Wednesday, February 01, 2006

The Common Factor that Powers Growth in China and India

China's growth miracle has long been explained by economists as the product of a decentralization reform strategy (in terms of the devolution of economic decision making power, not political authority, to the lower level of governments), read a good overview of this thesis here and here.

What I do not know, until now that is, is that the same reform strategy also characterizes India's reform strategy. Read this brand new working paper by Raghuram Rajan and his coauthors from the IMF and find out more yourself.

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