Posted on 10/25/2012 7:47:11 AM PDT by James C. Bennett
Capital and labor will flow to the best-performing states, pushing the lagging ones to raise their games.
India is a country of huge regional diversity and massive income inequality, with 22 official languages and 28 states, each with different social, cultural and political traditions, as well as vastly varying levels of industrialization and infrastructure.
Under India’s constitution, states have always held considerable powers, playing a leading role in law and order, electricity, education, land, and roads.
Several states have begun holding regular summits to advertise themselves to foreign investors, while chief ministers jet off to places such as China and the United States to sell their states as investment destinations.
The chief minister of the southern state of Tamil Nadu, J. Jayalalitha, reacted with dismay last year when told that South Korean carmaker Hyundai would build its next factory in the western state of Gujarat rather than expand in her state, amid reports that unreliable power supplies contributed to the decision.
“She was unhappy, pulling up her entire team working on electricity, saying, ‘We’ve got to solve this,’ ” said Ajay Shah of the National Institute of Public Finance and Policy. “If politicians feel this kind of pressure, it’s very good.”
Columbia University professor Arvind Panagariya said the economic reforms of 1991, which unleashed two decades of rapid growth, also were based on the principle of decentralization, with the government relaxing central planning and investment licensing rules and allowing states to compete for investments.
(Excerpt) Read more at m.washingtonpost.com ...
Interesting article highlighting the merits of weakening the powers of the federal government by enhancing those of the individual states.
Perhaps the Chinese people might learn lessons from India. Interesting Jan.2012 article.
http://www.economist.com/node/21543537
Good find!
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