“Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia’s or Egypt’s? If so, what exactly? If not, what is it about the ‘nature of India’ that makes it so? The consequences for human welfare involved in questions like these are simply staggering: once one starts to think about them, it is hard to think about anything else.” (Lucas, 1988)
Whilst India’s economy has been growing very fast in more recent years the question of why economies grow is one of the most important questions in economics because, as the quote suggests, its implications are very far reaching. Economic growth is the process by which we live a healthier, better educated, more productive life than previous generations. This course will develop a framework through which the fundamental elements this process can be understood. It will familiarize the students with the modern theories of economic growth and how they can be used to address important policy questions and topical issues such as: Why do some countries grow on a sustained basis and others fail to do so. Which institutions might be important in securing growth? Does economic growth lead to increasing income- and wealth inequality?