Thursday, May 14, 2009

What a Difference 18 Months Can Make: India's Growth & Infrastructure

Yesterday's edition of The Wall Street Journal had an excellent article about problems facing India's growing urban centers. It had links to some informative interactive graphics, a slide show about one urban center - Lucknow, and an informative video. It is a rich resource for a variety of teaching environments including world history, current events, geography and economics, and I strongly recommend it.

That piece also reminded me of another article from the same source that I read about 18 months ago. That one spoke about the then surging Indian economy's positive effects on the poor. After a bit of digging, I found a link to it. It also has an excellent series of interactive graphics, and despite being 18 months old offers some interesting possibilities for discussion.

In the older article, the main point is that economic growth is an engine for social change. Public education was expanding and offering opportunity for many with a subsequent result that the caste system was slowly falling apart. There was a new confidence and a belief that the state may not necessarily be the best director of economic growth. And many of India's rural poor were choosing to move to the cities where they saw greater opportunity.

The more recent article speaks to the result of that movement. While opportunity did exist, much of it has dried up with the slack global economy. But the poor have not returned to their villages. They still choose the potential of the city despite a woeful lack of public services. Part of that shortfall is the result of insufficient funding, but part of it remains competition for use of public funds among overlapping governmental authorities. Large monuments to government officials are touted as "make work" projects. Funds are diverted to build modern roads providing access to monuments, rather than building bridges or water treatment plants, largely as a result of a decision made by government agencies.

In fairness, the rate of population growth would strain the resources of the cities even in the best of times. But the stories, when read together, provide an interesting problem for discussion about pubic goods and services, the role of government, and the productive value of infrastructure in promoting growth and opportunity.

I'm sure there's more to discuss than I've outlined, but the articles are well-written and additional information provides a rich resource for classroom use. I look forward to your comments.

This post relates to the following Keystone Economic Principles:
1. We all make choices.
2. There ain’t no such thing as a free lunch.
3. All choices have consequences.

4. Economic systems influence choices.
8. Quantity and quality of available resources impact living standards.

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