Use the Solow model to explain how addressing the challenges facing India through key reforms would foster growth.

Economics of Emerging Markets Project

The project is based on the case study India 2014: The Challenges of Governance that is linked to the Project folder in Moodle. Read it carefully and focus on the connections between what you read and the content of the lectures.

1) The Solow model is constructed on the following basic relations:

Use the Solow model to explain how addressing the challenges facing India through key reforms would foster growth. If necessary, feel free to use expanded versions of the model as appropriate.
30%

2) Draw the Lorenz curve and compute the GINI coefficient for the distribution of income across major Indian States. Analyse the evolution over time of the percentage of people living under the poverty line. Use both to analyse the distribution of income across major Indian States, critically establishing wherever possible links to the rest of the indicators in Exhibit 7.
Using your analysis, outline whether and how regional policies should be actively used by the Indian government to promote growth.
20%

3) Critically compare the evolution of the sectoral GDP composition in India (Exhibit 3) with that of other appropriately chosen emerging markets and comment on the need and scope of further reforms in this area.
10%

4) Critically compare the evolution of the Corruption Perception Index (Exhibit 8) over the last 15 years between India and appropriately chosen emerging markets, using a developed country as a benchmark. Explain briefly how corruption impacts growth. What could India learn from its neighbours (e.g. Singapore) when it comes to tackling corruption?
10%

5) Identify the main patterns emerging from India’s current account (Exhibit 4) and try to establish links with the evolution of the Rs/US$ (and others, if necessary). Critically comment on the evolution of India’s economic performance.
10%

6) Critically summarise and conclude on the challenges facing India on its path to continued growth and development.
20%

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