Essays on Economic Development in South Asia Report

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The paper "Economic Development in South Asia" is a great example of a report on macro and microeconomics.   This paper discusses the impact that economic liberalization has had on federal relations in India. The paper argues that economic liberalization has transformed federal relations in India from intergovernmental cooperation between the central government and the states towards inter-jurisdictional competition among the states. I believe that this change has resulted in an inconclusive legacy regarding economic polarization among the states. The paper concludes that inter-jurisdictional competition has complicated the Indian state's ability to address fundamental developmental challenges.

The gradual political realignment in India during the 1980s increased demands for a more decentralized federal system. As I have argued in a previous paper, these demands formed the blueprint for federal relations in the 1990s. In this paper, I will argue that a new phenomenon--economic liberalization--in India's political landscape is having a more lasting repercussion on federal relations in India. INTRODUCTION One of the most important outcomes of the economic liberalization policies undertaken by India in the 1990s is the concentration of foreign direct investment (FDI) into a few states.

This concentration has prompted Indian states to compete with each other for further foreign investment inflows. Indeed, economic liberalization has prompted a change in federal relations from intergovernmental co-operation between the central government and the states towards inter-jurisdictional competition among the states (Singh, 45). I define inter-jurisdictional competition as the ravioli and contentious relationship for resources among similar tiers of government (constituent units) or among localities within a region. Based on this premise, I will discuss whether or not inter-jurisdictional competition has increased the polarization between states and/or affected the ability of the Indian state to address fundamental developmental challenges (Aleaz, 103-4,9). The timing and pace of economic liberalization in India The transformation from a one-party dominant system through the 1970s to a multiparty system of governance at the state level by the mid-1980s have been one of the most important phenomena in India's party system.

One author has labeled the transformation from one-party dominance to a multiparty system of governance as a paradigm shift in Indian politics (Aleaz, 103-4,9).


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Ali Engineer, Asghar Lifting the Veil: Communal Violence and Communal Harmony in Contemporary South Asia (Hyderabad: Sangam, 2001)

Bhaduri, Amit and Deepak Nayyar, The Intelligent Person's Guide to Liberalisation (New Delhi: Penguin Books India, 2000),

Brennan, Geoffrey and James Buchanan, The Power to Tax: Analytical Foundations of a Fiscal Constitution (Cambridge: Cambridge University Press, 1999),

Mohan, Chandra 'Reforms on slow track', Business India, Vol 7, No 385 (December 1999), p 50-51; Sunil Jain and Hardev Sanotra, 'Economic reforms: questioning the pace', India Today, Vol 18, No 21, 1999,

Peterson, Barry Rabe and Kenneth Wong, When Federalism Works (Washington, D.C.: The Brookings Institution, 2002)

Saez, Lawrence 'A comparison of India and China's foreign investment strategy toward energy infrastructure', Journal of Developing Areas, Vol 32, No 2, 1998

Singh, Mahendra 'Political parties and political economy of federalism: a paradigm shift in Indian politics', Indian Journal of Social Science, Vol 7, 2004

Venkatesan, Problems in the Implementation of Economic Reforms at the State Level (New Delhi: National Council of Applied Economic Research, 2004).

Wildasin, David 'Nash equilibria in models of fiscal competition', Journal of Public Economics, Vol 35, No 2, 2003

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