Gregory Clark @ GNXP

Gregory Clark is quickly becoming the economist du jour due to his recently published (and quite controversial) A Farewell to Alms. Late last year, Sepia Mutiny had a preview of some of the book’s content and, as schedule permits, we will likely cover more of it moving forward. As we said back then, for Mutineers Clark is definitely an economist to watch relative to others due to his outsized focus on Indian economic history.

So, until we get a chance to dive into more of the detail here, GNXP (Razib’s home when he’s not a 1-man comments machine on SM) has a great interview with Clark up right now and question #1 hits squarely into desi territory

1) In some early work, you wondered why workers in British cotton mills were so much more productive than workers in Indian cotton mills. You discuss this in the last chapter of A Farewell to Alms. You looked at a lot of the usual explanations-incentives, management, quality of the machines-and none of them really seemed to explain the big gap in productivity. Finally, you seemed to turn to the idea that it’s differences between the British and Indian workers themselves-maybe their culture, maybe their genes-that explained the difference. How did you come to that conclusion?

…When I set out in my PhD thesis to try and explain differences in income internationally in 1910 I found that asking simple questions like “Why could Indian textile mills not make much profit even though they were in a free trade association with England which had wages five times as high?” led to completely unexpected conclusions. You could show that the standard institutional explanation made no sense when you assembled detailed evidence from trade journals, factory reports, and the accounts of observers. Instead it was the puzzling behavior of the workers inside the factories that was the key.

What was this “puzzling behavior”? Well, unfortunately, it appears a good chunk of it was IST.

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p>Read the rest, let it whet your appetite for more, and expect to see Clark here on SM in the near future

101 thoughts on “Gregory Clark @ GNXP

  1. i’ve read the book. clark uses india as a case study a lot in terms of the problems with labor productivity (e.g., only 15 minutes out of 1 hour of “work” is actually spent working in early 20th cent. textile mills, so they had to employ a lot more labor, etc.). to be short about it: nehru’s choice in terms of investing in the commanding heights instead of basal human capital (e.g., steel mills vs. mass literacy campaigns) probably has resulted in more human misery integrated over time than mao’s ‘great leap forward’. i recently read a book, The Elephant and the Dragon: The Rise of India and China and What It Means for All of Us, and the litany of statistics is minding dumbing in terms of how inferior the bottom 3/4 of india’s human capital is vis-a-vis china.

  2. Maybe because Indians then didnt have much vested in the companies typically owned and run by goras. Its not like they were making the cloth for their use, most of it would be transported back to England, so they might have felt good riddance for pittance.

    Ahh, yet another tactic of the western voice to win this battle on outsourcing. Attribute laziness to Indian genes and there you have the cake and eat it forever.

  3. Maybe because Indians then didnt have much vested in the companies typically owned and run by goras.

    yes, after all indians have such fellow feelings of brotherhood across class/caste lines! i know that all the servile maids my family in bangladesh can no longer employ (i.e., my uncle complains he has to drive 100 miles from dhaka to find a young poor girl willing to clean up his family’s shit) because they work in textile mills which supply wal-mart miss having fellow brown people supervising them 😉

  4. Ridiculing me aside, do you honestly believe that a Indian labourer had the same kind of vested interest in his work then?

    Adding to the resentment of fighting a foreign rule and heavy taxes, you think the indian labour were happy to see a english company being their employers?

    If I have to paraphrase the cynicism I expressed in my previous comment, ‘Does anyone who read the book felt that the book written by Gregory got an agenda to undermine the outsourcing movement’.

  5. Adding to the resentment of fighting a foreign rule and heavy taxes, you think the indian labour were happy to see a english company being their employers?

    nationalism is the luxury of the affluent. do you think it is a coincidence that men like ambedkar were a bit suspicious about the intentions and interests of the self-declared native elites who would push aside the english? the peshwa’s dismissed the mahar’s from their armies because they were unclean, while the british recruited them (and in places like madras they enforced the right of untouchable soldiers to enter brahmin areas). that doesn’t mean that the british weren’t racist, or they didn’t often reinforce native prejudices and oppressive systems, but the whole white vs. brown angle is way too simplistic. workers are interested in the wage they bring home and the material conditions in which they live, not racial productivity.

    If I have to paraphrase the cynicism I expressed in my previous comment, ‘Does anyone who read the book felt that the book written by Gregory got an agenda to undermine the outsourcing movement’.

    clark is a conventional economist from what i know, so of course he favors free trade (of capital and labor). there’s nothing in the book which implies that outsourcing is bad, he simply notes that labor productivity in many third world countries is low. their comparative advantage is in low wages. this is pretty well known.

  6. btw, this doesn’t mean that labor productivity is stationary and fixed in stone. china had the same problems as india in the attempts to expand in industry, chinese workers simply wouldn’t focus just like indians. obviously that’s changed somewhat today. why? look at basic literacy and health statistics for china, they blow the median brown away (though not necessarily places like kerala or sri lanka). the focus on the ‘talented 10th’ of browns in terms of IITs, heavy industry and what not from on high in the 20th century is going to hurt big time.

  7. I haven’t read Gregory’s book, but I would hope there would be an analysis of the manufacturing sector in India today. Still woefully underdeveloped to be sure, but with a few success stories that should be examined to compare and contrast productivity. The question would then be, eliminating external factors like abysmal transportation & power infrastructure, how productive are workers at Arvind Mills denim export business, Ford India for example

  8. louiecypher, the book is actually more fixated on the period between 1200 and the productivity “lift off” in the 19th century when the seeds for the affluent consumer lifestyle were laid. there’s not that much about contemporary macroeconomic trends. rather, the focus is on figuring out why england broke out of the malthusian trap first of all the world’s societies.

  9. I can’t believe clark’s one paper, which is by no means accepted withing econ (or econ history) circles has attained the status of stylized fact. there are several possible criticisms of which i’ll pick one big one: data, data, data. clark has used three compiled sources for india (a house of commons commitee report and 2 U.S. government reports) and there is no reason to believe these date are comparable to the much richer, detailed data that he has for the UK (he himself elides this difficulty in the original paper). if you think about it, there is just so much variation in productivity within textiles in a given country and clark (who has basically no standard errors in his entire JEH paper) does not (perhaps cannot given his data, but nevertheless) tell us whether the difference in mean productivity is even statistically significant.

    at bottom, to just compare a non-random selection of aggregate firm data from one country to dissimilar data from anotehr country and attribute differences in their productivity to labour inefficiencies is a mighty leap and one that no modern day economist could make in any peer-reviewed journal.

    yes, the data’s crappy, but then acknowledge that rather than hoist your pet interpretation to the status of accepted wisdom.

  10. badstatistics,

    1) i think you are right that clark should have published more papers in journals fine tuning his ideas

    2) some of the arguments sound like looking for the keys under the street lamp because that’s where the light is. i.e., one reason he focuses on england is simply that there is a crap load of data sets one can retrieve.

    3) for a non-economist like me i did enjoy his elucidation of the ‘malthusian trap.’ i knew a lot of the stuff about nutrition and leisure time from biological anthropology, but it was interesting to see another angle.

    4) anyone who wants to read up on clark’s stuff can read this paper or track this weblog.

    5) his genetic arguments didn’t persuade me, mostly because he really has no model (though he does allude to basic quant. genetics).

  11. btw, economists with ideologies are as different as brad delong and tyler cowen seem to like the book. so though i respect any SM economists who thrash clark’s work, i have to say that the rather serious engagement it seems to be receiving in the econosphere implies to me that it isn’t a piece of crankery (despite my admitted love of p-values i acknowledge that would be gibberish to the general audience).

  12. I don’t know so much about the “free trade agreement” between India and England….. I was brought up on the version of history (don’t know how objective the books were, maybe they were Marxist/ nationalist) that while Britain had almost no duty on the import of Indian cotton, there were heavy taxes on importing Indian finished cloth, mill goods etc. ….. which would explain why industry never took off… any idea about the same?

  13. I think a large part of the differences can be explained by a) Environment b) Migration

    Environment In India a worker lost his job, he may have a little less to eat but that was it. In UK you lost your job and could not have heat in the house and were hungry, you died. I think this is more apparent as you go further south in India, where life is much more even keeled. i.e. Greater rainfall, year round crops. The driving force for increased productivity in modern society, is the desire of consumer goods (or the ability of their children to have consumer goods).

    Migration The sentence that the indian worker being surrounded by his relatives is telling. It means the workers were from the surrounding areas. Losing a job was not life threatening. They probably had a extended family support network. In UK in contrast it is well known that there was migration into the Industrial Cities. Workers did not have a support network. Hence, motivation for hard work. As time went on a support network was created, the union.

    The environment/extended family thesis is observable in the US for say the 3rd generation white americans. In the north-east large cities neither a warm environment or extended family exist. Higher productivity. In north smaller towns, have greater amount of extended families. Productivity drops relative to big cities. In the south extended families and a mild environment contribute to a slower pace of life and even lesser productivity.

  14. my uncle complains he has to drive 100 miles from dhaka to find a young poor girl willing to clean up his family’s shit) because they work in textile mills which supply wal-mart miss having fellow brown people supervising them 😉

    That may be true, but India saw a wave of industrial strikes, particularly in the textile industrty, in the early 20th century. Most of these were related to the extremely low wages the workers were paid, and the working conditions. Part of the ‘puzzling’ behavior might have been a lack of work ethic, but the other part probably was simply that they were pissed off.

    “January 1919 witnessed the first great mill strike when 150,000 workers stopped work. The strike lasted for 11 days; the workers’ demand for increased wages were conceded. Then followed a series of strikes (eight in January and seven in February) in the railway workshops, mints, dockyard, enqine-ring works, etc. The strikes were shortlived; as the demands for higher wages were granted…The fourth wave commenced with another great mill strike on January 2, 1920, which lasted a month. Approximately 150,000 workers struck for higher wages, shorter hours and other concessions. The industrial discontent spread to railway workshops, oil installations, dockyards, engineering works, municipal employees, tramway workers and even tailors and cutters. The strikes, which were chiefly for increased wages. were mostly successful. (link)”
  15. sbarrkum, one of clark’s main points is that prior to 1800 all societies were on the malthusian margin. that is, any society with excess resources just swallowed it up with increased population growth. so mild and salubrious climate of south india wouldn’t have resulted in a higher income or more flexibility in terms of choices, but rather a higher population density.

  16. It is probably a result of a more relaxed ,less cutthroat culture over the centuries in India. Land was relatively plenty in those days. Needs were simpler. Add to that the fact that whoever the employer was – British or Mughal invader, or some High Caste Zamindar, you had the factors responsible for a lack of ownership of the work done by the worker. How else can one explain how the typical Indian worker is hard working outside India and that includes productivity.

    And if you want productive indians at work, just go to a roadside tea stall and see the guys work their magic.

    Just throwing out thoughts. I have not done any real research on this.

  17. one thing to note: the nutritional data does not suggest plentitude and relaxation in south asia prior to the arrival of british. yes, there was more land, but the productivity was much lower for a variety of reasons. as more land was cleared (e.g., eastern bengal) more inputs could be thrown into the mix, but the population always grew to match it. the problem isn’t that people didn’t work hard, but the type of labor necessary for the farm doesn’t always transplant well to a regimented factory. e.g., if you have 15 factor steps and an error in one step could cause it all to be for naught you need a high degree of precision and accuracy.

  18. Vinod, thx for the post, and Razib, thx for the insightful comments.

    Gregory, Diamond, the “institutionalists”–isn’t it all a bit reminiscent of the homeopaths, butchers, faith-healers, etc. before modern medicine–I’m glad people are working on understading this important topic, just doutful the ultimate answer will look much like any present theory…

  19. cookiebrown, Is a peer-reviewed version of Bishnupriya Gupta’s paper available?

  20. I don’t know for, but I assume it is, as he has published a number of papers in the field. He teaches at the University of Warwick in the U.K., a very well regarded university, especially in the social sciences, and is an economic historian of some standing.

    Interestingly for members of SM, he has also done work on child labor in the United States around the 1900s, which could provide a useful point of comparison in the debate about child labor in the Subcontinent (and elsewhere, of course).

  21. Should read: I don’t know for sure….

    Another interesting and accessible paper for us layfolk (no offence, SM economists) is this one on historical wage differentials between Europe and Asia, where he and his co-author, Stephen Broadbent look at whether wage differentials existed even before the Industrial Revolution put India and other traditional artisanal economies at a huge competitive disadvantage.

  22. Greg Clark gave a talk in 1998 in my departmental seminar series on the productivity paper. It was a pretty frustrating exercise. He did a reasonable job with whatever data he had although he made some heroic assumptions if I remember correctly. To take one example for instance, the cotton yarn that was woven in India was short staple, unlike the long staple used in the US, and that takes longer to weave. Greg assumed an arbitrary number for the time differential.

    I think his result that labor productivity in India was lower than that in the US was interesting. I think he refers to labor productivity though and not total factor productivity. (Please correct me if I am wrong, this was a long time ago) and the former can be affected by capital intensity. In other words labor productivity may be lower in factory A compared to factory B if it uses fewer machines than factory B. Calculating total factor productivity is harder since one needs more data.

    I enjoyed the talk but I found Greg’s justification for the “Indians are lazy” argument very frustrating. I asked him about the role of the trade union movement in Bombay at this time, and he had simply not considered it. I told him about the literature on the Bombay labor movement at this time. One problem in a country with a labor force which is in transition from agriculture is that the labor force still retains ties to the village and is not perfectly attached to the jobs. Recruiters went to villages to get workers. There was a problem that workers would leave around harvest or for social/cultural events to their village. Mills therefore “overstocked” on labor and this could show up as lower productivity.

    I am trying to remember some literature on the trade union movement and recruiting for the industrial labor force (Its early in the morning and mutineers should remember that while I am not quite an Auntie, I am slowly getting there!). One article which stands out is by Chitra Subramanium in the Economic and Political Weekly. I will try and think of more.

    When I asked Greg about this, he said that “I have been to these textile mills in Delhi. The workers were sleeping under the machines!” I am sure this is true, but I don’t think Greg went to the textile mills in the 1930s. In the 1970s these mills were close to bankruptcy and had been nationalized. Greg was visiting a “sick” mill, which should have been shut down but due to bizarre Govt of India policy was still running. So this was a silly response to the question.

    Bottom line in my opinion: I think Greg did a good job in assembling some data and showing an interesting fact. I am not 100% convinced of the fact and his explanation of the fact did not convince me at all. He is a serious historian though so I do not mean to cast aspersions on his scholarship or motives. I just have a difference of opinion with him.

    PS Bishnupriya Gupta is a woman!

  23. nehru’s choice in terms of investing in the commanding heights instead of basal human capital (e.g., steel mills vs. mass literacy campaigns) probably has resulted in more human misery integrated over time than mao’s ‘great leap forward’

    Thats truly incredible. I just finished this book on Mao and Mao’s insanity during the ‘Great Leap’ was nonpareil.

  24. I would imagine that the impact of the Great Leap was not as devastating because the policy was mostly reversed within a few years, while Nehru’s policy went on for decades and the institutions/allocation of funds set up then are still in existence.

  25. Have to go in a couple of mins, but its interesting to see speculation (provocative though it may me) backed up by fragmentary evidence given the status of well established argument. Quoting badstatistics:

    at bottom, to just compare a non-random selection of aggregate firm data from one country to dissimilar data from another country and attribute differences in their productivity to labour inefficiencies is a mighty leap and one that no modern day economist could make in any peer-reviewed journal.

    those who know the import of the above should immediately stop giving his interpretation much credence. On the other hand it is an interesting proposition, so its worth wondering what kind of available evidence may shed some light on it.

  26. You are very welcome Nina! And its not so impressive really.. just what I do for a living. Now what you do (for a living?) on the other hand is truly impressive!

  27. NotQuiteAuntieYet, I am impressed. Thanks. You are very welcome Nina! And its not so impressive really.. just what I do for a living. Now what you do (for a living?) on the other hand is truly impressive!

    i like to call this the “mutual admiration society”

  28. at bottom, to just compare a non-random selection of aggregate firm data from one country to dissimilar data from another country and attribute differences in their productivity to labour inefficiencies is a mighty leap and one that no modern day economist could make in any peer-reviewed journal.

    “Why Nations Fail: Managerial Decisions and Performance in Indian Cotton Textiles, 1890-1938.” (with Susan Wolcott). Journal of Economic History, 59(2) (1999): 397-423.

    I think the article (which the argument in the book is based on, I believe)was published in the Journal of Economic History which is peer reviewed. Not that I think you shouldn’t be sceptical though.

  29. Well, whether Indians were lazy or not, the fact remains that under British rule, most Indians are dirt poor and mostly uneducated with no prospects for upward mobility unless they were descendants of parasite local princes. In independent India, the absolute number of dirt poor people has declined steadily, if not at the pace we would like, over the last 60 years.

    As for Nehruvian socialism, I will stick my neck out and say that for all its problems, it served a very important need: self-reliance in food, attempted self-reliance in high-tech industry (for those days) like steel, etc. Which is why we did not end up like Pakistan: with Mercedeses on the streets of Karachi and an inability to produce so much as a pin locally.

  30. (OK, exaggerating about Pakistan, but you get the idea). Also, and this is from someone who has seen the Indian education system up close, warts and all (being an army brat, I moved all over the country and changed 8 schools): the educational reforms of the late 1960s were great! Not only did we ratchet up the standards of math and science, but even history and English textbooks became more interesting (if you were fortunate enough to be under the CBSE Board and if you were inclined to the humanities, as I was). So from studying the exploits of Grace Darling and Greyfriars Bobby in Grade I, my horizons expanded with the new textbooks. I read extracts from Alan Paton’s Cry the Beloved Country and Saki (H.H. Munro) among others. In Hindi, I read Meera’s poetry along with the modernists like Premchand and Harivansh Rai Bacchan. And finally, there is a link between the current (however restricted) prosperity and the creation in the 1960s of top-notch technical and educational institutions like the Indian Institutes of Technology, All India Institute of Medical Sciences, central universities and the system of Kendriya Vidyalayas that helped education spread into the interior. None of these existed prior to independence. These were all the creation of post-independent India. Is there more to be done? Of course, there will always be work to be done even if a dozen people struggle to feed themselves. But all was not wonderful under the British (except for a select few) no matter what people like Niall Ferguson say. As Indians we should never doubt the benefits of our independence.

  31. Adding to the resentment of fighting a foreign rule and heavy taxes, you think the indian labour were happy to see a english company being their employers?

    Most textile mills during that period were in Bombay and were owned by Indian families like the thakarseys, kasliwals, tatas, ruias, wadia, khatau, kilachand.

  32. I would imagine that the impact of the Great Leap was not as devastating because the policy was mostly reversed within a few years, while Nehru’s policy went on for decades and the institutions/allocation of funds set up then are still in existence.

    I think the 14 million dead (officially) and upto 43 million (due to famine caused by Great Leap) would bed to disagree.

  33. I perused the article NotQuiteAuntieYet cited quickly (sorry, another class, and students waiting). The data is not very good, but I am inclined to buy the Bombay story (about low labor productivity); however the argument as a whole, that India could not capitalize on cheap labor because of low productivity is crazy on various levels. There are a a few other factors that account for this…British policy being one of them (eg. compare the performance of steel mills, started for the first time around that time)as Tomlinson has noted…sorry gotta go had so many more factors to mention…

  34. And speaking of strikes, I think Mahatma Gandhi was very active in intervening in the Ahmedabad textile strike of 1918 where he urged Indian mill owners to give in to the workers’ demands for higher pay, etc. And Indian ownership of industry only really came into its own during the First World War when communication with Britain was disrupted by the German navy, forcing the British India government to turn more to local manufacturers, especially to provision the troops in Iraq (then part of the Ottoman Empire) and other parts of the Middle East.

  35. Most textile mills during that period were in Bombay and were owned by Indian families like the thakarseys, kasliwals, tatas, ruias, wadia, khatau, kilachand.

    Yes, and No.

    A lot of mills were British owned too, all over India. Some examples: Elgin Mills, Cawnpore Woollen Mills, Army Cloth Manufacturing…wagehera, wagehera.

    Most importantly, they were setup within the British setup, rules, and regulations, and framework of English Industrial revolution – totally alien to Indian culture, and way of life at that time.

    NotAuntieYet has raised some very valid points.

  36. And finally, there is a link between the current (however restricted) prosperity and the creation in the 1960s of top-notch technical and educational institutions like the Indian Institutes of Technology, All India Institute of Medical Sciences, central universities and the system of Kendriya Vidyalayas that helped education spread into the interior. None of these existed prior to independence. These were all the creation of post-independent India.

    Sharmishtha, hello. This is, of course, the standard argument made by those who defend the policies of Nehruvian socialism. I used to be more sympathetic to this line of thinking earlier, than I am now.

    There were at least two solid steel plants in India before independence – the Tata plant at Jamshedpur, and the Indian Iron & Steel Works at Bhadravati, now in Karnataka – and both were private sector. Both these were established in the early 20th century, but even before that, in the 19th Century, there were smaller plants such as the Bengal Iron Works at Asansol.

    Similarly, BITS Pilani, Banaras Hindu College of Engg, Roorkee, Indian Instt of Science etc were phenomenally good engineering schools during the 1940s already – before a single IIT had been set up.

    Private Indian capital had also started an aeronautical industry – the Hindustan Aircraft of Walchand Hirachand was started in 1940 (admittedly during WW-II, but it was still private, and was major high-tech for its time). As well, Tata had started an Airlines much earlier, perhaps 1930s. Both these were later nationalized, and their private origins largely forgotten until now!

    There were any number of hospitals and good medical schools in India before Independence too, some by the Tatas, others like CMC Vellore etc.

    The point is that an argument can be made that the enormous investments channeled through the public sector as a result of Nehruvian socialism may have been wasteful in themselves, and crowded out much other productive investment which could have occured in the private sector. In addition, the peculiar ‘license permit raj’ froze many monopolies in place, and created new ones, aside from creating a crony capitalistic rent-seeking economy.

    These arguments point out some inconvenient things, and frankly, I was much less sympathetic to them at one time. As for the comparison with Pakistan, I agree that India’s development stategy did result in a large middle class, employed in wasteful, nepotistic state-run enterprises – while Pakistan’s strategy created a rapacious crony-capitalistic class (‘the fifteen families that owned all of Pakistan’) and an equally nepotistic Mercedes-driving upper-middle class. Each strategy created entrenched interests which looked down on the other’s value system and resulting political economy, and both need reforming.

  37. Most importantly, they were setup within the British setup, rules, and regulations, and framework of English Industrial revolution – totally alien to Indian culture, and way of life at that time.

    Kush (and notauntie…) have put their finger on something fundamental. Indian merchants and businessmen were not allowed to function autonomously during british rule…the comparison is clearer when you look at american merchants immediately after independence. in fact if you look at the indian railways, the lines/routes completely bypassed traditional (indigenous) commercial regions (the comparison with the u.s. could not be starker, train routes in the u.s. were completely dictated and run by american businessmen); in fact some marwari and gujarati businessmen (who wanted to be a part of the project) did complain but were powerless and completely ignored. for the rest of the story, await my book…

  38. ” at bottom, to just compare a non-random selection of aggregate firm data from one country to dissimilar data from another country and attribute differences in their productivity to labour inefficiencies is a mighty leap and one that no modern day economist could make in any peer-reviewed journal.

    “Why Nations Fail: Managerial Decisions and Performance in Indian Cotton Textiles, 1890-1938.” (with Susan Wolcott). Journal of Economic History, 59(2) (1999): 397-423.

    I think the article (which the argument in the book is based on, I believe)was published in the Journal of Economic History which is peer reviewed. Not that I think you shouldn’t be sceptical though.”

    I am sorry. I should look at this paper. I was quoting from his JEH piece from 1987 (and also the responses by Wilkins) and the only point I was trying to make was that in the past 10 years the bar for how one makes a causal argument using data in mainstreaam economics has been set considerably higher than it was previously. I very much doubt that the empirical part of that paper would convince most empirical micro-economists today (or perhaps even then).

    Essentially, I think that Clark’s argument is provocative, but the provocativeness comes from his leaps from data to conlcusion and are not in the data themselves. while these leaps are interesting, they should be taken as such and not presented as a stylized fact as they are in his latest book.

    really, the best way to answer this is to collect historical firm level data from the bombay mills in as comparable a form to the UK data as possible. there are some people actively working on the mills (tom asher i think is the latest in a long line) and using them to exploit the archival data (i hear that some of these old mills have very detailed production data) to write a paper. perhaps an interested grad student could be persuaded?

  39. By the way I believe Prasannan Parthasarathi has done some work on the weavers of South India (though I think his work goes back to the beginning of the colonial era); it would be interesting to see whether some of Clark’s speculations apply (or are plausible) in relation to that part of India.

  40. Essentially, I think that Clark’s argument is provocative, but the provocativeness comes from his leaps from data to conlcusion and are not in the data themselves. while these leaps are interesting, they should be taken as such and not presented as a stylized fact as they are in his latest book.

    I agree completely. Thats part of the problem with writing books (rather than articles) in Economics though. For some reason an argument in an article is refuted or challenged but once it appears in a book, it seems set in stone. Same thing with Freakonomics. Steve Levitt wrote some interesting papers, other people refuted them in other academic articles, but as soon as the book appeared it became gospel truth.

    I wonder why that happens.

  41. ok, i read the first few pages of clark’s 1999 paper and it seems to have more disaggregated data than the 87 piece. so, will have to read this paper to see if my criticism still stands.

    meanwhile, a more recent paper that attempts to do cross-country comparisions in productivity in a careful, rigorous manner is http://personal.lse.ac.uk/sutton/auto_component_printroom_version3.pdf

    the paper compares auto component manufacturers in india to “best practices” and tries to ensure that apples are being compared to apples. as is usual, it finds huge spreads in productivity in india (so the mean productivity leves are very imprecisely estimated) and also lower mean levels.

    To quote sutton’s summary: Differences among Indian firms are extremely large. A simple measure of labour productivity (no. of machines produced per man-year) shows a difference among Indian producers of a factor of more than 6. (b) The best level of productivity achieved by any Indian producer is somewhat less than half the minimum level achieved by the foreign firms surveyed. One implication of these findings is that it may be worth undertaking further comparisons among Indian firms, with a view to disseminating ‘Indian best practice’. (c) The productivity gap between the leading Indian producer, and the foreign firms surveyed, is not as wide as the gap in wage rates, so that labour costs per machine arelower for the Indian producer. However, labour inputs constitute only a small part of total unit costs, so that the corresponding advantage to Indian producers in terms of unit production costs is small, and this small advantage is easily outweighed by even very minor shortcomings in quality.

    1. Comparisons of quality between two machine tools are notoriously problematic, since it is usually the case that different machines are purchased with different uses in mind, so a ‘fair’ comparison is difficult. To minimize the difficulty, we identified 50 Indian users who operate an Indian CNC lathe or vertical machining centre side by side with a foreign equivalent machine, in the same production process. We inquired in considerable detail about the relative merits of each machine, both in terms of technical characteristics and in terms of service backup etc.
    2. The main findings in respect of quality were: (a) On technical performance, there was a small but significant quality gap in favour of the imported machine. (b) On service characteristics, there was a small but significant gap in favour of the Indian machine. (c) The most striking finding arose when we proceeded to pin down the source of this difference in service characteristics. Here, there are two key elements, the speed of response of service personnel when called, and the quality of service provided on arrival. Indian firms out-scored foreign rivals in terms of the speed of response when called, but – crucially – they scored less well than foreign firms in terms of the quality of the service provided on arrival. The small net quality advantage noted in point (b) above reflects the fact that the advantage of speedy response slightly outweighs the relative shortcoming in service quality.
  42. a couple of corrections: the sutton paper i linked to is not about autocomponents but about lathes and has a tiny sample size (8 indian firms, 2 japanese and 2 taiwanese) so some of the same statistical criticisms as before clerly apply. the pro is that they are trying as much as possible to compare apples to apples so some of the more egregious kinds of comparisions clark indulges in are not done here …

  43. re: great leap fwd vs. lack of investment in human capital in india. look at kerala and look at bihar. you have an enormous variation without india in terms of human capital. no offense to anna & v-man but i don’t think the malayalis start out with better genetic capital than biharis. there are contingent historical differences in culture and so on. but it clear that kerala shows that high rates of literacy are realizable in india, and the low rates of literacy (and you know the “official” rates generally have a low bar) are going to cause a problem in the 21st century when india tries to yank the bottom 3/4 of the country upward economically. if it was a zero-sum world where one had to have fewer IITs for greater literacy because of finite time and funds what would you choose? i’d choose the latter. the indian elite is terrorizing the knowledge classes of the USA via outsourcing, but browns are the largest group of semi-starved and developmentally ‘tarded people in the world because of the abjectness of the poverty on a mass scale. silicon valley and infosys millionaires can’t erase that. india is on its way to being a mega-brazil.

  44. a couple of corrections: the sutton paper i linked to is not about autocomponents but about lathes and has a tiny sample size (8 indian firms, 2 japanese and 2 taiwanese) so some of the same statistical criticisms as before clerly apply. the pro is that they are trying as much as possible to compare apples to apples so some of the more egregious kinds of comparisions clark indulges in are not done here …

    Another way to look at it would be to say that the Sutton paper is more of a “natual experiment” (i.e. do not look at it statistically); they are trying to control for as many factors as possible; in other words, instead of going for statistical control, they are trying to get as close to real control as possible. that is what people do when they perform experiments, so I’m not sure whether a statistically based criticism is valid.

  45. Chachaji, hello to you too. Regarding BITS Pilani, BHU, etc, you are right. But they were individual oases, drops in the ocean as it were. After independence, the Indian state did not sideline these institutions but infused cash into them. For example, I believe the Tata Institute in Mumbai is essentially a joint venture, with the Indian state providing cash but agreeing to let it be run as an autonomous institution. In any case, Nehru and Homi Bhabha were intellectually not hostile to each other. But with the creation of the IIT’s and the central universities after independence, we had a system that allowed scholars to feel a part of a broad academic community and that allowed students to feel that they were getting an education that was organized across the country on similar lines. I believe the CBSE Board was one of the best inventions in the Indian education system. In my childhood moves from school to school in very small towns, one thing that stayed fairly constant in the CBSE schools I attended (alas, not all my schools were CBSE)was the curriculum. Do you have any idea what a boon that was to a nomadic family? My teachers were not always imaginative but the books were always aimed at the higher-middle rather than at the lowest common denominator.