Economics, Management and Sustainability: Essays in Honour of Anup Sinha

291 Pages·2018·4.654 MB·English

by  Partha Ray, Runa Sarkar, Anindya Sen

Partha Ray · Runa Sarkar · Anindya Sen   
Editors
Economics,
Management
and
Sustainability
Essays in Honour of Anup Sinha
Economics, Management and Sustainability
Partha Ray Runa Sarkar Anindya Sen
(cid:129) (cid:129)
Editors
Economics, Management
and Sustainability
Essays in Honour of Anup Sinha
123
Editors
ParthaRay Anindya Sen
Indian Institute of Management Indian Institute of Management
(IIM)Calcutta (IIM)Calcutta
Kolkata, India Kolkata, India
RunaSarkar
Indian Institute of Management
(IIM)Calcutta
Kolkata, India
ISBN978-981-13-1893-1 ISBN978-981-13-1894-8 (eBook)
https://doi.org/10.1007/978-981-13-1894-8
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ProfessorAnupK.Sinha
Preface
It is not very often that one comes across an individual who is an outstanding
teacher, a well-known researcher, an able academic administrator and a warm,
approachable human being. Professor Anup Sinha is one such person.
He was educated in Presidency College, Kolkata; University of Rochester,
New York; and University of Southern California, Los Angeles. After completing
his Ph.D. from the University of Southern California in 1983, he returned to
PresidencyCollegeandtaughtattheCentreforEconomicStudiesforanumberof
years. In 1991, he decided to join the Indian Institute of Management Calcutta
(IIMC)wherehetaughttillhisretirementin2016.Inhislongcareerspanningmore
thanfourdecades,hehasbeenavisitingfacultyinanumberofinstitutionsinIndia
and abroad, including Indian Statistical Institute, University of Calcutta, National
Institute of Public Finance and Policy, University of Southern California,
Washington University in St. Louis, Curtin University of Technology at Perth and
KyotoUniversity.Averypopularteacherwithaninfectiousabilitytoquicklybuild
a strong rapport with his students, it comes as little surprise that he was voted the
best faculty for a number of years in IIMC by students and alumni alike.
Hisdoctoralworkwasoneconomicdevelopment,andhetaughtthesubjectover
many years as a teacher. He also taught macroeconomics to undergraduate as well
as postgraduate students. But his research interest of late went beyond the tradi-
tional confines of macroeconomics and economic development. His major publi-
cations are in the areas of economic development and reforms, macroeconomic
policies, globalization, business ethics and sustainable development. Over the
years, he moved away from the mainstream macroeconomics and economic
development to the more interdisciplinary area of “sustainable development”.1
1Some of his recent writings bear testimony to this. See, for example, “Corporate Ethics” (in
KaushikBasu(edited)TheOxfordCompaniontoEconomicsinIndia¸OxfordUniversityPress,
Delhi,2007);“TheAuraofGreen:CommitmentinanAgeofUncertainty”(inDecisionVolume
36,No.2August2009,withJamieGilpin);“GoodGovernanceandSustainability:MakingSense
of a Complex Agenda” (in S. Singh-Sengupta (edited) Spiritual and Ethical Foundations of
OrganizationalDevelopment,MacmillanDelhi,2009);“Sustainability:EthicsandtheFuture”(in
Journal of Human Values, October 2013); “The Business of Development: A Case Study of
Participation andDependency”(inDecisionJune2014);and“Sustainable Developmentandthe
ConceptofaGoodLife”(inRunaSarkarandAnnapurnaShaw(eds.):EssaysonSustainability
andManagement:EmergingPerspectives,Springer,2016).
vii
viii Preface
He has edited three volumes and co-authored two books, one titled Another
Development:Participation,EmpowermentandWell-beinginRuralIndiaandthe
other titled Economics of Sustainable Development.2
He was active, able and reputed as an academic administrator. He served as
ConveneroftheFacultyCouncil,Chairpersonofthedoctoralprogramme,Editorof
IIMC’s academic journal DECISION, Dean and three terms as Faculty
Representative on the Board of Governors at IIMC. He served on the Board of
National Bank for Agricultural and Rural Development (NABARD) from 2006 to
2009. He also serves on the Life Insurance Council of India as an Insurance
Regulatory and Development Authority of India (IRDAI) nominee. He is a trustee
of Uttaryan, a non-governmental organization which works with mentally chal-
lenged children and young adults.
However, the complete gamut of his interests is not restricted to academics
alone,butiswideandvaried.Helearnttoplaytheviolinwheninschoolandplayed
the first violin in the school orchestra. He was a well-known debater during his
college days. His passions (according to he himself) lie in the following; cricket,
readingcrimefictionandlisteningtoclassicalmusic—thethree“C”sofhislife.His
interest in theatre is much more than pedantic—he performed in faculty plays at
IIMContwooccasions.Healsofrequentlycontributesop-edpiecesinnewspapers
on a variety of contemporary social problems.
Inthisvolume,hiscolleaguesandstudentshavecometogethertohonourhimas
a memorable teacher, a reliable friend and a wise mentor.
In consonance with his interest, chapters in this volume are arranged in four
broad themes, viz. economic development; vulnerabilities and inclusive growth;
sustainability and corporate governance; and innovation and management. As a
prelude to the volume, what follows below is a brief description of these chapters.
Economic Development
Chapters in this part cover varied themes of economic development such as con-
struction of an adequate indicator of development, issues on governance, political
economy and public–private partnership.
Maitreesh Ghatak discusses attempts to develop an adequate indicator of
development and in the process highlights the many-sided nature of development.
For theorists, the nature of a relevant indicator often depends on a person’s view
of the goals of development, and hence, there are disagreements about the proper
indicatorthatshouldbeused.Ithasbeenknownforlongthatasingle-mindedfocus
on per capita GDP does little justice to the idea of development in all its richness.
Alternative measures like the percentage of population below the poverty line,
2Another Development: Participation, Empowerment and Well-being in Rural India (with Runa
Sarkar);Routledge,TaylorandFrancis,NewDelhi,2015;EconomicsofSustainableDevelopment
(withRunaSarkar),BusinessExpertPress,NewYork,2018.
Preface ix
measures of inequality such as the Gini coefficient and human development indi-
cators have been proposed. But objective as these may appear, no indicator can
truly captureall thedimensionsofsomethingas multifaceted asthequality of life.
Ghataknotes,forexample,thatdepletionofnaturalresourcesandpollutionduring
the growth process and discrimination against the girl child are two important
aspectsofthedevelopmentprocesswhicharenotbeingaddressedviathestandard
measures. Moreover, development policies cannot be examined in isolation of the
political setting. Dictatorships seem to be more efficient in single-mindedly pur-
suing their visions of development, but due to the absence of the checks and
balances (normally present in a democracy), they may not become aware of other
deleterious consequences of the path they are pursuing before it is too late.
Sumon Kumar Bhaumik takes up the related issue of governance. For him,
governanceencompassesboththeformalandtheinformalbasesfortherelationship
between thestateandtheprivatecitizens aswell astherelationshipamong private
citizens. One dimension of governance is “rule of law”, and data across countries
overtimedonotsuggestthatruleoflawautomaticallyimproveswithanincreasein
per capita income. However, some research seems to indicate that governance
quality is higher in democratic countries because in democracies officers are more
accountable and there is a higher degree of transparency. Governments can be
non-benevolent and rent-seeking, and certain institutions are needed to keep them
incheck.Onecannotrelyontheprocessofgrowthalonefortheemergenceofsuch
institutions. Sometimes, external intervention in the form of FDI or aid can be of
help, but these can be double-edged. On a more specific note, the economic
approach to governance focuses on the mechanisms that facilitate transactions in
modern exchange economies. The establishment of clear rules governing transac-
tions must be accompanied by the equal ability of all parties to get the rules
implemented.Carryingtheideaofanon-benevolentstatefurther,onecanenvisage
situations in which the state itself acts as an intermediary to violate the rules and
expropriate some of the parties engaged in transactions. The state can enter into
contracts with different groups to enable it to expropriate other groups and then
share the revenue with the former. The elites running the state apparatus must
co-opt some groups through the distribution of spoils of expropriation and create
“patron-clientnetworksthatextenddowntotherestofthesociety”forwinningthe
violentconfrontations that theexpropriation requires. Bhaumikfeels that this view
of governance indicates that only an “open access order” where political factions
havetoenjoythesupportofsocialandeconomicinterests,broadlydefined,canact
asanantidotetothisfundamentalpremiseofanon-benevolentstatetryingtobend
contractual rules through violence.
AmitavaKrishnaDuttgoesbackintothehistoryofeconomicthoughtandnotes
that the study of the economy, which used to be called the political economy,
changed to economics and the term political economy fell into disfavour. More
recently, the term has experienced a revival, although not necessarily referring to
thesamethingaseconomics.Hischapterdescribeshowthenamechangeoccurred,
howthetermreturnedandhowpoliticaleconomyisdistinguishedfromeconomics,
the change in the nature of the study of economies that accompanied—though not
x Preface
precisely—the change in the name, the problems caused by these changes and the
reasonsforthechange.Hearguesthatareturntothenamepoliticaleconomyfrom
economics and a return to what political economy tried to do before the change in
name aredesirable notonly for abetter understanding oftheeconomybutalsofor
the well-being of people, especially those who have been excluded and
marginalized.
In contrast to the broad sweep of the other three chapters in Part I, Indrani Roy
Chowdhury and Prabal Roy Chowdhury analyse a very specific tool now finding
widespread use—the public–private partnership. They analyse the possibility of
collusionbetweentheprivatefirmandthegovernmentdepartmentintheprocessof
PPP formation. They develop a simple model based on risk-sharing to look at this
possibility. They show that PPPs are most likely to form in case the externality
gains out of the project are significant, and agents are risk-averse. Otherwise, PPP
formation may lead to bribery and sub-optimal project choice. In the light of this
possibility, the government may opt for direct control over the project instead of
forming a PPP.
Vulnerabilities and Inclusive Growth
Thechaptersinthispartarespannedoverboththeoreticalandempiricalaspectsof
vulnerabilities and inclusive growth. These cover theoretical issues as diverse as
explanations of the recent Greek crisis, the extent of private contribution to higher
education, and the case for and against a unitary education policy across all parts
of the society. These apart, there is an empirical and conceptual contribution that
looks into the definition of unemployment in India.
Ghosh and Ghosh in their chapter, “Capitalism, Crisis and the Common Man”,
develop a simple model that redresses many of the major deficiencies of the
characterization ofthefinancialsectorinthestandard IS-LM-basedopen-economy
macro-models. Going beyond Bernanke–Blinder (1988)-type IS-LM model with a
credit market, their extended version of an open-economy Keynesian model
incorporatesfinancialintermediariesandimperfectcapitalmobility.Intheirmodel,
itisshownthatthemultiplierprocessthatoccursintherealsectorandthemoneyor
creditmultiplierprocessthatoccursinthefinancialsectortakeplacesimultaneously
reinforcingeach other.Theyapply thismodel toexplain someofthestylized facts
of the Greek crisis. Their results tend to indicate that the higher growth rate in
Greece since 1997 could have been due to higher growth rates of GDP in other
European countries and USA and the higher growth rate of inflow of capital.
Furthermore,thehighergrowthratesinotherEuropeancountriesandUSAandthe
highergrowthrateinnetinflowsofcapitalcouldhavebroughtaboutsharpfallsin
interest rates.Thiscould haveinducedtheGreekgovernmenttoborrow onalarge
scale to finance additional expenditure which is the primary reason behind the
accumulation of a sizable amount of debt by the Greek government by the
beginning of 2008.
Preface xi
Dasgupta in his chapter “School Language Policy, Crime and the Minority
Underclass”developsatheoreticalmodelofasocietyconsistingofamajorityanda
minority.Thesecommunitiesdifferintermsofasetofbehavioural-expressivetraits
andconventions.Individualsbornintoacommunityacquirethatcommunity’straits
andconventionsaspartoftheirupbringingwithinthecommunity.Insuchaset-up,
heexaminesthecaseforlinguistic–culturalunificationoftheeducationalsystemin
societies with a majority and a minority ethnolinguistic community. It is demon-
stratedthatthatpossibleaggregateefficiencygainsfromsuchunificationhavetobe
balancedagainsttheconsequencesofgreaterincomeinequalitywithintheminority
community. Such expansion may set in motion attempts to expropriate productive
individuals which, through cumulative causation, may more than dissipate any
income gains accruing to the minority community from integration. Thus, the
efficiencycaseforaunitaryeducationpolicyneedstobequalifiedbythepossibility
of both immiserization and criminalization of the minority.
Bag and Mondol in their chapter, “Private Giving in Higher Education”, start
with a stylized fact about the significance of private giving in higher education in
USAbyalumniandtopphilanthropistsasagainstitsnon-existenceinacountrylike
India, independent of the wealth differential between an American and an Indian.
Theyvieweducationasaconsumptiongoodbuttobeprovidedonlyvoluntarily.In
particular, the greater the collective contributions to education, the better is the
quality of institutions where young people can gather knowledge that serves them
not only for future careers but also in the enrichment of life experience. Their
starting point is Krugman (1979)’s model, wherein it has been shown that in an
economywithonlyprivategoods,consumerswithapreferenceforproductvariety,
economies of scale in production and monopolistic competition, different regions
could have a tendency to merge into a single conglomerate region. Their formal
models show that high labour cost due to low population base could have made
privategoodmorecostlyandpublicgoodrelativelymoreattractiveinanadvanced
country.
Dutta and Husain in their chapter, “Being Out of Work: An Analysis of
UnemploymentandItsDurationinIndia”,lookintosomeofthedata-relatedissues
on measuring unemployment in India and question the currently used definition of
unemploymentinIndiabydifferentagencieslikeNSSO,LabourBureauorCensus.
Using data from the NSSO's 68th round survey, they propose a new definition of
unemployment which utilizes information on the duration over which the respon-
dentiswithoutworkintheyearprecedingthesurvey.Theyestimate theincidence
ofsuch“outofwork”respondentsandidentifygroupswhoaremostatriskofbeing
“out of work” using a two-stage least square logistic model. They argue that pol-
icymakers and researchers have failed to utilize the potential of such information
that not only can generate more realistic levels of unemployment but also can
provide information on the duration of unemployment.