• India is the most important developing country in the world due to its sheer size and low income levels.
• India’s exports are mostly composed of low-value manufactured goods and raw materials/agricultural products.
• India’s services exports are 60% as large as its exports of goods.
• India needs to focus on labor-intensive manufacturing to move people out of agriculture and urbanize faster.
• The Modi government has made big strides in improving infrastructure, but education and literacy rates remain low.
• India has been trying to promote manufacturing through its “Make in India” initiative, but it has failed to gain much traction, possibly due to the Indian regulatory environment and business culture..
• The failure may be due to the focus on making things for the domestic market, which does not force companies to increase their productivity or develop new products.
• India has been trying to attract foreign direct investment through special economic zones (SEZs), but they have been mostly focused on service exports.
• Electronics hardware, semiconductors, and telecom equipment are the manufacturing sectors India should be focusing on, as they are perfect for globally integrated supply chains and offer plenty of opportunity for technological upgrading.
• India should also consider another round of land reform, as it can help small farmers own their own plots, increase agricultural output, and force landlords to become more entrepreneurial.
• Overall, India has the potential to become a major player in the global economy, and the reforms of the 1980s and 1990s have given Indians a taste of what their country can achieve.
• The article emphasizes the need for experimentation and learning from other countries in order to achieve economic development, with the goal of allowing the world’s largest country to take its rightful place among the industrialized nations.
Published February 6, 2023
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