Raghuram Rajan: belief

Transcript context

…Do you worry much about premature industrialization for India? The percentage of jobs and manufacturing has been declining for some while, but India’s not yet quite a middle-income country. It is a concern, but I would argue that there’s enough room for growth in India, doing the old traditional things. I wouldn’t worry about it right now. I think in the longer run, we have to worry. We certainly have to upgrade the quality of education in India significantly. More people have to be better prepared for the global economy; they’re not. We have many of the same problems that we talk about in industrial countries — too few people educated at the levels that the economy needs. But that said, I would say there are very low-hanging fruit in India, which if we pluck, we can generate 9, 10 percent growth for the next 10, 15 years that would get us firmly into middle income. I don’t think we necessarily need to go the Chinese way of manufacturing-led growth. Maybe that option has already closed out. But just simply building out the infrastructure in India, connecting people, getting internal trade up — you don’t need to go the external manufacturing route to get strong growth for some time. Oil-producing countries aside, are there countries, or even regions, that have done 9 percent growth without a lot of manufacturing and exports? Isn’t there a kind of cost disease that so many of the service sectors — even in wealthier countries — they just don’t increase in productivity much?…

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