Mr. Dani Rodrik, Rafiq Hariri Professor of International Political Economy at JFK School of Government, Harvard University, today addressed the IIMA PGPX students as part of their speaker series. Mr. Rodrik is rated as one of the Top 100 most influential economists in the world according to the Research Papers in Economics (REPEC) group.
Mr. Rodrik’s address focussed on the potential for growth in developing countries such as India and China in the current global economic scenario. As one of the proponents of the “Theory of Growth”, he shared unique insights on how growth can be created and sustained in developing economies through a combination of well targeted government reforms aimed at increasing labour productivity and education levels. According to Mr. Rodrik, closing existing gaps in knowledge and capital-labour ratios is essential for maintaining rapid economic growth.
An important message that was highlighted by Mr. Rodrik in the presentation was that developing nations are better off pursuing their own unique growth models based on pragmatism as opposed to the western models of blindly following the mantra of liberalization, privatization and stabilization. He emphasized that the future growth of a country will depend on its ability to integrate its economy with world economy, its capacity to maintain sustainable government finances, and its ability to institutionalize property rights. The government policies of the developed countries which focuses on ensuring economic stability , low inflation and improved governance has increased the resilience of economies but has not necessarily triggered or sustained growth. This is one of the key reasons why the Chinese and Indian economies, though hampered by internal challenges have outperformed the west.
In the Q&A session that followed, Mr. Rodrik provided specific examples from the current macroeconomic environment to illustrate his view on why Governments in India, China and other developing nations should avoid universal recipes, and focus rather on selective reforms. Mr. Rodrik remarked that the Indian economy has tremendous potential for growth and the government should implement policy reforms such as improving labour productivity by dispersal of workforce from resource intensive sectors like agriculture to manufacturing and services. Overall, the students found the interaction extremely relevant and enriching in the present global economic context.