Economic Growth and Development

(singke) #1


On my first visit to India as an economics undergraduate in the 1990s, I had
£900 to last for three months – a budget of £10 a day. I travelled in unreserved
second-class trains which involved an often brutal scramble merely to board
the train; actually finding a seat was at best an occasional and unexpected
pleasure. I stayed in some fairly seedy hotels, some of which cost not much
more than the price of a newspaper at home. But I always treated myself to a
good dinner, and in small towns this was often at the best restaurant in town.
My fellow diners were the prosperous families of the town with often a driver
sleeping in the car waiting for them to finish. If the restaurant was a bit quiet I
would often chat with the waiter. Where was I from? What job did my father
do? Why was I not married? A common lament I often heard was that the
waiter had graduated from university, sometimes having an MBA degree and
so was working in a restaurant until finding a job in a ‘respectable profession’.
It was odd. Why was a poor student able to eat in a good restaurant among the
prosperous and be served his food and drink by a waiter with much better
academic credentials?

The central fact in our economic world: global inequality

That this incongruous situation could easily still occur in the 2010s reflects the
central fact of global economic life: the massive inequalities prevailing in the
world economy. In 2012, according to World Bank figures, Norway had an
av erage income per person ($66,657) that was 436 times greater than Burundi
($153),or average incomes in Burundi were only 0.23 per cent of those in
Norway. I certainly didn’t work harder than Indian waiters, I hadn’t been more
innovative, I hadn’t saved for longer. I was eating in a good restaurant and he
was serving a poor student because he had been born in India and I in England.
In the mid-1990s the £900 I had saved for the trip was equivalent to four or five
times the average annual income of an Indian person.
To put this massive disparity – which only rarely finds its way into the
media – into perspective, the much-reported global financial crisis saw average
incomes in Britain dropby 2 per cent in 2008, the worst year. Greece saw
incomes fall from US$28,640 in 2008 to US$25,460 in 2012, a drop of around
10 per cent. Income levels in the other European countries that generated the
most doom-laden discussion – Ireland, Italy and Portugal – are now more or
less back to where they were in 2008.
Similarly European news reporting has been full of dramatic talk of a crisis
in education, social services and health care. Per capita expenditure on health

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