Falling Behind and Catching Up: India's Transition from a Colonial Economy

38 Pages Posted: 16 Jan 2018

See all articles by Bishnupriya Gupta

Bishnupriya Gupta

University of Warwick - Department of Economics

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Date Written: January 2018

Abstract

India fell behind during colonial rule. The absolute and relative decline of Indian GDP per capita with respect to Britain began before colonization and coincided with the rising textile trade with Europe in the 18th century. The decline of traditional industries was not the main driver Indian decline and stagnation. Inadequate investment in agriculture and consequent decline in yield per acre stalled economic growth. Modern industries emerged and grew relatively fast. The falling behind was reversed after independence. Policies of industrialization and a green revolution in agriculture increased productivity growth in agriculture and industry, but Indian growth has been led by services. A strong focus on higher education under colonial policy had created an advantage for the service sector, which today has a high concentration of human capital. However, the slow expansion in primary education was a disadvantage in comparison with the high growth East Asian economies.

Keywords: colonial history, Long-run development, Service Sector led growth

Suggested Citation

Gupta, Bishnupriya, Falling Behind and Catching Up: India's Transition from a Colonial Economy (January 2018). CEPR Discussion Paper No. DP12581, Available at SSRN: https://ssrn.com/abstract=3102216

Bishnupriya Gupta (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

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