Monitor Article: Uganda: The Case of the Indian Economic Miracle

Uganda must learn from Indian lesson
Arthur George Kamya

Relying on a recently published book titled “In Spite of the Gods” by Edward Luce, this article attempts to draw some lessons for Uganda from the economic organisation of post-independence India, initially organised around policies of import substitution (Mohandas Gandhi’s handspun and homespun cotton substitute for Manchester-manufactured, imported yarn), self-reliance and tight state control.

In 1991, the Indian government ushered in a period of economic liberalisation responsible for today’s so-called Indian economic miracle. In addition to being a vibrant and pluralistic democracy, pre-liberalised India built up an intellectual and technological prowess unequalled in the Third World.The Indian economy was buttressed by a widespread use of English as the language of higher education instruction. An average GDP growth rate of 3.2% prior to 1990, however, was derided as the “Hindu rate of growth”. While per capita incomes of India and South Korea were roughly at par in 1947, the latter was ten times the former by the 1980s. Questions were rightly raised about the pre-1991 Indian economy: Were the large resources (equal to budgetary allocation for elementary schools) poured into English language universities for the urban elite justifiable in a country with 84% illiteracy rate?

The economic advantages latent in pre-liberalised India came to bloom with liberalisation. India’s scientific and technical capacity spawned miracles. The software industry in America’s Silicon Valley, dominated by Indians, reproduced several satellites in India. Western patients now routinely travel to India to be treated by India’s brain and hip surgeons. Indian drug companies have more pending patent applications in the US than any other country (including the USA). Owing to its facility with the English language, India is the world’s call centre capital.

A comparison between the Chinese and Indian model of economic growth is instructive. Chinese economic growth has been relatively more labour intensive compared to India. China spends a comparatively higher share of its budget on elementary education as opposed to India which spends more on higher education. With respect to textiles, while China competes on price, India competes on quality. Essentially, while China has developed in the same sequence as most western countries (agriculture to low cost manufacturing, climbing up the value-added ladder, to hopefully burst into the nirvana of internationally tradable services), India (half of whose economy comprises of services, with agriculture and industry, each accounting for about a quarter each) is more akin to a middle-income country.

How is the foregoing analysis applicable to Uganda? Post-independence India’s economic experience demolishes three shibboleths of President Yoweri Museveni. First, contrary to Movement dogma, it is possible for a country to democratise prior to having a sizable middle-class or majority literacy. Secondly, India’s post-liberalisation rapid economic growth in the absence of broad-based manufacturing-driven industrialisation teaches that destructive industrialisation such as the Mabira Project is not a necessary. There is more than one way to skin the economic development cat. Thirdly, the argument that we can populate ourselves to economic prosperity (India and China have large populations; India and China are developing very fast; therefore, in order to achieve high development, a country needs a high population) is a fallacy. There is neither correlation nor causation between the magnitude of populations and the rate of economic growth of countries. Proponents of this piffle mistake population size for population growth. Respectively, 2006-2007 figures of population size, population growth and GDP growth are for India (1.1 billion, 1.6%, 9.2%), China (1.3 billion, 0.6%, 10.7%) and Uganda (30 million, 3.6%, 5.3%), translating into rates of increase in living standards (economic growth rate less population growth rate) of 7.6, 10.1 and 1.7 percent respectively With respect to the ultimate goal of economic development (raising living standards), Uganda lags behind the other two countries not because they have bigger populations but because Uganda has a higher population growth rate..

The bigger question, though, is this: As a former British colony, with a decent higher education system (at least prior to recent changes), our economy is more akin to India than China. Yet we seem determined to follow a China-type model of development. Is this wise? Are not government policies (such as not teaching English until Primary Four) in a world where English is the coin of the globalised realm misguided?

The writer is a regular commentator on contemporary issues affecting Uganda.agkamya@hotmail.com