> T C A Srinivasa-Raghavan: How the malayalees made it > > OKONOMOS > > T C A Srinivasa-Raghavan / New Delhi June 27, 2008 > > http://www.business-standard.com/common/news_article.php?autono=327191&leftnm=4&subLeft=0&chkFlg= > > > > The Kerala phenomenon ? of little work, high growth ? is > best explained by the capabilities approach to growth. > > The rest of India has always tended to ogle at Kerala and > the Malayalees. Even before they had taken over not just > the government of India ? and simultaneously become its > main opposition in 2004 (a political yin and yang if ever > there was one) ? the question was being asked: how do the > mallus manage to be so well off without working? The > Biharis and the UP bhaiyyas were especially outraged: ee > padhai likhai ka chamtkar hai, babua? > > They were not alone. The other bunch of layabouts ? > economists ? too were puzzled. So no less than a personage > that His Nibs, Amartya Sen, and his colleague at Harvard, > Martha Nussbaum, came up with this new theory, now known as > the capabilities approach to growth. > > Here what matters is not the usual caboodle of savings, > investments, skills, organisation and technology etc but > "substantial freedoms". These are things like > longevity, political and economic freedom, good health, > good education, clean environment etc. What matters is not > just how people function but whether they have the > capability to be able to function as they choose. Growth, > they said, happens when people are happy inside. > > Narendar Pani, a former colleague of mine at The Economic > Times, who has now reverted to type and become an economist > at the National Institute for Advanced Studies (NIAS), > Bangalore and his colleague there, Jafar K, have now come > up with a paper* that tells us just how it is that the > malayalees made it ? of having their cake and eating it > too. > > "Kerala's image of a low growth state with high > social indices has come up against some striking empirical > trends," they say. "Its growth rate has taken > off, it has become vastly less agrarian, and has yet > refused to urbanise." Their explanation: it is all a > result of the state's limited use of the capabilities > approach. > > They show how "the capabilities approach can affect > patterns of growth as well as the transition of agrarian > economies into non-agrarian ones. This in turn can affect > the process of urbanisation, contributing to the creation > of non-agrarian villages." > > The critical juncture, say the authors, was the election of > the Communist government in 1957 and the priorities it > established. Like Banquo's ghost, these lingered on. > The focus was on improving social opportunities, especially > education and health care facilities, at a time of low > growth. This became the 'Kerala Model'. "It is > often the cornerstone of arguments against a preoccupation > with growth alone and forms a part of Amartya Sen's > case for seeing development as freedom." > > Things remained sluggish for about two decades but then, > after 1987, growth started.. Economists were foxed: how > could a state where there was so little investment, grow so > rapidly? Amartya Sen came to the rescue.But of course there > were other factors as well: "remittances that were > growing very slowly during the earlier period began to > gather momentum by 1987-88 and took off after 1991." > Devaluation throughout the 1990s also helped. > > So investment did take place, except not in factories > because the mallus were so unionised. Jeffrey Sachs, being > American, was one of those who was not just foxed but also > quite incensed. He just couldn't figure it out. > > The authors also say that the "marginal propensity to > save of remittances was not just higher than that of > domestic income, but also doubled over the period 1991-92 > to 1999-2000 compared to the period 1980-81 to > 1990-91". The share of construction increased from 4.0 > percent to 9.3 percent, that of transport, storage and > communication from 6.0 percent to 9.2 percent and Other > Services from 15.2 percent to 17.2 percent. > > Well, then, high incomes, high savings and, one must assume > therefore, high investment: was growth such a mystery, after > all? Did the world needed a new theory to explain it? > > The only mystery was how Kerala did not urbanise and > non-agrarian villages grew. Pani and Jafar attribute this > to the emphasis on social development and the capabilities > approach. They may well be right, I don't know; but two > things do need pointing out in the Kerala context. > > One, thanks to fiscal devolution, Kerala was able to sponge > off the other states and the Indian Union. And thanks to > out-migration, it exported its worst problem, namely, > educated unemployment. Bihar, here the Sen-type freedoms > are in very short supply, is now emulating these two > aspects of the Kerala model. It seems to be doing well, > too. So what price capabilities? > > Someone ? perhaps Pani and Jafar ? should conduct a > comparative analysis? > ----------------------------------------------------------------------------------------------------------------------------------------------------------------- > > *Capabilities, growth and non-agrarian villages: Second > phase of the Kerala Model, National Institute of Advanced > Studies, Bangalore > > http://www.nias.res.in/docs/capabilities_growth.pdf > > > > > > > > -- > > > --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Green Youth Movement" group. 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