Experiences of Capitalism in India and Pakistan

Abstract

The objective of this study is to examine the economic policies and socio-economic changes which have taken place in South Asia for the last six decades. However, my focus will be mainly on India and Pakistan to try to examine how capitalism has been developing differently in these two countries. It seems to me that this study is important because the proponent of free-market polices (i.e. mainstream economists) ignore the poverty issues and emphasise mainly growth rates and unquestionably assume that 'trickle down' would solve poverty problems. We should also not forget that India is home to the largest number of poor in the world, and as such is an obvious test case for whether pro-market reforms work or not. The ruling elites cite high GDP (gross domestic products) growth rates as indicative of economic development and consequently the well-being of the people.Growth is seen as a panacea and in order to achieve higher economic growth rates both countries had earlier adopted import-substitution-industrialization (ISI) and later on neo-liberal (i.e. 'free market') economic policies. The study will also analyse the impact of neo-liberal economic reforms on socio-economic situation both in India and Pakistan and its impact on reducing poverty. In Pakistan these reforms were launched in 1988, while in India in 1991 under the IMF supervision. As a result both economies have witnessed an upsurge in GDP growth rates (especially in India). Despite the high GDP growth rates for the last two decades in India, for example, over all employment has not been growing. The service sector, which witnessed a rapid economic growth, accounts for a much smaller share in employment relative to their contribution to GDP. The study finds that capitalism has failed to remove poverty and inequality despite its long history of penetration in South Asia under colonial and neo-colonial regimes and in spite of being backed by the new technology and increased amounts of credits. The experience of Pakistan clearly illustrated this fact. There is a lack of discussion about the presence of a large proportion of people living in sub-human conditions and lack of overall and holistic development of human being.

Challenges for Industrialisation in India: State versus Market Policies

“…For instance, initially the development in Japan, then South Korea and most recently in China has been the most spectacular and the most widely discussed (Siddiqui, 2009;Das, 2006). However, proponents of 'outward-looking' industrialisation policy overlook the differences among the East Asian countries that successfully followed this policy (Siddiqui, 2013). Japan and South Korea had almost no foreign direct investment capital flows, while the economies of East Asian countries like Hong Kong, Singapore (Siddiqui, 2010) and more recently, China, have been dominated by inflows of foreign capital (Sen, 2007).…”

National Planning Strategies for Agro-based Industrial Development in Secondary Cities of Sindh Province, Pakistan

“…According to the European Institute of Urban Affairs (2012), secondary cities can be defined as "those cities outside the capital cities, whose economic and social performance is sufficiently important to affect the potential performance of the national and regional economy" [20,21]. Siddiqui (2011) had also suggested in his study that stable economic development in the agro-based sector can be a pre-requisite to attain sustainable growth for Pakistan and Sindh province. Other researchers also claim that secondary cities create strong internal economies by acting as a central hub for encouraging agricultural and trade sectors [7,12,22].…”

Growth and Crisis in India’s Political Economy from 1991 to 2013

“…India's growth has been led by the services sector, which includes real estates, IT, telecommunications, and banking and contributes nearly 50% to the GDP in 2013. Manufacturing, which experienced a remarkable growth and transformation of the East Asian economies, had rather grown much slower in India (Siddiqui, 2011). The agriculture sector, which still employs nearly two-third of India's workforce, remains stagnant.…”