Navigating Spaces of Economic Growth

It is well known from the voluminous literature on economic growth that national policies and institutions play a major role in driving differences in per capita incomes across countries (Acemoglu 2009). These factors do so by affecting the incentives to invest in technology, and induce households to accumulate physical and human capital. Any institutional analysis of growth outcomes, however, tends to be embedded in a long run framework. Developing countries like India experience episodic growth, which is subject to phase transitions. The challenge becomes how to operationalise the role of institutions on economic growth in the medium run, where the relevant growth cycle may be, say, of a 15-year duration. The Political Economy of India’s Growth Episodes by Kunal Sen and Sabyasachi Kar does exactly this. It provides a political economy reading of India’s growth experience since 1950, using a medium run institutionalist perspective. In Chapter 1, the authors econometrically identify four growth episodes in India using a two-stage procedure. The first stage utilises the well-known Bai–Perron procedure to identify structural breaks. The second stage uses a magnitude-filter (for example, growth regimes must last a minimum of eight years) to further refine the set of candidate break-points estimated in the first stage. This yields four growth episodes: 1950–92; 1993–2001; 2002–10; and the post-2010 period.¹

States of Growth