Economic Development in India

7323 Words Aug 10th, 2012 30 Pages
ECONOMIC DEVELOPMENT IN INDIA: THE ROLE OF INDIVIDUAL ENTERPRISE (AND ENTREPRENEURIAL SPIRIT)
Anil K. Lal* and Ronald W. Clement**

The Indian economy provides a revealing contrast between how individuals react under a government-controlled environment and how they respond to a market-based environment. Evidence suggests that recent market reforms that encouraged individual enterprise have led to higher economic growth in that country. India can generate additional economic growth by fostering entrepreneurial activity within its borders. To pursue further the entrepreneurial approach to economic growth, India must now provide opportunities for (1) education directed specifically at entrepreneurial skills, (2) financing of entrepreneurial
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Based on the successful experience of the former Soviet Union, many economists and policymakers concluded that, particularly in a poor country, planning was essential for the efficient allocation of an economy’s resources (Panagariya, 1994, p. 194).
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The history of U.S. business has shown how the pursuit of self-interest by individual economic agents has led to benefits for the larger society. Consider the well-known example of Henry Ford’s introduction of assembly line production. This technological advancement led to a significant increase in productivity at Ford Motor Company. Indeed, despite paying higher wages to his workers, Ford could still produce automobiles at a much lower cost and pass on part of that lower cost to consumers in terms of lower prices.

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Asia-Pacific Development Journal

Vol. 12, No. 2, December 2005

The governments in these newly independent nations assumed a significant role in economic development. They sought to quickly and substantially raise the standard of living through directed and controlled economic development. Apart from everything else, these developing countries invested heavily in education to promote literacy and to ensure an adequate supply of technical manpower to meet their growing needs. Further, these previously colonized nations did not want to
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