“Inclusive institutions foster long-term economic growth, whereas extractive institutions impede it”. Examine this statement with relevant examples from India and other developing countries.
Kartavya Desk Staff
Topic: Inclusive growth and issues arising from it
Topic: Inclusive growth and issues arising from it
Q5. “Inclusive institutions foster long-term economic growth, whereas extractive institutions impede it”. Examine this statement with relevant examples from India and other developing countries. (15 M)
Difficulty Level: Medium
Reference: TH
Why the question The 2024 Economics Nobel laureates have argued that differences in the quality of economic and political institutions is what best explains the divergence in the economic fates of countries Key Demand of the question To examine how inclusive institutions, contribute to sustainable growth, while extractive institutions hinder it, using relevant examples from both India and other nations to illustrate this dynamic. Structure of the Answer: Introduction: Briefly define inclusive and extractive institutions, and explain their significance in shaping economic outcomes. Body Role of inclusive institutions: Discuss how secure property rights, rule of law, democratic governance, and transparency foster long-term growth, citing examples from India (e.g., land reforms, financial regulation) and other developing countries. Impact of extractive institutions: Explain how corruption, concentration of power, and exploitation hinder development. Provide examples from colonial India and modern developing countries where such institutions exist. Comparison and analysis: Highlight differences between countries with inclusive versus extractive institutions, showing the varying economic outcomes. Conclusion: Emphasize the importance of transitioning from extractive to inclusive institutions for achieving sustained economic growth and development, with a forward-looking statement.
Why the question
The 2024 Economics Nobel laureates have argued that differences in the quality of economic and political institutions is what best explains the divergence in the economic fates of countries
Key Demand of the question
To examine how inclusive institutions, contribute to sustainable growth, while extractive institutions hinder it, using relevant examples from both India and other nations to illustrate this dynamic.
Structure of the Answer:
Introduction:
Briefly define inclusive and extractive institutions, and explain their significance in shaping economic outcomes.
• Role of inclusive institutions: Discuss how secure property rights, rule of law, democratic governance, and transparency foster long-term growth, citing examples from India (e.g., land reforms, financial regulation) and other developing countries.
• Impact of extractive institutions: Explain how corruption, concentration of power, and exploitation hinder development. Provide examples from colonial India and modern developing countries where such institutions exist.
• Comparison and analysis: Highlight differences between countries with inclusive versus extractive institutions, showing the varying economic outcomes.
Conclusion:
Emphasize the importance of transitioning from extractive to inclusive institutions for achieving sustained economic growth and development, with a forward-looking statement.