We put before you two countries:
Both are Asian. One has little land, most of it eroded hillsides. Its population density, already the highest in the world, is exacerbated by heavy immigration. It has to import all its raw materials, water, and oil. It receives no foreign aid whatsoever and until recently was still a Western colony. It has an authoritarian government.
The other is also densely populated, but it has lots of arable land and natural resources. Free from colonial rule, it has also been the recipient of about US$55 billion in aid over the past 40 years. It is a functioning democracy and the World Bank’s pet project.
Which do you bet would be better off? It seems to be a no-brainer – the second one, of course.
But wait – the country without resources is Hong Kong, today routinely at the top of lists of the best Asian cities in which to live and do business; and the well-endowed one is India, after 60 years of independence still one of the poorest countries in the world.
“The standard of living in Hong Kong had multiplied more than tenfold in forty years, while the standard of living in Calcutta has improved hardly at all,” says John Templeton.
After nearly half a century of centrally planned economic development, India’s annual per capita income remains somewhere between US$500 and US$3,400 a year, depending on the type of calculation you use and whom you are talking to.
A per capita income of around US$750 puts India – the fourth largest economy in the world – in the company of sub-Saharan Africa. Meanwhile, Hong Kong has a per capita income of over US$20,000 a year, on par with first world countries.
What on earth is wrong here?
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