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Regional Economic Policies, Geography, and Growth Episodes in China's Coastal Growth Provinces: Lessons for the State of Gujarat

Bajpai, Nirupam

We believe that the State of Gujarat has a chance for a tremendous breakthrough in economic development during the current decade. There are several reasons for this view. Opening up of the Indian economy has produced new dynamism in India’s western and southern states, most
dramatically in the information technology sector, but in others as well. The new technologies especially information technology and biotechnology give new opportunities for economic and social development. In the post-reform period, Gujarat, in particular, has witnessed high growth in: chemicals and petrochemicals, engineering, agro and food processing. Demographic trends in Gujarat, especially a slowing population growth rate and a rising share of the population of working age, contribute to rising per capita income. Gujarat, with a diversified industrial base, continuing improvements in the state’s investment climate, one of the most attractive states’ for domestic private investors, setting-up Special Economic Zones (SEZs), availability of large skilled managerial and technical manpower, exporting almost 20 percent of India’s total exports, and last, but not the least, being a coastal state, with almost 1600 Kms of coastline, the State of Gujarat can become a major platform for labor-intensive manufacturing exports in the country, similar to what the coastal Chinese provinces have achieved during the last two decades. Briefly put, following an export-led growth strategy, Gujarat can get set for take off into a period of sustained high growth. In this paper, we analyze the growth experiences of China’s coastal provinces in order to draw relevant lessons for Gujarat. Briefly put, to attain and sustain high rates of economic growth, Gujarat needs to follow a two-pronged
growth strategy, wherein the first prong is export-led growth, and the second prong is rural improvement. For the first prong, lessons from the Chinese coastal provinces are particularly instructive, since the Chinese provinces achieved in the past twenty years the kind of export-led growth that Indian states could have achieved, but have so far failed to achieve
because of poor public policies. With regard to the second prong, Gujarat needs a specific strategy to bring modern economic growth to rural Gujarat, through a concerted campaign of infrastructure upgrading and appropriate re-design of state policy.

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More About This Work

Academic Units
Earth Institute
Center on Globalization and Sustainable Development
Series
CGSD Working Paper, 10
Published Here
September 8, 2015
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