Transcript Sustainability of Hinduism and the Hindu Rate of Growth as the

Sustainability of Hinduism and the
Hindu Rate of Growth as the Global
Growth Rate
By: Surendra K. Kaushik, Professor of
Finance, Lubin School of Business, Pace
University ([email protected]) & Founder
of Mrs. Helena Kaushik Women's College in
India (www.helenakaushik.org)
Abstract
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This paper argues that in the long run GDP annual growth rates will most likely regress
back to the trend line in the US and India in the 3 to 4 percent range. There is a
remarkable stability and similarity of growth rates in the two countries over long
periods. In India it has been derogatorily called the Hindu Rate of Growth. Presumably
higher rates are associated with other religions and value systems. The evidence,
however, finds the same low rate in the US. Growth rates in other advanced countries and
Europe are about the same as well. Higher rates would be desirable and possible
with new human capital and technologies. The ten percent a year rate in China from
1980 to 2010 is unlikely in the future. The Hindu Rate of Growth which is the same as
the US rate of growth is most likely to be sustainable in the future as in the past. The stability
is explained in terms of cultural characteristics specifically associated with
Vedic Hinduism. United States shares some characteristics of an open global culture
with India. Therefore what is sustainable are the common US and India rates of global
growth where India’s spirituality and yoga are taking root in the US and American
scientific research and innovation are enriching Indian trading and entrepreneurship
into industrial and materialistic society.
Sustainability of Hindu Rate of Growth
• The Hindu Rate of Growth (HRG) is a controversial and
derogatory expression used to refer to the low annual
growth rate of the socialist economy of India before 1991,
which was around 3.5 percent from 1950s to 1980s, while
per capita income growth averaged 1.3% (Chart 3).The
average US nominal GDP growth rate at that time was 6.2
percent while the real GDP growth rate, at 2005 prices, was
3.4 percent a year from 1930 to 2010 (Chart 1). India’s
growth rate for the most recent thirty year short-term
period from 1980 to 2010 by comparison is 6.11 percent a
year (Chart 2). Perhaps it is not a coincidence that the US
rate of growth over the first two and a quarter centuries
since 1776 is essentially the same. It is a remarkable
similarity of growth rates.
United States Growth Rate
United States Economic Growth Rate
1930-2010
40.0
30.0
GDP percent change
based on current dollars
20.0
10.0
0.0
GDP percent change
based on chained 2005
dollars
-10.0
-20.0
-30.0
Source: Bureau of Economic Analysis , U.S. Department of Commerce
India’s Growth Rate
India GDP, Constant Prices
Average Annual Growth Rate: 6.11%
12
10
8
6
4
2
0
1980198119821983198419851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007200820092010
United States Growth Rate
India’s Recent Growth Rate
Hindu Value Drivers of Hindu Growth
Rate
• There are a number of empirical truths about Hinduism
that demonstrate a steady and sustainable rate of
growth. Some of these are: (i) global perspective in
thinking (ii) open and welcoming migratory culture, (iii)
ageless view of time and space, (iv) inquisitive and
open mind and knowledge-based enterprises, (v) an
accepting, assimilating and tolerant society, (vi)
reciprocity and exchange based on specialization, (vii)
expanding view of self, (viii) acceptance of controlled
aggression (ix) greater importance on knowledge based
enterprises and (x) satisfaction from balance between
the spiritual, mental and physical lives.
Globalization and Growth Rate
• The paradigm of openness inside the economy and in
its trade, investments, and engagement with the rest of
the world is building external confidence in the Indian
economy (Denison 1967, Kaushik 1996). India is
marching forward consistent with its long and
successful history with the underpinnings provided by
the Vedic system. Economic liberalization, including
industrial deregulation, privatization of state-owned
enterprises and reduced controls on foreign trade and
investment that began in the 1991 (Kaushik and Silk
1994, Kaushik 1997, and Kaushik and Santicchia 1999)
has helped accelerate the country's growth in the short
term to more than 6% per year since 1980 (Chart 2).
U.S. Long-term Growth Rate
• Consistent with the analysis of the sustainability
of growth at 3 to 4 percent a year, or the Hindu
Rate of Growth presented above, the U.S.
economy grew by an average of 3.8% from 1946
to 1973, while real median household income
surged 55% (or 1.6% a year). The economy since
1973, however, has been characterized by both
slower growth (averaging 2.7%) and nearly
stagnant living standards, with household
incomes increasing by 10%, or only 0.3%
annually.
Recent Growth in China and
India
Recent Growth in India and
China
Conclusion
• Building up of human capital and operation of the market forces
with support from social, political and business institutions are the
key characteristics developed for economic progress in India in its
long and sustainable journey as part of the global family.
• Our discussion should not be interpreted to imply that high rates of
growth currently achieved in India are undesirable or should be
reduced. A 6 percent average growth rate for the next two to three
decades is entirely possible towards a 4 percent rate for yet a
longer period of several decades as argued in this paper.
• The long-term key driver of India’s continuity and sustainability is
the Vedic foundation on which its value systems and culture are
based. The United States has many of the same cultural
characteristics of openness, assimilation, broad view, and long-term
perspective in addition to the focus on science and education,
innovation and entrepreneurship. The proximity of long-term
growth rates in India and the US is impressive.