An article this week called "How does corrupt India grow fast?" gets at some of the reasons that make real-estate and infrastructure development so difficult in India. It is one thing to outsource software development to India via the internet, it is an entirely different game to go to India to develop realestate or major projects that involve buying land, getting things through customs, getting permits and entitlements from government, and hiring large local labor forces.

Although I think this author raises a fascinating question, I disagree with the conclusions that he draws. I believe that the answer to the question, 'Why does India grow so fast?' is that India has two economies -- one fast-moving economy that is posting tremendous growth and productivity supported via trade with the West, and then the old, corrupt, slow-moving economy reinforced by persistent, centuries-old institutions.

Maybe Ashwin has some insight on this - he has studied corruption in India quite extensively?

Posted by rjorr at April 19, 2006 7:55 PM