According to a study by Harvard’s Centre for International Development (CID), India has the potential to be the world’s fastest-growing economy over the next decade till 2024. The study is based on the 2014 trade data.
The Indian economy, which is currently projected to grow at 7 per cent per annum, could easily outpace the growth in Chinese economy that could slow to 4.3 per cent, according to Harvard’s latest study.
The CID department of Harvard is led by Professor Ricardo Hausmann, who is also leading the research for the ‘Atlas of Economic Complexity’.
His study not only presents an optimistic picture for India, but also shows that India is on an upward track based on its increasing sophistication in its industry, along with its ability to adapt to the changing global demand and variety in exports.
Talking about the Indian growth, Prof. Hausmann said:
“India has made important gains in productive capabilities, allowing it to diversify its exports into more complex products, including pharmaceuticals and even electronics.”
In his study, Hausmann further notes that India with its recent gains in complexity of its economy along with its ability to continue improving with time will also drive higher incomes, and “this will position India to lead global economic growth over the coming decade.”
The study, along with its growth projections, has released a new country ranking based on the 2014 economic complexity index.
The Index in turn incorporates data stretching back to 1962, where India is at the 42nd spot and over the years improved by five positions.
The rankings also continue to show Japan, Germany and Switzerland leading the table while the UK, the US and France (10th, 13th and 16th) seem to have all slipped.
The rankings show that oil based economies like Venezuela have slipped the fastest, and this supports the notion that a country with surfeit of mineral wealth can make the governments lethargic and encourages rentierism and thus act like a curse for them.
The study further shows that Southeast Asia and sub-Saharan Africa are the top gainers and have clocked the fastest per capita growth.
The area includes China, which has grown by an impressive 16 positions to reach the 17th spot, even though in the long run its prospects are getting dimmer.
The study has not failed to recognize the country’s know-how, which enriches its community’s complexity and is often supplied by migrants.
Talking about this, Hausmann said:
“Immigration policy must confront the fact that many of the firms that help diversify a country and drive its growth are started by immigrants and foreign firms.”
Further shedding light over the economic complexity of a country and how it helps, Timothy Cheston, a CID team member, said:
“Sustained growth is fundamentally human driven. The greater the diversity of productive know-how in a place, the more complex products it can make, which underpins income gains.”
The study also shows a bullish growth on east Africa, with Uganda, Tanzania and Kenya all making the top 10 list, and all predicted to grow at least by 5.5 per cent annually.
This growth forecast is also favourable for south Asian countries like the Philippines, Indonesia and Vietnam which it states could grow above the current global averages.
Though the advancement of economies in the developing countries are the fastest, the forecast for advanced economies is more muted with the US expected to grow just at 2.8 per cent, UK and Spain at a slightly higher rate, but Germany and Italy at a much lower rate.