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From semiconductors to electric vehicles, governments are identifying the strategic industries of the future and intervening to support them – abandoning decades of neoliberal orthodoxy in the process. Are industrial policies the key to tackling twenty-first-century economic challenges or a recipe for market distortions and lower efficiency?
India's population is now a little over one billion; it will almost certainly surpass 1.5 billion by mid-century, overtaking China's population along the way before it stops growing. But, as worrying as this might appear, this actually represents a considerable demographic slowdown: India's population more than tripled during the past sixty years. Moreover, the economy is growing much faster than before. So will India be able to provide a comfortable home for 1.5 billion people?
I recently co-authored a study (with Tim Dyson, Leela Visaria and others) that concludes, with modest optimism, that while India can manage its population growth, it also faces a number of major difficulties.
True, poverty fell in the 1990's, while literacy rates and school attendance rose. But they did so unevenly. Most of India's big poor states - Bihar, Madhya Pradesh, Orissa, Rajasthan, and Uttar Pradesh - suffer from a combination of relatively slow economic growth and rapid demographic growth. Only Rajasthan's economy has kept pace with the rest of the country; the other four have not benefited much from trade and regulatory liberalization.
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