Last week, members of the Eccles family presented an award to two of the most progressive thinkers in economics and poverty at Columbia University in New York City.
Spencer Eccles presented the award, designed to foster dialogue in innovative economic ideas, to two of the foremost experts on India— Columbia University professors Jagdish Bhagwati and Arvind Panagariya —for their book "Why Growth Matters." The book argues which for the importance of economic growth in India.
The award comes at a time when all eyes are on India as it wraps up the world's biggest ever election. When results are announced this Friday, the five-week rollout will have included nine phases and more than 800 million voters.
The stakes are high for India, one of the world's biggest emerging economies and largest democracy, and questions of how to kick-start the country's slowed economy and address the age-old question of poverty have dominated the debate.
This year's recipients were exciting candidates because we can watch some of these ideas go into practice after the election, said Randy Quarles, who was on the selection committee and attended Monday's event. Their research can have a "big impact for the world" because India is a proving ground for other developing countries, he said.
"In 60 years, the only thing that has made a significant difference in reducing India's poverty is growing the economy," said Randy Quarles.
The book has been described by the Economist magazine as "the definitive book on the Indian economy," and one of the authors, Panagariya, has counseled candidate Narendra Modi's BJP Party on economic policy, and is rumored to be a top choice for a government post with Modi.
The answer to moving India out of poverty, the authors say, is growth. "In big countries with a lot of poor people and very few rich people, like India, China, and Brazil, if you do something about social spending for the poor on things like schools and health clinics, the amount of money it would take is extraordinary," said Bhagwati.
Reallocating money on social programs is a waste of time, they say, without kick-starting the economy. If the pie isn't very big, it doesn't go very far when you try to share it, said Bhagwati. "We have to grow the pie."
It should be obvious that growth matters, said Baghwati, but that hasn't always been the case. A few years ago, India's economy was booming, expanding at an annual rate of nearly 10 percent. There was talk that the dense country's growth could overtake China, but then policymakers did little to foster the progress. "They assumed it would continue on its own," said Panagariya. Now, India's economy is lagging behind at half the pace of a few years ago.
What's at stake isn't just growth, it's India's age-old struggle with poverty. Growing the economy has lifted 200 million Indians out of poverty in the last couple decades. In 1978, say the authors, half of Indians were below the poverty line. Now that number has shrunk to one-fifth.
Now they are making a case, or what the Economist has called a "policy manifesto," that politicians stop focusing on welfare programs and create a bigger economy so that there is "more to share."
To do this, they are calling for deregulation in labor — manufacturing has lagged because of tangled labor laws. Infrastructure is also an issue for investors and corporations where roads and electricity are not reliable.Comment on this story
Part of the purpose of the prize, presented with the The Jerome A. Chazen Institute of International Business at Columbia Business School, is to "foster conversation" among policymakers, academics and students for lasting solutions to difficult economic problems, said Hope Eccles and Lisa Eccles, president of the George S. and Dolores Dore Eccles Foundation, who were also present for the award ceremony. "The book is deep, but it's not a textbook," said Hope Eccles.
Improving financial literacy is a goal for the Eccles Foundation, which is known for its philanthropy and education efforts. Spencer Eccles noted that George S. Eccles, the founder of the prize, would have been pleased since his own life work was in growing the economy through his career in banking and finance.
George S. Eccles, a 1922 Columbia Business School grad, established the prize 25 years ago to foster public dialogue about economics, said Spencer Eccles, CEO and chairman of the George S. and Dolores Dore Eccles Foundation and chairman emeritus of Wells Fargo Bank. Past recipients include notables such as Henry Kissinger, Henry Kaufman and Mary Ann Keller.