Putting the ‘Kerala Model’ to Rest: Lessons for a New Era of Development in India

36 Pages Posted: 20 Sep 2010

See all articles by Apoorva Shah

Apoorva Shah

American Enterprise Institute (AEI)

Date Written: September 20, 2010

Abstract

In a country where two out of five citizens, about 450 million people, live in poverty, it is no exaggeration to say that the development experience of Kerala – a coastal state on the southwestern tip of India – stands out as extraordinary. Despite a history of anemic economic growth, this state of 32 million boasts effectively universal literacy rates and life expectancy levels close to many Western societies. Because of this, the “Kerala model” has been hailed by NGOs, development experts, and Western academics as an alternative path for human development in which a robust welfare system rather than economic growth drives social progress.

The real story, however, is quite different from this received wisdom about the “Kerala model”. Through the use of historical evidence and quantitative data, this paper shows that government welfare policies in Kerala had less positive impact on social development and more negative impact on economic development than commonly perceived. Not only do many of the state’s successes trace back to institutions that predate the welfare state, the socioeconomic realities within Kerala reveal a society trying its best to break free from the yoke of statism. In fact, dirigiste policies explain how a highly educated, healthy society has been unable to achieve robust economic growth despite substantial latent capacities. Today, Kerala serves both as an example – of how investments in human capital pay off handsomely even in the midst of other economic challenges – and as a harbinger – of an “emerging India” that is impressive in its potential but often underachieving in its results.

Keywords: India, Development Policy, Kerala, Economic History

JEL Classification: O20, O53, N95

Suggested Citation

Shah, Apoorva, Putting the ‘Kerala Model’ to Rest: Lessons for a New Era of Development in India (September 20, 2010). Available at SSRN: https://ssrn.com/abstract=1680001 or http://dx.doi.org/10.2139/ssrn.1680001

Apoorva Shah (Contact Author)

American Enterprise Institute (AEI) ( email )

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