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Economist and Friend: George Rosen (1920–2018)

Indira Rajaraman (indira_raja@yahoo.com) retired as RBI Chair Professor at the National Institute of Public Finance and Policy, and was a member of the Thirteenth Finance Commission.

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George Rosen, economist and steadfast friend of India, passed away in Chicago on 8 January 2018, at the age of 98. He was professor emeritus at the University of Illinois, Chicago. The title of Rosen’s delightful autobiography published in 2005, Globalization and Some of Its Contents: The Autobiography of a Russian Immigrant, says it all. In what is clearly a riposte to the famous diatribe against globalisation by Joseph Stiglitz (Globalisation and Its Discontents, 2002), the book speaks of what the freedom to migrate meant to people facing religious persecution, like his own family of Jewish extraction. Migration today is a contentious issue, and the persecuted of yesterday often become the persecutors of tomorrow, but Rosen saw resistance to religious and race labels as enabled only in a globally-linked world.

He produced a stream of scholarly work on India over a span of 50 years. Of his many books, the first, titled Some Aspects of Industrial Finance in India published in 1962, was a boon for students looking for some light on how the great industrial future promised by the leadership of the time was going to be financed. The contribution made by the book is attested to by its having been cited, after a lapse of more than 50 years, in a 2015 Economic & Political Weekly article on the subject by Partha Ray (“Rise and Fall of Industrial Finance in India,”EPW, 31 January 2015).

Rosen seized whatever data he could lay hands on, and concluded that the new development finance institutions set up at the time—starting with the Industrial Finance Corporation of India (IFCI)—enabled newer industries to obtain financing, in a situation where commercial banks tended to stay within their comfort zone of financing older industries with which they were familiar. In subsequent years, those state-funded development finance institutions ran aground, what with non-performing assets fuelled by poor diligence, and got washed out in the post-reform move towards universal banking. But what Rosen’s painstaking data-based work showed was that, at the time they were established, they played an important role in the industrial development of India.

An anonymous review of the book in the Economic Weekly criticised it for drawing conclusions from limited data, but concluded:

… [Rosen’s] work will be the most important one in the field not merely because he has been able to derive some interesting results but also for his freshness of outlook and methods of investigation. (“Industrial Finance,” Economic Weekly, 1 December 1962)

The issues flagged by Rosen’s book all those years ago bedevil us to this very day, given the poorly developed corporate bond market. The specialist institutions he supported for long-term finance have seen a limited rebirth of sorts, with the post-reform setting up of the Infrastructure Development Finance Company (IDFC) in 1997, and the India Infrastructure Finance Company Limited (IIFCL) in 2006, this time with a wider funding base, extending beyond the state, and better incentives for due diligence.

Many books on India followed. Among the more recent were Economic Development in Asia (1996); Contrasting Styles of Industrial Reform: China and India in the 1980s (1992); Industrial Change in India (1988); and the very interestingly titled Western Economists and Eastern Societies: Agents of Change in South Asia, 1960–70 (1986). On the last mentioned, when Rosen first engaged professionally with India in the 1950s as a member of a team from the Centre for International Studies at the famed Massachusetts Institute of Technology, there was a steady stream of Western economists visiting India to provide advice on how to achieve what in those days was quaintly termed “take-off into sustained growth.” Many of them were completely befuddled by the country and left, never to return. But Rosen stayed; with his scholarly interest in Indian policy, never pontificating, always data-based, and ever-willing to consider opposing viewpoints. The issue of Western-trained economists, and their ability to provide useful policy advice to India surges to the fore from time to time, and did as recently as
last year.

Rosen earned a PhD in Economics from Princeton University in 1949. In later years he worked as a researcher for the redoubtableRAND Corporation for a five-year term, and was chief economist at the Asian Development Bank from 1967 to 1971. Although the issues he addressed remained current and relevant to the later times through which he lived, he retained the courteous and self-deprecating manner of an earlier era. He also retained the preference of earlier economists for books as publication avenues, in place of the journal publications by which modern economists are judged.

He served in the army during World WarII as a radio operator, and characteristically described himself as having been “not a good” radio operator. But his side won the war anyway. His wife Sylvia Vatuk (a distinguished anthropologist with scholarly interests in India) survives him. For her, their children, and his many friends in India, he is irreplaceable.

 

 

Updated On : 12th Feb, 2018

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