Commentary

Delayed Economic Reform Killed 14.5 Million Children

The 20th anniversary of Communism’s fall is a good time to estimate the costs borne by countries like India that did not become Communist but drew heavily on the Soviet model. For three decades after Independence, India levied sky-high taxes, strove for self-sufficiency, and gave the state an ever-increasing role in controlling the means of production. These socialist policies yielded economic growth averaging 3.5% per year, just half of that in export-oriented Asian countries, and yielded poor social indicators too.

Growth accelerated with tentative reforms in 1980, and shot up to 9% after reforms deepened in the current decade. How much lower would infant mortality, illiteracy and poverty have been had India commenced reform a decade earlier, and enjoyed correspondingly faster growth and human development? I have published estimates in a paper for the Cato Institute (see http://www.cato.org/pubs/dbp/dbp4.pdf). This shows that the delay in reforms led to an additional 14.5 million infant deaths, an additional 261 million illiterates, and an additional 109 million poor people. Indian socialism delivered a monumental tragedy, lacking both growth and social justice.

Economists frequently estimate what would have happened had policies been different. The assumptions on which such estimates are based can always be questioned.

For instance, Nobel Laureate Amartya Sen has popularized the notion of 100 million missing women on account of gender discrimination in China, South Asia, West Asia and North Africa. These regions have 94 females per 100 males, against 105 females per 100 males in other countries with equal gender treatment. Sen assumed that without gender discrimination, the female:male ratio in the four developing regions would also have been 105:100. On this basis, he estimated that gender discrimination had caused a shortfall of over 100 million females — what he called “missing women”.

Sen’s model was so simplistic that he did not send his paper to an economic journal: he published these estimates in the New York Review of Books. Various economists complained that he had neglected other causes of gender differences, and some came out with alternative estimates.

Despite these objections, Sen’s estimate of 100 million became world famous, and his phrase, “missing women”, became standard lexicon in gender debates. What mattered was not the precision of his estimates, but the magnitude of the social disaster he was able to highlight.

In the same spirit (but without implicating Sen), i have sought to estimate the number of missing children, missing literates, and missing non-poor arising from the delay in economic reforms. Had reforms started in 1970 rather than 1980, India would have grown faster. In this fast-growth scenario, i assume that per capita income growth in the 1970s would have been what was actually achieved in the 1980s: growth in the 1980s would have been what was actually achieved in the 1990s: and growth in the 1990s would have been what was achieved in 2001-08.

I calculate the rate of change of infant mortality, literacy and poverty with GDP since 1971. I then apply this rate of change to the fast-growth scenario. This reveals what infant mortality, literacy and poverty would have been with faster growth.

In a fast-growth scenario, infant mortality would have been less every year, and in 2008 would have been 27 deaths per thousand births, against the actual 54 per thousand. The cumulative number of “missing children” turns out to be a massive 14.5 million. This is two-and-a-half times the number of Jews killed by Hitler.

I use trends from the latest surveys to calculate actual literacy and poverty levels in 2008, and compare these with literacy and poverty levels in a fast-growth scenario. With faster growth, literacy would have been virtually 100% by 2008, and 261 million more people would have been literate. Again, faster growth would have reduced the number of poor people in 2008 from 282 million to 174 million. This means we have 109 million “missing non-poor” on account of delayed reform.

Doubtless critics will object, as they did after Sen’s exercise, that i have used a simple model that neglects other factors affecting infant mortality, literacy and poverty. Demographer Ansley Coale reworked Sen’s calculations to show that the number of missing women was probably 60 million, not 100 million. That did not dent public horror at the social tragedy that Sen unveiled.

I invite critics to produce more sophisticated models on the impact of delayed reform, as Coale did in the case of missing women. If these more sophisticated models conclude that Indian socialism killed only 10 million children and not 14.5 million, i will shrug. My point about the magnitude of the social tragedy will stand.

Swaminathan S. Anklesaria Aiyar is a research fellow at the Cato Institute’s Center for Global Liberty and Prosperity.