Why did India fail to industrialise where East Asia succeeded?

IN ECONOMICS, the term “development” conceals as much as it reveals. The hidden connotation is that of wealth, and wealth equals power. Japan took the lesson to heart during the first half of the 20th century; now it’s China’s turn to upset the applecart. Expressed nakedly, without circumlocution, it expresses a central problem of political economy: how to catch up with the West?

The problem is one of political economy, not economics, even though economists have a good deal to say about it. The process is called late industrialisation; for purposes of convenience, I treat it as a non-Western, 20th-century phenomenon. By 1900, a handful of Western countries had come to dominate the rest of the world (Japan’s colonial career, which begins soon afterwards, is distinct from theirs). This domination was challenged by embryonic national movements led by reformers who had studied the West at close quarters. To them, it seemed evident that technology was power: to catch up with it, they would have to modernise and industrialise. This process involved two stages. The first step – of borrowing technology from the West – proved relatively easy. The next stage was much more difficult: in it, the state undertook to manage the economy in the interests of industrial growth, favouring domestic firms over foreign competitors.