The “Kerala model of development” is often cited as a path for developing nations to secure strong human development indices (literacy, health, etc.) but without first adopting the “Washington Consensus” (essentially higher, per capita GDP via free markets). Today’s Economist Blog has a brief update on the model and the risk posed to it by the global economy and it reminded me of an old-ish article I never got around to blogging…
Back in September ’07, NYT described the Kerala model and its adherents this way –
TRIVANDRUM, India — This verdant swath of southern Indian coastline is a famously good place to be poor. People in the state of Kerala live nearly as long as Americans do, on a sliver of the income. They read at nearly the same rates.
With leftist governments here in the state capital spending heavily on health and schools, a generation of scholars has celebrated the “Kerala model” as a humane alternative to market-driven development, a vision of social equality in an unequal capitalist world.
…It also gained a reputation as a place hostile to business, with heavy regulation, militant unions and frequent strikes. There are fishing jobs but little industry and weak agriculture. Government is the largest employer; many people run tenuous businesses like tea shops or tiny stores.
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p>However, if there’s one thing economists of all stripes agree on, there’s no such thing as a free lunch. They further note –
…far from escaping capitalism, they say, this celebrated corner of the developing world is painfully dependent on it.
“Remittances from global capitalism are carrying the whole Kerala economy,” said S. Irudaya Rajan, a demographer at the Center for Development Studies, a local research group. “There would have been starvation deaths in Kerala if there had been no migration. The Kerala model is good to read about but not practically applicable to any part of the world, including Kerala.”..The number of overseas workers doubled in the 1980s, and then tripled in the 1990s. In a state of 32 million where unemployment approaches 20 percent, one Keralite worker in six now works overseas.
And both the NYT and the Economist blog go into some of the painful details as the global economic slow down works its way down to my home state –
THE lush state of Kerala in the south of India generates most of its foreign exchange either by exporting people or importing them. It earned almost 20 billion rupees ($500m) from foreign tourists in 2006 (the latest year for which figures are available) and about 245 billion (in the same year) in remittances from Keralites working abroad, 89% of whom go to the Gulf.The state has an astonishing 24.5 emigrants per 100 households. Kerala’s per capita output is one of the lowest in India, but its per capita expenditure is one of the highest. (Gopinath Pillai, a Singaporean diplomat of Keralite descent, describes the situation like this: one poor fellow works three shifts in Dubai, saving every penny to send home, where there will be eight guys reading two newspapers a day and discussing politics.)
With large numbers of these ex-pat Keralites employed in the Gulf’s (a) oil-fueled (b) construction industry, the global downturn is likely to be a double whammy. While the rest of India is likely to do well over the next few years due to strong, internal trends, Kerala for all its efforts to insulate itself from the vicious swings of capitalism may wind up the most exposed.
as someone who remits money into Kerala I can attest that the only reason Kerala survives is due to Capitalism 🙂 However the article does not consider that there are many Keralites who work in other parts of India. Good luck getting tickets (Bus or train or plane ) to travel between any city in Kerala and Bangalore / Chennai on a normal weekend – not a holiday one.
The effect of the economic downturn on remittances has been a meme in reporting on this issue over the past year. One of the most interesting articles I read recently was about how the downturn in Russia was leading to immigrants from the assorted -stan’s in Central Asia losing jobs, and sharply reducing the flow of remittances which sustained the economies of many of these countries, and how their return might further increase the large swaths of unemployed young men with no hope in these countries without a strong governmental and security structure would further increase the risk of these parts of the world becoming a fertile terrorist haven
I know of an excellent jobs program for the unemployed hordes of Central Asia…
3 · Timur Leng said
Does that involve making cavalry charges at a column of Russian (or Chinese) tanks while trying not to get blown to smithereens?
This was the article on remittances to Tajikistan I was referring to – a very depressing tale of the actual living conditions and prospects of the people, but very interesting in the interplay of economics and geopolitics.
WHY SO SERIOUS?
…back in my day, killing a joke that way was a beheading offense…
will they try to bring in IT / Tech companies the way West Bengal is doing now ?
they have been trying for 5 years now. But the squabbling prevents large scale creation. Also a strike or a bandh or a hartal two days in a week does not help. Whilst working in India our firm tried to set up operations in Cochin – gave up as being as we could offer reliability. Incidentally the cable enters India at Cochin – at least it did a few years ago and apparently it is faster from cochin than from bangalore. Techies may be able to help. Smart city has caused a major explosion in land values in Kerala esp Cochin. The best modern aspect about Cochin is the international airport – from touchdown to getting into the taxi is 20 mins on a normal day. Makes a big diff when one has travelled around the world and just want to get to bed.
The thing i hate about discussions of “the kerala model” and many other discussions of economics is exemplified here: “global capitalism.”
This is redundant – there is only global capitalism – we can look at different parts of it like “Kerala” or “New York City region” or “the economy centred around Delhi” or “the economy centred around Dhaka” but it always operates in a whole, which this post points out pretty well despite the politics of the author: (“‘Washington Consensus’ (essentially higher, per capita GDP via free markets)”.
From the article: “There are fishing jobs but little industry and weak agriculture.”
That may not be such a bad thing. China seems to be well on its way to committing ecological suicide, and India (or at least, the rest of India) isn’t too far behind.
Given that Omanakuttan placed second in beauty in the whole wide world, and that Lakshmi Menon is quite successful, isn’t it a little premature to claim that the Kerala model is at risk?
11 · Rahul said
the gloabal consensus is that the kerala model is flat
Here is a short summary of the problems facing the Kerala “model”. Given the combination of factors, things will get rather messy if the Gulf growth collapses.
there was an interesting piece in the local rag the other day on which countries actually the most mileage from the recent global economic surge. The argument is grounded on the assertion that the last twenty years have been good for the global economies. [I would agree to that. With the remarkable exception of the Zimbabwe, whose currency was actually at parity with the GBP in 1980 (!), the world has moved in the right direction.] If you agree with that, I think it is instructive on what constitutes real, lasting progress.
Read on .
Now… back to Kerala. Do you think Kerala is a popped balloon, a spraying spigot, or is she a turgid saguaro that has shored up for the lean days?
9 · Dr Amonymous said
This is nonsense
Article like these are the result of superficial kind of research people are doing these days. Superficially, if one looks at Kerala, people will get the picture these incompetent researchers are promoting.
That there is a Kerala model (you know the characteristics) is a fact. There must be some reason for this status of Kerala. (Bengal has siimilar socio-political climate, but there is nothing like a Kerala model in Bengal. Bengalis were educated and cultured, but why they couldn’t tap the gulf opportunities?)
There is a reason why Keralites thrived like no other. It is no free lunch either.
Interesting writeup…but i have doubts about the closing statement regarding the impact of the global downturn.
I am not sure if there has been any effect of the current economic problems on the oil producing gulf nations. Arent they still going strong?
Obviously, you guys haven’t been watching Akkara Kazhchakal or you’d know that people who stay in Kerala are smarter than the ones who leave.
17 · amreekandesi said
oil prices diving due to lack of demand = bad for oil producing states. arab staes lost 2.5 trill and real estate development has all but stalled. dubai in trouble. on top of that, non-arab staes in trouble especially russia and venezuala. chavez is crawling back to western oil companies after realizing nationalization of oil companies isn’t going so well.
Hmmmmm–I wonder how much lower oil prices have to go before we PIO’s can finance an army to march on Mecca? (We won’t “sack” anything, but don’t blame us if a few things “are lost.”) Remember, Romila Thapar will “historicize” this for us–we’re just the helpless and innocent play-things of history, and are not motivated my any ill-will. 😉
You think?? The last time I filled my tank it cost me $20. At least their sound investments from $150/ barrel oil will see them through… oh wait
18 · LC said
I KNEW IT! Will Rogers was Mallu!
16 · Meera J said
AAARGH! How diffcult is it to think of reasons?
Of course I might be missing the point of the post, in which case clarifications would be nice.
<\further ramble>
16 · Meera J said
Am just back from a 8-day trip in Tamil Nadu (Madurai, Rameswaram, and Kanyakumari), and spent a day-and-a-half in Tr9ivandrum on my way back to Hyderabad.
Frankly, I was amazed at the under developed nature of Trivandrum as a city. I mean, it is not even as developed as a Tier-2 city like Visakhapatnam (Vizag) or Mysore for that matter.Narrow, pot-holed roads, small kirana (grocer) shops and tea stalls, dozens of able bodied youth just sipping their tea and lazing around..IMO, Kerala is lush and beautiful, but there is not much of a middle class there.You either have these plush beach resorts, and sea-side mansions for ultra-rich (CPM party leaders mostly), and then you have this vast mass of lower middle class people.Are the Mallus truly literate? They travel all over the world and see the best examples of development, and yet, they manage their home state in such a lazy, indifferent manner.
May be Calicut and Cochin are different, and probably that’s where the middle class in Kerala lives.Definitely not in TVM.
I think the importance of the Kerala model(mythical or otherwise) lies in the fact that it explodes the myth that the government cannot afford to provide social services like universal health and medicine; and as for the taxation element, if most of Kerala’s money comes from the Gulf, won’t that be in (non taxable) NRI accounts which can’t be used to pay for government services? This in a day and age when states across India(economically much better performing than Kerala; with tax income from the big corporates etc.) are washing their hands of any responsibility for these services(meeting budget deficit targets set by the Washington consensus type things for example by not hiring for thousands of vacant posts in government schools, a 22 year old protesting lady teacher was shot dead by the police in Haryana recently for no good reason) ……. but Kerala does has a problem with militant trade unionism, being stuck in a 60s mindset that business is bad etc. which prevent human development to be accompanied by economic…..
A couple of notes 1. There is no Income tax at the State Level in India. States in India earn most of their income through sales tax — all that NRI money is ultimately spent on goods and services putting money into the Kerala Government. 2. Kerala runs huge deficits.Kerala is screwing up India Naturally this is not sustainable unless there are huge certral government subsidies — which is a model all states cannot follow.
3. Lots of states (all?) in India have Universal Health. Go to most governmet hospitals in most places, and you wil not be charged for treatment. How it works in practice is another matter. 4. Kerala government in the past could not provide even basic services in the past — such as halfway decent electricity supply in the past. As per Kumar (#25) things do not have seemed to improved. 5. The previous CM of Kerala said that the government does nothing but pay salaries. This does not square with government providing the effective services that you allude to.
20 · rob said
i doubt you have the saffron balls for it.
20 · rob said
typical excuse. what elst can i expect from you?
23 · DizzyDesi
“AAARGH! How diffcult is it to think of reasons?”
It is that difficult that many of our new gen researchers, unlike Amartya Sen, couldn’t come up with any reason that propelled Keral into a Kerala model-state. Superficially, it may appear that the new gen economists are right when they profess, “The Kerala model is good to read about but not practically applicable to any part of the world, including Kerala.” Even school going Keralites may say similar things; so common place. But the Master sensed the undercurrents that made Kerala a model state.
None of the five reasons DizzyDesi suggested appear to me persuasive or arguable. Just to mention the %of muslims in Bengal is greater than that of Kerala. So religion was not the determining factor. It was not even a note worthy factor until recently.
26 · milominderbinder
Yes. “the Kerala model… explodes the myth that the government cannot afford to provide social services like universal health and medicine”. NYT also mentioned it right; “With leftist governments here in the state capital spending heavily on health and schools, a generation of scholars has celebrated the “Kerala model” as a humane alternative to market-driven development, a vision of social equality in an unequal capitalist world.”
25 · Kumar
Yes. Trivandrum bears an under developed aura. But to see the development in Kerala, travel rural Kerala. There is nothing similar to Kerala villages any where in India. The young Keralites are a mixed bag. Some are lazy, some support militancy in India, some are creative and hard working, but many are supporters of progressive human condition . http://www.readwriteweb.com/archives/cashnxt_low-cost_banking_for_the_rural_poor.php Even the malayalam rock band AVIAL bears the tag “Politically-aware and ideologically driven”… So there is hope.
Kerala is a money order economy. That the much trumped success of the Kerala Model is a myth has been written up extensively by TVR Shenoy and Rajeev Srinivasan for over 10 years now. But they don’t count do they? Because they call fakes and frauds for what they are.
Sure, if labels raise your hopes.
The success of the Kerala model has been attributed to the education and empowerment of women, which was accelerated by the state’s matriarchy structures, and also exposure to the west. Some of the matriarchy lingers, Kerala women can be really bossy, though no match for the Bengalis. Most of that empowerment is gone now, with sex rackets and molestation cases reported almost every day, some involving CPM ministers’ sons.
The current CPM government’s leading faction believes in the Washington consensus and the China model of development. The level of corruption and goondaism is scary.
8 · melbourne desi said
I believe that they have the same issues with strikes in West Bengal with the tech sector and in general. I also read that the W.B. government has shunned English and made it necessary for all official documents to be in Bengali. If an outside company wants to establish they have to get everything translated into Bengali. Good/Bad? That’s Bengal.
On the point about Zimbabwe’s currency being equal to the GBP at one time… Can someone explain how it was that the INR used to be 8 to 1 USD ? Was it that the USD was worth even less then (I thought the USD has been devaluating for a long time) or that after the Indian economy was opened up more, the currency was not pegged and allowed to float to where it is now?
27 said: 3. Lots of states (all?) in India have Universal Health. Go to most governmet hospitals in most places, and you wil not be charged for treatment. How it works in practice is another matter.
I agree about what you said about the sales taxes…. however as for health in Kerala, while all states have government hospitals, I’ve been to government hospitals in a couple of states(not Bihar, one of them is New Delhi) including Kerala, and the difference must be seen to be believed.
And yes, you must see something of rural Kerala and not just TVM……. anyway a somewhat ideologically driven partisan article Sainath that touches on the issue peripherally:
It’s odd the more primitive debate on this now comes out of Kerala. Accept that framework, and Uttar Pradesh and Bihar are way ahead of it. Countless big-budget `development’ projects have been on forever. With little improvement in the living standards of the people in those States. Meanwhile, it might make sense to test one more indicator. Check how the bottom 30 per cent in each of our States is doing or has done over a period of time. It might give you a very different view of development. (Link)
30 · Meera J said
megadeth scared the life out of me in ’92. i was preparing for a fiery apocalypse and the end of life as we know it when ‘countdown to extinction’ was out. but then avial’s ideology of political regeneration and hope sucked the life out of megadeth’s message of nihilism. obama’s inauguration to the white house and pakistan’s slow march to democracy are a fitting culmination to avial’s optimistic and unceasing struggles.
thank you avial (esp. rex vijayan). i hope you liked the (agent provacateur, red, 34 b) bra i flung at you at your last concert in mumbai.
There’s only one model that works and will work throughout the world for all times to come: The model that attracts and retains people to work and settle down in a particular place.
If people are leaving a place for opportunities elsewhere, the place has a failed model. If people from outside don’t want to come and settle down, it’s a failed model.
There are pockets of success in India that have models that attract and retain people: Western Maharashtra, Southern Karnataka, Northern Tamil Nadu, South-Central Gujarat and the Delhi-Haryana belt. The rest of the country follows failed models (but have not collapsed yet because of central Government largesse, well endowed with natural resources(fertile soil or minerals) or remittances from outside).
This principle applies to countries as well. Any country that needs to build rules, walls and fences to keep people from outside from pouring in is following the correct model. The US is the undisputed leader in this respect. Given a chance, half the world will immigrate to it.
Even within the US, there are pockets of failed models. California is a recent prime example. Thanks to excessive taxation and curbs on businesses, rampant public spending and welfare programs by the SanFransico liberal crowd, more people are leaving the state than entering it. The state is on the brink of bankruptcy and is now considering handing out IOU’s as unemployment checks (no – the grocery stores don’t take them as payment). Detroit is another example. Same policies as California, but with runaway unionisation. There are some parts that are so bad that even the criminals are leaving because there’s nothing to loot from the boarded up houses.
Darn! I wish I knew this during my teenage years when I used to have dominatrix fantasies…
M. Nam
Bengali women are better in that department.
Actually Moornam, California’s budgetary problems are the result of those ridiculous budget-allocation referendums they have. More than half the state budget is pre-determined by referendum. When you put the politicians in charge of the purse in a straight-jacket by eliminating their ability to actually reallocate the budget it isn’t surprising that they’re not able to actually do anything about it.
Direct democracy is a naive and silly notion.
Tenuous businesses in Kerala? Who owns/runs all those huge tea/spices/coffee plantations on the windward western ghats?
Kerala is not as dependent on Gulf money as it was ten years ago. I completed my XII in 2000 and though hardly any of us are still in Kerala, neither are they in Gulf. They are spread across India with a few in US, UK, Singapore & Australia.
As far as the Kerala model is considered, though Kerala has produced an educated society, it has never been able to provide them employment. It is the third most densely populated state in India (after Bihar and WB) and does not have the resources to support its citizenry. So, it has essentially grown on income from abroad than from within.
Development in India and China is many times measured in terms of the gleaming western style multi-story complexes and the number of McDonalds and Pizza Huts. In that terms Kerala is very backward, as Kumar #25 has pointed out earlier in a comment. Kerala model made progress happen in rural areas and not in the cities.
Kerala is way far developed than the rest of India in terms of human rights awareness of ordinary citizens. It did not start with gulf money. The original paper describing ‘Kerala Model’ was published in the 1970s. The kerala model’s best days were in the sixties and seventies, before the gulf states gained their economic clout. The model pretty much is dying as more and more money and ‘development(India style)’ comes to the state. Globalization has made Kerala model difficult to maintain and thrive. Global Development is largely measured in terms of conspicuous consumption. That model will meet its end point when China and India are completely destroyed in ecological terms. China has made significant progress(?) in that direction. India is a distant second in that direction. Development has to be measured in terms of human life indices that are yet to be developed. Measuring Kerala model in terms of GDP, per capita purchasing power is the wrong approach, because the kerala model is totally different from California Model( Kerala model was compared to California by the original authors from New Jersy in the late 1970).
Kerala model has significantly suffered because of militant politics practiced by the political parties and religious right(?). The political parties and religious leaders are a mirror of the society. So I put the blame on common man. The common man in Kerala is much more aware of her/his rights than his counterpart in rest of India. But she or he is seldom aware of ones responsibilities. Kerala has acheived a great deal in obtaining the rights to common man, while it degraded in making sure of the fullfilment of the responsibilities by the common man .
Kerala model is dying because there are not many people in Kerala who realized their early success. Now every keralite is chasing California model via Gujarat as the ‘Desi Model’. The average Keralite now look toward an Ahmedabad, Hyberabad, or Bangalore, rather than a Thrissur or Kottayam village. So I take the model is not practical at this point in world economy. But I definitly think is worthwhile to be studied for future.
36 · MoorNam said
Very good sample(Detroit vs. Californian city). A Californian burns more fossile fuel than a Michiganite for heating and cooling, eventhough the weather is much nicer in California. The economy is directly tied to how much fossil fuel you can consume.
Kerala will never be able to build as many Coal or nuclear power plants as other states in India, because of its people awareness. So Kerala will not be a major economy in India’s future.
36 · MoorNam said
If that is true, you have to advocate Mexico City model.
25 · Kumar said
I have visited interior villages of Kerala and other states. I was amazed to see that kuccha (mud) houses were almost non-existant in Kerala, which is very common in other parts of India. Also remarkable is the number of schools and hospitals in the villages. This is also an anomaly compared to other states in India where village kids usually have to travel far to reach schools. There seems to be less of rich-poor gap in Kerala than in other states, nor the grinding poverty that is common in many other states. That was my observation.
Kerala has produced a literate society. Education, however…
M. Nam
Worlds largest refinery will soon be commissioned in Jamnagar, Gujarat. Gujarat has the no.1 oil refining capacity in India, even before the new refinieries in progress goes online. Interestingly, not a gallon of the refined product from that refinery is going to be consumed in India, but it going to add 5000 jobs to the payroll. Gujarat is no.1 in cement production,the most energy consuming industry. Economic state of Gujarat vs. Kerala is a no brainer.
45 · MoorNam said
There underlying problems faced by people from Kerala is not unique. Look at the problems of people from Vermont. It is much easier to build a refinery in Louisiana or Texas than Vermont.
Love Avial. But they had some dropouts and it does not feel the same since. It is hard for other parts of India to have a band with similar theme, because development does not bring any crisis in other parts of India. Their theme is a reflection of Kerala’s development crisis as a society.
46 · LandBeyond7Zs said
Is that necessarily a good thing ? Kerala had Coca Cola depleting groundwater to the extent that it was impacting water availability for common people, agriculture and environment. BTW, like Kerala, people of Gujarat are spread all over the world too. But the relatively recent impetus towards industrialization in Gujarat is great advancement.
49 · zee said
Therein lies the crisis, aside from all local political issues. For the rest of India, the plant in Plachimada is development. For people in Kerala, it is hard to figure out whether it is development or a victim of development.