Finance, Orient Blackswan, Hyderabad, India. Chaps 5,6 and 19 Reddy, Y.V., (2007), Developing Debt Markets in India: Review and Prospects RBI Monthly Bulletin, December Sabel, C. and J. Zeitlin, (2004) Neither Modularity Nor Relational Contracting: Inter-Firm Collaboration in the New Economy, Enterprise and Society, 5, 3pp 88 403. Saxenian, A. (2002) Transnational Communities and the Evolution of Global Production Networks: The Cases of Taiwan, China, and India, Industry and Innovation, 93, pp 183 202. Singh, N., (2006), Service-led industrialization in India: assessment and lessons mimeo, University of California, Berkeley Streeck, W, (2001), Introduction: Explorations into the Origins of Non-liberal Capitalism in Germany and Japan in W. Streeck and and K Yamamura, The Origins of Non-liberal Capitalism: Germany and Japan in Comparison, Cornell University Press. pp 1-38 Streeck, W. and K Yamamura, (2003), Introduction: Convergence or Diversity: Stability and Change in German and Japanese Capitalism in W. Streeck and and K Yamamura, The End of Diveristy? Prospects for German and Japanese Capitalism, Cornell University Press. pp 1-50 Syrquin, M. and H. Chenery, (1989), Three Decades of Industrialisation, World Bank Economic Review, Vol. 3(2), pp 145-181 Whitford, J. and C. Potter, (2007) Regional Economies, Open Networks and the Spatial Fragmentation of Production, Socio-Economic Review, 5, pp 497 526. Cases: 1. WuMart Stores 2. Icebraker: China entry decision 3. Ranbaxy 4. Infosys/Wipro